The Maastricht Treaty sets the following convergence (or Maastricht) criteria to EU Member States, also to Lithuania, aiming to adopt the euro.

No less than every two years or upon request of a Member State who has been granted an exemption regarding adoption of the euro upon joining the EU, the European Commission (EC) and the European Central Bank (ECB) prepare convergence reports and present them to the EU Council. 

The European Commission, after consultations with the European Parliament (EP) and discussion in the European Summit, may propose to the EU Council to decide whether a country meets the criteria to introduce the euro.

The main Maastricht criteria:

● Price stability. A Member State’s inflation rate must not exceed the average of the three Member States who have achieved the best results by more than 1.5 percentage points.

● Public finance:

-  government deficit must be less than 3 percent of GDP;

- government debt must be less than 60 percent of GDP or approaching this level at a satisfactory rate.

However, during the evaluation of how the criteria are being met, factors such as earlier progress in shrinking budget misbalance and (or) extraordinary or temporary factors that affect budget balance, are taken into account.  Also, it is expected that member states, whose national debt and GDP ratio is bigger than 60 percent, will bring it down to the par level sufficiently quickly.

● Exchange rate. A Member State must participate in the second Exchange Rate Mechanism (ERM II) for at least two years and maintain the exchange rate of its currency stable against the euro. Whether this criterion is being met is first evaluated on the basis of whether the currency rate is similar to the set euro exchange rate, as well as factors that could have affected a larger exchange rate. This is supported by the fact that in August of 1993, the ERM fluctuation rates were increased from ±2,25 to ±15 percent, and the meaning of the ERM fluctuation rates became less clear. Also, on 1 January 1999, the third stage of Economic and Monetary Union (EMU) the old exchange rate mechanism was replaced with the new exchange rate mechanism, where participating currencies‘ standard main exchange rates vis-à-vis the euro are set at ±15 percent.

● Interest rates. The nominal long-term interest rate must not exceed the average of the three Member States who have achieved the best results in terms of price stability by more than 2 percentage points. When they wish to borrow money, Governments issue long-term bonds that pay interest. If investors lack confidence in the economic potential, or inflation is high, they will demand higher interest rates – the rewards for higher risk. Thus, the Government securities long-term interest rate is one of the main indicators of a country’s economic reliability, and for new EU members’ – an indicator of progress in real convergence.

Lithuania and the Maastricht criteria

Convergence Indicators 2006

Convergence Indicators 2007