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IMF urges Lithuania to boost revenues after cuts

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(Globalpost/GlobalPost)

Lithuania must boost revenue and investment to safeguard its solid recovery after a biting austerity drive which helped it to overcome recession, the International Monetary Fund said Monday.

"Lithuania's revenue-to-GDP ratio is the lowest in the European Union and we think that there is scope to shift the adjustment more to the revenue side," Julie Kozack, head of the IMF monitoring mission to Vilnius, told journalists there Monday.

The eurozone-keen Baltic state made "significant progress" since it saw output sink by 14.8 percent in 2009 amid the global financial crisis, and growth is to continue in 2013 for a fourth year in a row, Kozak added.

Noting that spending cuts made up most of Lithuania's fiscal consolidation, the IMF on Monday recommended higher taxes on real estate and motor vehicles, and improve tax collection in order to boost income.

Future economic growth "will depend critically on boosting investment" in the nation of three million, it said, adding that cutting red-tape would be a key pre-requisite.

A series of biting austerity measures imposed after the 2009 nosedive saw output grow by 1.5 percent in 2010, followed by 6.0 percent in 2011 and 3.4 percent in 2012.

Austerity weary-voters ousted the centre-right government responsible for the cuts, bringing Social Democrats who pledged growth into power in October's general election.

Leftist Prime Minister Algirdas Butkevicius has nonetheless vowed fiscal prudence in order to meet his goal of euro adoption in 2015.

vab-mas/rl

http://www.globalpost.com/dispatch/news/afp/130211/imf-urges-lithuania-boost-revenues-after-cuts