Lithuania's main centre-right party agreed on Monday to talks with three other parties on forming a coalition to combat a financial crisis after winning an election without securing a parliamentary majority. The Homeland Union-Christian Democrat Party won 44 seats in the 141-seat parliament in a second round of voting on Sunday that ended seven years of Social Democrat rule in the former Soviet republic, which is now in the European Union and Nato.
The outcome showed voters' concerns over double-digit inflation and fears that the global credit crunch and financial crisis could hit growth and jobs in the Baltic country of 3.36 million people. The economy, including adopting the euro currency despite a slowing economy, is the main challenge facing the next government. But it is also likely to face a delicate balancing act in relations with Russia, an important energy supplier. "Soon we are going to work out a plan on how to cope with the challenges of the looming economic and financial crisis," Andrius Kubilius, the Homeland Union-Christian Democrat Party's leader, told a news conference.
He spoke after he and three other leaders signed an agreement to launch coalition talks and draw up a government programme. His partners in the negotiations will be the National Resurrection Party, which was formed by a TV talent show host a few months ago, and two smaller liberal groups, the Liberal Movement and the Liberal and Centre Union. The four parties have a combined total of 79 seats in the parliament.
The centre-left Social Democrats, in power since 2001, were second in the election and will have 26 seats in parliament. Prime Minister Gediminas Kirkilas, the leader of the Social Democrats, said the best government would be a "rainbow coalition" with Kubilius' party but its traditional rivals have ruled that out. Kubilius said his party wanted the posts of finance minister, economy, defence and foreign affairs.
He has said he would soften the blow of the economic slowdown by reducing personal income tax, and also closing other tax loopholes so that budget revenues do not suffer too much. Gross domestic product growth slowed to 3.1 percent in the third quarter, data showed on Monday, down from 5.2 percent in the previous three months. Economists expect the pace of the slowdown to pick up.
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