Dropping The Policy Anchor

According to a statement by Lithuania's Finance Ministry in late February, the government of Prime Minister Andrius Kubilius is planning on setting a firm target date for eurozone entry of 2014. Though Lithuania's relatively benign levels of public debt (as a percentage of GDP) and consumer price inflation should be sufficiently low to allow for the adoption of the common currency by the end of our five-year forecast period, the country's bloated budget deficit remains a key concern.

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