Monday February 22, 2010 02:49:10 AM GMT
VILNIUS, Feb 22 (Reuters) - Lithuania's government backed a new medium-term budget plan on Monday and said adopting the euro in 2014 was possible if it met the targets, the Finance Ministry said.
Lithuania, which saw its economy fall 15 percent last year, wants to get its public sector budget deficit under 3 percent of gross domestic product (GDP) by 2012 from an expected 8.1 percent in 2010.
"With all the measures to meet the convergence criteria being implemented, 2014 would be a realistic date to adopt the euro," the ministry said in a statement. However, a formal euro adoption date was not set in the plan.
Public debt, as calculated under European Union rules, is expected to stand at 36.6 percent of GDP in 2010, down from a previously expected 40 percent. It would be 39.8 percent in 2011 and 41 percent in 2012 -- all below the EU's 60 percent ceiling, the ministry added in a statement.
The government recently revised its deficit forecast for this year from 9.5 percent of GDP due to better growth forecasts based on a faster recovery in exports and EU *.
The government confirmed in the convergence programme that it expected the economy to grow 1.6 percent this year, more than the 0.5 percent growth forecast from the central bank. GDP is expected to grow 3.2 percent in 2011 and 1.2 percent in 2012.
Inflation, which prevented Lithuania from adopting the euro in 2007, is expected to be at 1.5 percent in 2012, and should not be a problem, the ministry said. (Reporting by Nerijus Adomaitis; editing by Stephen Nisbet)