Why do Lithuanian entrepreneurs live much better than entrepreneurs from other European countries? Because we are a country run by mafia-like nets of relatives...

"Borrowing is also becoming more expensive for the residents of Lithuania. According to the Bank of Lithuania, the interest rates of new agreements of credit institutions' loans to households increased by 0.06 percentage points - up to 6.6% in June alone. In the euro zone, Lithuanian residents have the most expensive housing loans from countries that use the common European currency.

 

When asked by Verslo Žinios about the situation, Šiaulių bankas specialists say that the main reason for the price difference is that the loan portfolio in Lithuania and the Baltic states "consists of almost 100% of loans with a variable interest rate".

 

"I think that the main reason is related to the peculiarities of the Lithuanian housing and loan market," says economist Aleksandras Izgorodin. - For example, last year in Lithuania, 88% of all new loans to companies and residents were issued at variable interest rates, which automatically means that our loan market, both in terms of business lending and housing lending, is quite sensitive to the growth of those base rates."

 

For example, in France last year only 34% of all new loans were issued at variable interest rates. According to the economist, it probably shows that the state is trying to fix those interest rates in one way or another, or at least compensate companies and people.

 

"I'm so cautiously guessing that there are some state mechanisms, like state grants for young families or something like that, that limit that interest." And in Lithuania, in this sense, we have a completely market economy", the economist thinks.

 

However, in VŽ's opinion, there is really one extremely weak place where the politicians who come to power could, can and should work on it, which is to increase competition in the banking sector in order to reduce the dominance and dictates of the existing ones. More than one government has verbally "brought" foreign banks to Lithuania - it seemed that soon we will have at least Polish banks here, maybe that is even further away now.

 

We have a flop, the wagon full of populist promises is still standing still. What was missing? Determination, competence, and maybe "plans" were blown away by much more active lobbyists fighting for "their" territory...

 

C3P0 commented:

 

Exactly the same article can be written about food products in Lithuania, household chemical products in Lithuania, toys in Lithuania. The only difference with the banking sector is that bank interest rates in LT are higher within the limits of statistical error, and food products are sold by a relatively large number of sellers, but this does not help food prices to be low, on the contrary, they are higher than e.g. in Poland up to 2 times, i.e. not 0.8 percent, but 200 percent. Household chemicals are 3-5 times more expensive than in Poland or Germany, i.e. 300-500 percent. Toys are up to 50% more expensive. So what's with that competition in Lithuania? What? Are we only going to "grate" the banks and keep quiet about everything else?"