Lithuania PM criticizes opposition budget plans, faces defeat

Reuters News

10/11/2012 11:37:05 AM - Reuters News

VILNIUS (Reuters) - Lithuanian Prime Minister Andrius Kubilius hit out at centre-left opposition budget plans on Thursday, warning of danger to fiscal stability.

He spoke ahead of a parliamentary election on Sunday, which he is likely to lose and which is expected to lead to a government formed under the centre-left Social Democrats.

"You need to understand very clearly that financial stability will require more unpopular decisions. There is little room for significant changes in revenue and spending," Kubilius told a news conference.

"But certain parties have points in their programs, and their leaders speak of them in debates, which ... would mean that financial stability is not adhered to," he added.

He said opposition parties had raised the idea of increasing rebates on value added tax for some goods and services.

The Social Democrats have proposed raising the minimum wage and introducing a progressive income tax in a country that cut spending and raised taxes after the 2008 global crisis.

But they also say they will adhere to a strict budget policy and keep to European Union rules on budget deficits, which set a limit for the fiscal gap of three percent of output.

Lithuania had falling wages and living standards and a 15 percent drop in output in 2009. Some growth has returned, but thousands have emigrated and it is one of the poorest EU states.

An opinion poll by survey group Sprinter for news portal Delfi showed the Social Democrats remaining the most popular party ahead of the first round of an election on Sunday.

The poll put the Social Democrats, led by former finance minister Algirdas Butkevicius at 16.9 percent, followed by the Labour Party, led by a Russian-born businessman, at 15.8.

Kubilius' Homeland Union polled at 7.9 percent.

The election is likely to influence when Lithuania seeks to adopt the euro. Kubilius has said 2014 would be realistic, but Butkevicius told Reuters he is aiming for 2015.

Lithuania has two voting rounds: on Sunday half the seats are decided on a proportional representation basis, with the rest decided two weeks later in district runoffs.

(Reporting by Andrius Sytas, writing by Aleks Tapinsh; editing by Ron Askew)