Next year’s budget is already under the scalpel of the new government: it does not cut the DNA plan, but there will be less optimism

The representatives of the Liberal Movement Simonas Gentvilas and the financial analyst Marius Dubnikovas, the Freedom Party Aušrinė Armonaitė and Kasparas Adomaitis and the Christian Democrats of the National-Lithuanian Union I. Šimonytė and Mykolas Majauskas work in the informal group formed by the parties that they formed the coalition.

“This is a group that is reviewing the entire budget project, the main investments,” said Gentville, candidate for environment minister.

M. Majauskas, president-elect of the Budget and Finance Committee of the Seimas, said that the group intends to present its recommendations and points of view to the Government, which will improve the budget proposal.

BFK member Vytautas Mitalas added that the Freedom Party would like to first review some of the measures in the DNA plan.

Will return to government

The 2016-2020 mandate committees’ findings on the draft budget, containing proposals for approximately LTL 632 million, should be considered at Tuesday’s Seimas session. euros. The project will then be returned to the new government.

The next reading of the project is scheduled for December 17. It should be adopted shortly thereafter.

According to the project, in 2021 it is expected to raise 11.38 billion in the state budget. 150 million euros of income. EUR or 1.26%. less than planned this year. Spending next year is estimated to be $ 15.49 billion. 271 million euros. EUR or 21.22%. more than planned this year.

The budget deficit in 2021 could reach 4.11 billion. and be equal to 5%. gross domestic product. However, after evaluating the project, the Bank of Lithuania and the National Audit Office noted that the deficit could be larger next year.

M. Majauskas also said that the presented project does not reflect the real situation.

“Without a doubt, this was stated by both the State Audit Office and the Bank of Lithuania, saying that the real budget deficit will definitely be higher. The State Audit Office spoke about 1% and the Bank of Lithuania, about of an additional 2%.

There are specific reasons for this. First of all, part of the investment may have to be financed from the budget and not from European money. Second, estimated costs are not required to amortize the damage suffered by employers and employees as a result of the pandemic. Third, we also need to look at the nuances of income. For example, a company can take the opportunity to extend the tax-deferred refund due to a pandemic for one more year, ”he said.

The fact that the draft prepared is very optimistic, said S. Gentvilas.

“It just came to our notice then. The outgoing minister, Vilius Šapoka, also said that the money for business is planned for December. So if the quarantine is extended, we will not be able to compensate the business and it will be a big challenge,” he said.

Name the danger

S. Gentvilas taught that the Liberal Movement sees next year’s budget as the most dangerous due to the DNA plan.

As you know, the long-term investment economic development plan prepared by the Ministry of Finance, called “DNA of the economy of the future”, foresees a total of 6,300 million. euros. New investments are expected to amount to 2,200 million. EUR 4.1 billion has already been accelerated and already planned investments have been accelerated. euros. As of November 20, the plan had 71 approved projects.

“First, because the amount of money is so large, the state can get stuck with the administration. There will not be as many staff, since the State used to invest about a billion euros a year, and now the flow will suddenly double or triple.

The second danger is that Lithuania can receive and compensate a lot from the Recovery Fund, but the money must be allocated to specific areas and projects. T. and. climate change, environment and digitization, and we are seeing a number of projects that may not meet the criteria and it may become clear in the spring that they will need to be covered by Lithuanian taxpayers’ money.

The third thing is that investments are focused on the public sector. As a result, there has been criticism from the private sector, targeting waste managers, recyclers who do not ‘start’, who need subsidies, such as tire recycling, etc.

Finally, there is another danger: many incentives for construction and “concrete”, and when there were not many years in the investment sector, now suddenly a large flow of orders, inflation can consume money and the same amount of money will be made. work, “Gentvilas said.

For her part, Mitalas noted that there were good tools in the DNA plan.

“I couldn’t describe the entire DNA plan as just a set of unnecessary or poorly prepared tools. There are very good things that, in my opinion, would bring great benefits.

But there are also measures that are not fully discussed or are simply lacking. In the field of education, for example, as far as I am concerned, the ratio of such measures is “50 to 50”. In other areas, it may be different, but the bigger question is the state-provided DNA plan to borrow $ 200 million. which will also be important in terms of fiscal discipline ”, he said.

Financing order

Mr. Majauskas noted that each draft DNA plan would ultimately be decided by the Government.

“You will have to assess where they are and take a close look at the funding sources. Then make the right decisions.

In the next session of the Seimas BFK, we will have an interview with the Ministry of Finance, where we will ask to present the situation and answer questions. I will invite colleagues from other committees to join, who will find these topics important and interesting, ”he said.

The president of the commission suggested that all investment projects should be financed by the EU.

“Whether it’s the Structural Funds or the Recovery Fund, other instruments that we can use as members of the EU. We should only reach into the treasure pocket as a last resort. That should be the ‘waterfall’ system.

By the way, it can also be noted that an important part of the projects of the ADN plan is focused on consumption, which will not necessarily return through investments, a larger state budget or people’s income, which would allow paying debts later ” said M. Majauskas.

The EU Resilience and Recovery Mechanism (FRR) is estimated to provide 2.4 billion LTL for Lithuania. grants in euros.

Read more about the DNA plan projects in other Delfi publications.