The State’s Debt Acceptance Criteria Identification and Evaluation of Their Acceptability in Lithuania

Abstract

Debating the introduction of euro in Lithuania, the media and scientific literature have been analysing the rates of economic convergence. This article analyses the stability of the state’s financial situation, questions the scientists’ attitude towards the state’s debt and presents the acceptability criteria of the state’s debt. The correspondence of financial situation’s stability indicators to acceptance criteria does not get enough attention in scientific works. The aim of this article is to explore the limits of Lithuanian borrowing, using the established criteria for the assessment of state’s debt. The evaluation has revealed that the stability indicators of Lithuanian financial situation often do not correspond to the approved criteria. With the use of mathematical modelling, this article calculates the amount of acceptable state’s debt during the selected period.