The euro, which became Lithuania’s currency at the beginning of this year, had a significant economic impact: as the rating agencies upgraded Lithuania’s credit ratings, the interest burden on the state, residents and businesses was eased, expenses related to the litas and euro exchange operations disappeared, and cross-border payments in euro became cheaper.
The European Commission has today released its latest Eurobarometer survey. In Lithuania, which joined the euro in January this year, the survey showed that 55% of respondents see the euro as good for their country and 77% see the euro as good for the EU.
Moody‘s credit rating agency upgraded Lithuania‘s long-term borrowing rating from Baa1 (positive outlook) to A3 (stable outlook). Moody’s decision was driven by competitiveness and resilience of Lithuania‘s economy, continuation of the Government‘s fiscal consolidation and country’s membership in the euro zone.
Today 100 days have passed since Lithuania adopted the Euro. The Euro adoption being a success story is proven by the fact that as many as 92% of the Lithuanians felt being well informed about the adoption of the Euro, and presently 68% of respondents favourably view the common European currency (exactly a year ago the number was just around 50%). The Ministry of Finance was one of the main organisers and coordinators of the process.
At the today‘s meeting of the Coordinating Committee on the Euro Adoption in the Republic of Lithuania presided over by the Prime Minister Algirdas Butkevičius the information about the process of adoption of the Euro in Lithuania has been presented. During the meeting which has also been attended by the Minister of Finance Rimantas Šadžius and the Chairman of the Board of the Bank of Lithuania Vitas Vasiliauskas it has been stated that the Euro adoption in the Republic of Lithuania was excellently coordinated and well organised.
A smooth adoption of the Euro enabled not only to improve international credit ratings of Lithuania but also to actually reduce borrowing costs. For instance, the interest rate on 10-year nominal term Government securities issued in March this year compared to that of the April 2014 Government securities emission decreased from 3.087% to 0.766%.
From 1 January of this year until 1 March, commercial banks, Lithuania Post, the Bank of Lithuania and some credit unions exchanged, free of charge, litas cash in the value of 2.8 billion (EUR 0.81 billion) and performed more than 1.2 million exchange operations. When exchange will end at the post offices and credit unions, litas will be exchanged into euro at commercial banks and the Bank of Lithuania.
From 1st March the Lithuanian Post and credit union offices will no longer exchange Litas to Euro free of charge; however banks will further continue to provide the service. Till 30 June Litas banknotes and coins will be exchanged free of charge at 343 bank branches, and from 1st July till the end of this year Litas banknotes only will be exchanged at 89 bank branches. In the meantime three cash desks of the Bank of Lithuania will exchange Litas banknotes and coins free of charge for unlimited time.
Experts suggest the euro has a lesser impact on the Lithuanian price level compared to the neighbouring countries
Although almost 90% of the respondents last year expected a steep increase in prices after the adoption of the euro, however, early 2015 demonstrates completely different trends, in fact, consumer goods and services are getting cheaper. According to the information available to the Statistics Lithuania, the prices for goods and services in January dropped by 1.3%, compared to December, while the estimated monthly deflation in February amounts to 0.3%.
Public survey: after the euro adoption, the population’s support for the single currency neared 70 per cent
According to the data of a representative public survey conducted at the end of January–beginning of February, 68 per cent of Lithuania’s residents assess the euro adoption either positively or very positively. Compared to December of last year, support for the euro increased by 8 percentage points.
The free Euro line 8 800 34528 that has operated for ten months finishes its work on the 1st of March. For the period from May last year more than 15,000 calls have been received. 40% of callers have been representatives of business, 60% - general public.