LONDON, Nov 25 (Reuters) - Lithuania plans to return to its pre-financial crisis practice of issuing international debt with a possible Eurobond sale in the first quarter of 2010, said the country's finance minister on Wednesday.
"2008 was a one-year exception (when Lithuania did not issue debt) because of the U.S. mortgage crisis in spring and (the collapse of) Lehman Brothers in autumn. I think we will come back to the usual practice next year," Ingrida Simonyte told Reuters in an interview in London. Prior to the financial crisis, the Baltic economy routinely tapped global capital markets twice a year at those two periods, she said.
Lithuania raised $1.5 billion in a global dollar-denominated bond sale in October.
"We are not thinking yet of precisely the currencies or markets. It will depend on the strategy we will elaborate in 2010. We will have a tender first," said Simonyte, in London for three days to meet investors.
She said the government's gross borrowing plans in 2010 amounted to 13 billion litas ($5.7 billion) and that two-thirds of this amount likely to come from abroad.
Foreign financing sources would include multilateral agencies such as the European Investment Bank, not just international capital markets, she added.
Lithuania's coalition government is struggling to balance the budget as state revenues have fallen and demand for social payments have soared in line with unemployment amid the country's deepest recession since the early 1990s.
"In 2010, we envisage a natural decline in revenues and an increase in expenditure," she said.
But Simonyte said she was confident the 2010 budget would be passed next month with the required social spending cuts to keep the deficit below this year's 9.5 percent.
"At the moment, it's not a discussion on whether to do something to reduce the deficit but a discussion on how to achieve it," she said.
Unlike neighbouring Latvia which has taken a 7.5-billion euro rescue packaged led by the International Monetary Fund and the European Union, Lithuania has said it is capable of coping with the downturn without multilateral financing.
The finance ministry has forecast a 4.3-percent economic contraction next year.
Simonyte said this figure included the impact of the closure of the aging Ignalina nuclear power plant at the end of this year, which generates over 70 percent of the country's electricity.
But she added that existing estimates were reached using gas prices that were higher than they are now.
"The impact will be lower than forecast," she said.
(Reporting by Sebastian Tong; Editing by Ron Askew) ((sebastian.tong@thomsonreuters.com; +44 20 7542 8561; Reuters Messaging: sebastian.tong.reuters.com@reuters.net)) ($1=2.294 Lithuanian Litas)