Vilnius  - The economy in EU member state Lithuania will shrink by more than 18 per cent in 2009, according to an official estimate released Wednesday.

Finance Ministry figures predicted a fall of 18.2 per cent of gross domestic product (GDP) for the year as a whole, with a further contraction of 4.3 per cent in 2010 before growth returns in 2011.

The previous Finance Ministry prognosis was for a 10 per cent fall in 2009, while the Lithuanian central bank is currently predicting a 15 per cent drop.

Finance Minister Algirdas Semeta, who is being tipped to replace president-elect Dalia Grybauskaite as Lithuania's EU Commissioner, said the downbeat assessment should re-focus the country's efforts on replacing the national currency, the lita, with the euro as soon as possible.

"We are assessing the macroeconomic situation from a long-term perspective... with the aim of achieving compliance with the Maastricht criteria in the medium term," he told reporters.

Against the backdrop of the downbeat forecast, the government of Prime Minister Andrius Kubilius continued to plan a series of austerity measures Wednesday to balance the books and keep Lithuania's budget deficit within the 3 per cent limit demanded by the Maastricht criteria.

Kubilius said that if the government did not take additional measures, the budget deficit would reach 8 per cent of GDP.

Those additional measures will include raising Value Added Tax from 19 per cent to 21 per cent, wage cuts for public sector employees and new restrictions on social benefits.

Only last month the Lithuanian parliament passed a revised budget to save 3 billion litas (1.2 billion dollars), but the government is already planning further measures to save another 1 billion litas.

Lithuania is the largest of the Baltic states, with an economy larger than those of Latvia and Estonia combined, but just like its neighbours it has been hard-hit by the global credit crunch.

On Tuesday the Latvian parliament agreed to slash around 1 billion dollars from public spending and the Estonian government is also drawing up controversial public spending cuts as all three states wean themselves off the credit boom that came to an abrupt end last year.(dpa)