VILNIUS, July 3 (Reuters) - Lithuanian Deputy Finance Minister Ingrida Simonyte was appointed new finance minister of the crisis-hit country on Friday and said she backed austerity plans to keep a lid on the budget deficit.
She was appointed by President Valdas Adamkus on the same day the government approved a wage cut of 15 percent for the prime minister, ministers and parliament members and a 24.5 percent salary reduction for the highest earning civil servants.
The wage cuts are part of measures Simonyte, 35 and with 12-1/2 years of work in the Finance Ministry under her belt, will have to follow through as Lithuania faces a possible 2009 economic drop of 18 percent, similar to neighbouring Latvia.
'There is a big and growing deficit and we have to cut this deficit,' Simonyte, who will replace Finance Minister Algirdas Semeta, told Reuters by telephone.
'At the current time every country in the Baltics has to follow strict budget discipline,' she said.
The government wage cut decision is part of this budget discpline, though Prime Minister Andrius Kubilius said in a statement that there would be no need to return to the question of salaries until the end of 2010.
Lithuania's measures are similar to those in Latvia, which last year had to take a 7.5 billion euro rescue from the European Union and International Monetary Fund.
Simonyte reiterated earlier government statements that Lithuania did not need IMF help but that it did not see seeking help as taboo.
'This year, taking into account measures which have been proposed by the government, I think it (the budget deficit) will be 7 or 8 percent (of gross domestic product),' she said.
'Next year it would be 10 percent if we do not do some further measures, but these further measures will be proposed.'
She said the measures, including public sector salary cuts and a floated idea of pension cuts, were similar to Latvia because the situation was similar: the need to cut spending and restore competitiveness under a fixed exchange rate regime.
'We need an internal devaluation through wages and deflation of prices,' she said. The currency board peg of the litas to the euro remained an anchor of the economy,' she said.
'Economically in the current situation there are no very clear advantages in getting rid of the currency board, none at all,' she said.
Simonyte had been widely tipped to replace Semeta, who has been appointed as Lithuania's representative at the European Commission after the current representative, Dalia Grybauskaite, won election as Lithuanian president.
Grybauskaite takes over from Adamkus later this month.
(Editing by Mike Peacock/Toby Chopra) Keywords: LITHUANIA MINISTER/ (via Riga newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +371 29 269 191) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
She was appointed by President Valdas Adamkus on the same day the government approved a wage cut of 15 percent for the prime minister, ministers and parliament members and a 24.5 percent salary reduction for the highest earning civil servants.
The wage cuts are part of measures Simonyte, 35 and with 12-1/2 years of work in the Finance Ministry under her belt, will have to follow through as Lithuania faces a possible 2009 economic drop of 18 percent, similar to neighbouring Latvia.
'There is a big and growing deficit and we have to cut this deficit,' Simonyte, who will replace Finance Minister Algirdas Semeta, told Reuters by telephone.
'At the current time every country in the Baltics has to follow strict budget discipline,' she said.
The government wage cut decision is part of this budget discpline, though Prime Minister Andrius Kubilius said in a statement that there would be no need to return to the question of salaries until the end of 2010.
Lithuania's measures are similar to those in Latvia, which last year had to take a 7.5 billion euro rescue from the European Union and International Monetary Fund.
Simonyte reiterated earlier government statements that Lithuania did not need IMF help but that it did not see seeking help as taboo.
'This year, taking into account measures which have been proposed by the government, I think it (the budget deficit) will be 7 or 8 percent (of gross domestic product),' she said.
'Next year it would be 10 percent if we do not do some further measures, but these further measures will be proposed.'
She said the measures, including public sector salary cuts and a floated idea of pension cuts, were similar to Latvia because the situation was similar: the need to cut spending and restore competitiveness under a fixed exchange rate regime.
'We need an internal devaluation through wages and deflation of prices,' she said. The currency board peg of the litas to the euro remained an anchor of the economy,' she said.
'Economically in the current situation there are no very clear advantages in getting rid of the currency board, none at all,' she said.
Simonyte had been widely tipped to replace Semeta, who has been appointed as Lithuania's representative at the European Commission after the current representative, Dalia Grybauskaite, won election as Lithuanian president.
Grybauskaite takes over from Adamkus later this month.
(Editing by Mike Peacock/Toby Chopra) Keywords: LITHUANIA MINISTER/ (via Riga newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +371 29 269 191) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.