S&P drops Lithuania outlook to stable

Standard & Poor's said it revised its outlook on the Republic of Lithuania to stable from positive on delayed EMU membership prospects.

At the same time, the A long-term and A-1 short-term sovereign credit ratings on Lithuania were affirmed, the agency said.

The outlook revision reflects the expectation that Lithuania's accession to the EMU is unlikely to occur before 2008, after the European Commission's decision on strict application of Maastricht Criteria, S&P noted.

Without early EMU membership, the potential negative economic effects of balance-of-payments pressures and the country's sizable net external liability position remain a major constraining factor on the ratings, the agency said.

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