Minister Kreivys: Lithuania to emerge as knowledge economy

After a year of steep decline, the outlook is good in the Lithuanian economy. The country’s Minister of Economy Dainius Kreivys is optimistic. The NIB Newsletter used an opportunity to meet Mr Kreivys when he visited NIB in mid-October to participate in a Finnish-Lithuanian investors forum.

The Lithuanian economy was among those in Europe that received the toughest blow during the crisis. In 2009, the country’s gross domestic product plunged by 14.8%. The deficit of the state budget soared to 8% of GDP. The cuts in budget spending amounted to 12% of GDP over two years.

– How is Lithuania coping with the current recession? What is the overall picture?

“This year is much better and the outlook is good. The recovery has been primarily driven by export industries. If we compare our economy with a plane, we are still flying with just one engine. Since internal consumption is also taking off, the hope is high that we’ll be flying at full capacity in about a year’s time.”

– What do you see as the principal lessons of the crisis?

“First of all, the crisis has taught us to be fiscally prudent. Those countries that had fiscal surplus were better prepared to face the crisis. Another issue is the management of the incoming liquidity and regulating the financial market with the national currency pegged to euro. Everyone has learned from the crisis-the market, the state and the society, which, thanks to an intense debate in the media, is better educated to see the country’s economic policies as part of a bigger picture.”

– What does Lithuania gain from international initiatives, such as the EU Baltic Sea Strategy? Is it a tool for dealing with the crisis?

“For Lithuania, this is a chance to reposition ourselves in the international competition, to shift from a labour-intensive economy to a knowledge economy. We are cooperating with our neighbours in the Baltic Sea region and using EU funds for building knowledge infrastructure, clusters around the universities in the countries three main cities. The target we are pursuing is to become a Nordic-Baltic innovation hub by 2020 with the main focus on services within ICT, education, medicine, transport and logistics. This will create a productive environment for innovations.”

– How do you see NIB’s role in strengthening Lithuania’s competitiveness?

“NIB is the first regional organisation for all eight Nordic and Baltic countries. It really shows how closely we are working together to achieve targets in developing clean energy and innovations. A key issue for us is to diversify the supply of energy and move from using fossil fuels to producing energy from renewable sources. NIB is a very natural tool to finance development in these areas.”