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Lithuania in downturn: Before, during, after Prime Minister Andrius Kubilius No vember 13, 2009

Lithuania in downturn: Before, during, after Prime Minister Andrius Kubilius No vember 13, 2009. The reasons of downturn. Volume of export of goods and services (2007Q1=100, seasonaly adjusted),2005Q1-2009Q2. The consequences of downturn: stability at the level of 2006.

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Lithuania in downturn: Before, during, after Prime Minister Andrius Kubilius No vember 13, 2009

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  1. Lithuania in downturn: Before, during, after Prime Minister Andrius Kubilius November 13, 2009

  2. The reasons of downturn

  3. Volume of export of goods and services (2007Q1=100, seasonaly adjusted),2005Q1-2009Q2

  4. The consequences of downturn: stability at the level of 2006

  5. Changes in LT, LV, EE GDP

  6. Changes in GERMANY GDP

  7. After the downturn: signs of optimism

  8. Changes in LITHUANIAN GDP compared with the PREVIOUS QTR

  9. After the downturn: Fiscal challenges

  10. Crisis of a double nature 危机 危险 机遇 The Chinese use two brush strokes to write the word CRISIS. One brush stroke stands for danger; the other for Opportunity. In a crisis, be aware of the danger – but recognize the Opportunity. John F. Kennedy

  11. Government’s action plan – Challenging the Crisis Fiscal consolidation package Economic stimulus plan National agreement

  12. Fiscal consolidation package • Fiscal consolidation worth 8% of GDP – 2009 +5% of GDP – 2010 • Comprehensive tax reform: • Value Added Tax, Excise Duty, Personal Income Tax, Profit Tax • Substantial cuts in budgetary expenditure: • Public sector wages • Social benefits • General public expenditures

  13. Getting back to the track The Lithuanian Government has taken the absolutely right steps and measures to fight the recession. European Commission, November 2009 The Economy encouragement plan which is being implemented in Lithuania is very good. I think it has very good prospects. European Industry Commissioner Mr. Guenther Verheugen, September 2009, Vilnius Lithuania‘s economic stimulus package is one of the best in Central and Eastern Europe. Erik Berglof, Chief Economist of the European Bank for Reconstruction and Development

  14. Economic stimulus package Stimulus package worth 5% of GDP Credits for businesses: - Small credits - Open credit fund - Credits for SMEs - State guarantees for loans - Partial compensation of loan interest - Risk capital fund and business angels fund Export promotion and export credit insurance Renovation (public buildings and apartment blocs) Absorption of EU support Addressing the “red tape”

  15. Economic stimulus through EU structural funds

  16. National agreement • Signed on October 29, 2009 • Signatories representing more than 350,000 individuals and 5,500 companies agreed to the plan of fiscal discipline and economic stimulus • Parties agreed: - to bring the fiscal deficit back below the euro-adoption limit of 3% of GDP as soon as possible and prevent an excessive build-up of public debt - to reduce civil servant wages by an average of 10% and streamline or eliminate many state institutions - to reduce pensions and maternity benefits - to increase the social security tax by 2% - to reduce the corporate profit tax from 20% to 15% - to launch a large-scale, high-value public-private partnership to build and renovate public buildings and infrastructure throughout Lithuania and thereby to create or maintain more than 30,000 jobs - to simplify and shorten administrative procedures for companies to get EU structural funds and construction permits - to offer low-interest loans for start-up companies, and to initiate public projects to employ workers from distressed companies

  17. Speedily recovering economy2009q3/Q2 – HIGHEST IN EU 2007 2008

  18. BACK TO THE FUTURE

  19. Global Information Technology Leadership • World’s 4th best-quality Internet • World’s fastest upload Internet Global leadership in mobile telephone subscribers per 100 population and Europe’s 2nd greatest mobile penetration • Sources: www.speedtest.net; Study by University of Oxford (England) andUniversity of Oviedo (Spain), 2009; European Commission

  20. Talent pool Among most multilingual Europeans (foreign language studies in 2008) Professionals of diverse specializations (Most popular BA studies) 40% of population with universityeducation – one of the best-educated humanresources in the world 90% of Lithuanians speak at least one foreign language and every second speaks two foreign languages (mainly Russian,Polishand/or English) 22 universities and 28 colleges

  21. Competitive operational costs Highly competitive wages (average monthly gross wages, EUR, 1st Q 2009) Low electricity cost for industries (EUR cnt per kWh when 2000 MWh/year are consumed) Office space among the cheapest in EU (rent rate EUR psqf pa) Competitive fuel prices (diesel, EUR liter incl. taxes) Source: The Global Competitiveness Report 2009-2010 by World Economic Forum; ww.resolution.lt; www.energy.eu

  22. Doing business 2010 Lithuania rated 26th among 183 countries Objective to be in top 10 next year Homework already being done: - Decrease the number of procedures to start a business from 7 to 4 - Decrease the period of time necessary to start a business from 26 to 11 days - Improvement of the necessary planning procedures for development - Decrease costs of business registration - Ease and simplify payment of taxes and business regulation procedures

  23. Special incentives for investors The best thing about investing in Lithuaniaisthat Lithuania is truly interested inattracting foreign investment, and a widerange of special incentives and state’ssupport are offered for a foreign businessentering the market. Hernández Vergara,CIE LT Forge *Dividends paid or received are not taxed when an investor controls at least 10% of voting shares in the enterprise for the period of at least 12 months.

  24. Strategic investment projects: nuclear power plant Project objective: new nuclear power plant constructionand infrastructure development Project duration: to launch the new plant in 2018-2020 and to operate it for next 60 years Project value: EUR 3-5 bn; largest greenfield investment in the country International participation: Latvia, Estonia, Poland

  25. Strategic investment projects: liquid gas terminal Project objective: liquid gas terminal construction Project duration: 2012-2018 Project value: EUR 620-670 M

  26. Strategic investment projects: outer seaport construction Project objective: Klaipėda outer seaport development Project duration: 2012-2018 Project value: EUR 600 M

  27. Strategic investment projects: Rail Baltica & Via Baltica Project objective: Rail Baltica railway line construction; Via Baltica road line reconstruction Project duration: till 2014-2015 Project value: EUR 269 M; EUR 145 M

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