…AND SOME BIG FISCAL QUESTIONS IN 2000.

The 2000 budget, which was approved by the Lithuanian parliament on December 23, promises to bring the consolidated fiscal deficit including the SODRA balance down to 2.8 percent of GDP, from above 9.0 percent in 1999. This would meet a key condition set by the International Monetary Fund (IMF), which in mid-December announced the formalization of an US$80 million standby agreement for Lithuania in 2000. This preliminary agreement also set the stage for release of a US$ 100 million World Bank structural adjustment loan later this year. Lithuania’s foreign exchange reserves are seen as adequate for now, and government officials claim that they will not need to tap the IMF funds. But given the country’s shrinking economy and shaky finances, the IMF and World Bank loans could play a critical role in financing Lithuania’s still-large current account deficit in 2000. The release of these funds is predicated on the dramatic reductions in Lithuania’s budget deficit. If these reductions don’t materialize, Vilnius could find its recession and fiscal problems lasting well into 2000.

KOCHARIAN LOSING MORE GROUND IN POWER STRUGGLE.