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COUNCIL OPINION

of 14 March 2006

on the updated convergence programme of Lithuania, 2005-2008

(2006/C 82/10)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

In view of the above assessment, and in the context of strong growth prospects and to ensure sustainable convergence with the EU, the Council invites Lithuania to:

Comparison of key macroeconomic and budgetary projections

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(1)OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). The documents referred to in this text can be found at the following website:

http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm

(2)  Following a decision by Eurostat in May 2005 on the classification of payments related to the compensation for lost rouble savings in the early years of transition and the restitution of real estate property confiscated in Soviet times, the deficit target set in the previous update (2,5 % of GDP) has been adjusted to exclude payments related to these liabilities to allow for a meaningful comparison.

(3)  The programme provides all compulsory and most optional data prescribed by the new code of conduct, although the presentation of compulsory data is in a few cases slightly different from that in the new code of conduct, for instance domestic demand is shown instead of final domestic demand, interest expenditure corresponding to FISIM is missing and the tax burden shows what should be total taxes, i.e. the sum of direct, indirect and capital taxes, therefore indirect taxes paid to the EU budget and social contributions are missing in the calculation of the tax burden.

(4)  The costs of the ongoing pension reform (introduction of a second pillar) are included in the deficit. The costs are estimated at 0.3% in 2004, 0.5% of GDP in 2005, 0.7% in 2006, 0.8% in 2007 and 0.8% in 2008.

(5)  Cyclically-adjusted balance (as in the previous rows) excluding one-off and other temporary measures. The adjustment taking out the pension reform costs according to the updated programme would be 0.5% of GDP in 2006, 0.7% in 2007 and 0.2% in 2008, or 0.5% on average in the period 2006-2008.

(6)  Commission services calculations on the basis of the information in the programme.

(7)  There are no one-off and other temporary measures in the programme.

(8)  There are no one-off and other temporary measures in the Commission services' forecast.

(9)  Based on estimated potential growth of 7.0%, 6.9%, 7.0% and 7.0% respectively in the period 2004-2007.

(10)  It included payments related to savings compensations and real estate restitutions amounting to 0.4% of GDP in 2005, 0.8% in 2006 and 1.2% in 2007.

Source:

Convergence programme (CP); Commission services' autumn 2005 economic forecasts (COM); Commission services' calculations

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