Negative interbank interest rates are making life easier for Lithuanian borrowers, both consumers and businesses, but Lithuania’s financial experts are worried that it may create another financial crisis and could be sign of a coming economic downturn.
© DELFI / Kiril Čachovskij

The Bank of Lithuania calculated that the due to the negative EURIBOR rates, Lithuanian consumers and companies last year saved more than €15 million on interest. However, the Central Bank’s experts are not so inclined to cheer as they warn that negative interest rates are a consequence of a weakened economy and could again can lead to a financial crisis.

“Every resident who has a €50,000 loan saves €100 per month. However, low interest rates represent a difficult period for the economy,” said Marius Dubnikovas, a representative of the Lithuanian Confederation of Business.

Marius Jansonas, the president of the Finance and Credit Management Association, said that low interest rates warn of a possible second crisis: “Everyone is talking about the second crisis, I agree with that - it is not normal that the interest rates are negative.”

Chairman of the Bank of Lithuania Vitas Vasiliauskas said that “160,000 residents have taken loans associated with floating interest rates, linking to a 3 or 6 months EURIBOR rate.” More than 40,000 companies are also tied to variable rate loans.

Analysts predict that the European Central Bank will raise interest rates as early as the second half of next year.


Skusevicius appointed ambassador to Canada

Lithuanian President Gitanas Nauseda on Thursday appointed Deputy Foreign Minister Darius Skusevicius...

MPs reject President Nauseda's second veto

The Lithuanian parliament overrode on Thursday a presidential veto on its decision to add two road...

Ambassadors to NATO and Russia recalled

President Gitanas Nauseda recalled on Wednesday Lithuania's ambassadors to Russia, NATO and UNESCO...

European greens: Sinkevicius not our candidate but has good ideas

Lithuanian's European commissioner -designate Virginijus Sinkevicius is not their candidate but he...

Zemaitaitis ousted as vice-speaker of parliament

Remigijus Zemaitaitis , the Order and Justice party's leader, has been ousted as vice-speaker of...