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LFMI senior expert Vytautas Žukauskas says politicians tend to seek quick fixes and ignore long-term consequences, but the COVID-19 crisis and the upcoming elections have further strengthened this trend.
According to him, the conditions for spending were also created by the fiscal discipline rules published during the pandemic.
At the start of the pandemic, the Lithuanian government and Seimas decided that the country could borrow € 5 billion this year.
Politicians appeal to the conscience, patriotism and values of the people during elections, but they themselves will show true values by choosing not to spend when the opportunity arises.
“Today’s strong debt growth will be either higher taxes in the future or a lower possibility of financing budget expenditures,” explained V. Žukauskas at a press conference on Tuesday.
According to him, the possibility of increasing spending has also reduced the need for the government to carry out mature structural reforms.
The expert also warned that it will be difficult for politicians who initiated stimulus measures to abandon them after the crisis.
According to V.Žukauskas, now is the right time for the new rulers after the Seimas elections to be characterized by “not high indicators of spending or debt, but no loss of milestones.”
“Politicians appeal to the conscience, patriotism and values of the people during elections, but they themselves will show the real values by choosing not to spend when the opportunity exists,” said an LFMI expert.
Photo by Julius Kalinskas / 15min / Vytautas Žukauskas
Institute president Elena Leontjeva also said that in the heat of the pandemic, the government had the opportunity to optimize the state budget and public sector functions instead of plugging budget holes with borrowed money.
“The quarantine would have helped, because we have seen that without certain functions, life does not collapse,” Leontjeva said.
According to the LFMI president, the government probably did not take this opportunity because it was not pressed for time or finances under the pillow.
“Companies withstood the pandemic because they rethought, saved, abandoned unnecessary activities and took on new ones. Unfortunately, the state did not do that, “he said.
Plans for the elections
Before the elections, the LFMI analyzed the points of the parties’ programs related to changes in the economy.
Guoda Azguridienė, head of research at the institute, said the parties are united by the desire to create a high value-added economy.
However, according to her, this goal sinks into contradictory actions, and that economy can be achieved with competitive taxes, little bureaucracy, minimal corruption, stable laws.
Photo by LFMI / Goda Azgurdienė
“This should not be a rhetorical slogan, it is an economic policy,” said G. Azguridienė.
According to her, the actions of politicians should not only encourage investment, but also help the future employee. First, through a quality education.
“If we want an economy with higher added value, then politics must also have more added value,” said the expert.
The Free Market Institute argues that this requires better legislation, currently devalued, and a change in the government’s attitude toward people.
“Probably most of the new members of the Seimas hope that the government will become a servant of all of us,” said LFMI President E. Leontjeva.
Photo by Julius Kalinskas / 15min / Elena Leontjeva
She argued that it is also important for politicians to understand that their focus on certain issues also directs the public’s attention to certain issues.
“We just realized that if we were going to keep up with the changing laws, we weren’t sure of our future stability. If people are constantly fed with benefits, (…) people’s interest and energy will be directed here, ”said the director of the institute.
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