Lithuania's authorities should postpone plans for a minimum wage hike after the central bank on Friday cut its GDP growth forecast for this year, a senior expert at the Lithuanian Free Market Institute (LLRI) said.
Vytautas Žukauskas
© DELFI / Tomas Vinickas

"There has been much talk lately about raising the minimum monthly salary. This is a wage hike at a time when the outlook for the Lithuanian economy is unclear. Growth is still in forecast, but we do not know how things will be in half a year. The political situation in the East is quite threatening and we are exporting a lot to that area," Vytautas Žukauskas said.

Raising the minimum wage is a political issue that would place an additional burden on privately-owned businesses amid a worsening of the economic situation in the country, he said.

The central Bank of Lithuania on Friday revised its GDP growth forecast for this year down to 2.7 percent, from 3.1 percent projected in December. This downward revision, which is not the first one, signals that the country's economic situation is deteriorating, Žukauskas said.

Given the weakening economic outlook, it is obvious that the government will fail to achieve its target of 8 percent growth in VAT revenue, the largest single source of budget revenue, he said.

BNS
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