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UPDATE 1-Lithuania votes to up IMF quota, not seeking loan

Published 04/08/2009, 12:16 PM
Updated 04/08/2009, 12:24 PM

(Adds opposition call to seek loan)

VILNIUS, April 8 (Reuters) - Lithuania's government decided on Wednesday to raise its quota at the IMF but said it had no plans at present to seek a loan from the fund.

However, the main opposition Social Democrat party, which lost office in December after losing October elections, urged the centre-right coalition to talk to the IMF about a loan -- an idea which also found favour with the finance minister's wife.

The government proposed a bill to parliament to raise the quota at the IMF to 183.9 million Special Drawing Rights (SDRs) from 144.2 million SDRs, the first rise since 1999, when Lithuania sought assistance during Russia's financial crisis.

Prime Minister Andrius Kubilius stuck to statements that approaching the International Monetary Fund (IMF) was not excluded, but no talks were taking place.

"We are having no negotiations with the IMF... and we have no plans to do so at the moment," he told journalists after meeting the prime minister of neighbouring Latvia, who last year agreed a 7.5 billion euro bailout led by the IMF.

The government said the decision on the quota was related to previous proposals by the Fund for some members, including the Balts, to up quotas to reflect better their economic weight.

Each member of the IMF is assigned a quota, based broadly on its relative size in the world economy and determining its maximum financial commitment to the IMF and its voting power, as well as providing a basis for its access to IMF financing.

The Social Democrat parliamentary faction called on the government to start negotiations.

"By taking a loan from the IMF, we could live through these economic hardships more easily, we would prevent companies from collapsing, retain jobs and guarantee at least minimal wages," the parliament group said in a statement.

But in a good sign for finances, the finance ministry said it had already raised 2.5 billion litas ($959 million) in debt since the beginning of the year, including 1.1 billion in March.

Recession has led to plunging budget receipts in Lithuania and the government is planning to slash spending this year.

An opinion piece by the wife of the finance minister added to speculation of an IMF bailout. Ramune Sotvariene, a columnist for a leading daily, said it would be inevitable "sooner or later".

Finance Minister Algirdas Semeta denied leaking any secrets.

"My wife is a journalist and she is free to speculate," he said, adding the couple kept their professional and personal lives separate. "Wives are important in life, but the government's decision will not depend on them," Kubilius said. (Reporting by Nerijus Adomaitis; editing by Stephen Nisbet)

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