“Especially now, when there are so many opportunities to invest in national defense, energy infrastructure and the same industry. Bearing in mind that Lithuania’s GDP-to-debt ratio is 40%, while Europe’s is 100%, while Estonia’s is 20%, we could borrow much more,” said N during the general assembly of the Vilnius Chamber of Commerce, Industry and Crafts. Stepfather.
“At this stage, the state should make use of countercyclical fiscal policy,” he added.
According to a Swedbank economist, excessive concern about the size of the debt may contribute to the economic recession. In his opinion, in 2009-2010 the crisis showed that borrowing and investing during a slowdown is a good solution.
“One of the reasons why Estonia is in the third year of economic recession is that it has the lowest debt in the European Union,” he claimed.
“We have seen such mistakes in 2009-2010. during the crisis. And it seems to me that many states have learned – when there is a recession, the economic sector does not grow, there are problems, the state borrows and invests,” he commented.
N. Mačiulis emphasized that about half of the European Union (EU) countries do not comply with the Maastricht criteria, which limit the debt to 3%. from GDP.
“Of course, there are valid rules of fiscal discipline. But half of the states do not follow them. I think they should be treated with respect, but not as a sacred thing,” he said.
Further growth of Lithuania will be much more complicated
N. Mačiulis also mentioned that although Lithuania’s GDP per capita reached 90%. Further growth of the EU average, given the price differentials, will be difficult.
“We also surpassed some of the old EU countries and all the neighbors. Further progress will be much more complicated”, said N. Mačiulis
“For example, in Slovenia 20 years ago GDP per capita was 90%. for the EU average. Today it’s the same 90%, no progress,” he explained.
The economist explained that Lithuania’s growth since 2004 due to EU support, cheap labor and easy imports of more advanced technology. However, after Lithuania catches up with Western countries, the potential for this is much lower.
“The last 20 years have been very successful. But looking at the next 5-10 years, I would be cautious about the growth potential. It is drained in most cases,” he commented.
“All the low hanging fruit has been picked. Those that hang higher are harder to reach. And so far, I see a little less effort to achieve them,” he said.
