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The coronavirus pandemic that hit Lithuania earlier in the year threatened a deep crisis and a long period of struggle, but the gloomier forecast scenarios did not come true, although there was talk of a double-digit drop in the country’s GDP. in 2020, the Finance Ministry forecasts 1.5 percent. drop this year and 3 percent. growth next year.
The fact that Lithuania has recovered faster than expected is also reflected in the draft state budget for 2021 prepared by the Ministry of Finance, which was approved by the government on Wednesday.
Sigismund Gedvila / 15min photo / Hand disinfection
The state budget project for 2021 has been published in the database of legal acts of the Seimas.
The preliminary draft budget for 2021 prepared by the Ministry of Finance foresees a state budget deficit of 5%.
The state budget revenue projected for 2021 is 11,385 million. including 2,260 million euros. 15,490 million euros for the acquisition of assets, expenses and international financial aid and from the European Union. euros.
In 2020, the budget deficit will reach 8.8 percent, and in 2021 it is expected not to exceed 5 percent. The budget was planned by the ministry to cover previous commitments, for example another ten euros of money for children this year, but at the same time paving the way for a return to sustainable finances.
At the government meeting, Finance Minister Vilius Šapoka stated that the budget for 2021 is based on four principles: focusing on the most vulnerable and meeting commitments, investments in the future (DNA plan), slowing spending growth and debt management.
“Global uncertainty is growing and the main risks associated with the second wave of the pandemic are both a deeper recession in the eurozone this year and a slower recovery in the coming years. The situation of a pandemic can cause more significant fluctuations in financial markets, as well as the geopolitical situation, Brexit ”, V. Šapoka drew attention to possible threats.
Photo by Julius Kalinskas / 15min / Boy’s money
According to the minister, suddenly try to reach 3 percent. from GDP to the state budget deficit would be too painful for Lithuania, as the government would no longer be able to meet previous financial commitments. It is considered that this could generate an additional impact on consumers: they would start saving more, consumption would decrease and the economy would not grow 3% next year.
Meanwhile, the budget deficit for 2021 is even higher, for example 7%. – it would mean that the debt begins to grow freely, which could worsen Lithuania’s credit ratings, which determine the cost of borrowing. This would increase the cost of servicing the debt. According to V. Šapoka, the rating agencies will evaluate this year how countries intend to return to sustainable finance.
It is estimated that the debt could stabilize in two years and begin to decrease, the budget public finance deficit in 2021 should not exceed 5%.
Neither new taxes nor new benefits
The state budget project for 2021 does not foresee new taxes. The new benefits are not included in the project, for example, the thirteenth pension, which the “peasants” spoke about just before the Seimas elections.
On Tuesday, before the government began considering the state budget project, the thirteenth pension created a wedge between Finance Minister Vilius Šapoka and Prime Minister Saulius Skvernelis.
In an interview with LRT radio on Tuesday, V.Šapoka stated that when drawing up the state budget for 2021, additional long-term financial obligations should be avoided, so the budget does not provide for the thirteenth pension or other long-term financial obligations. term of the funds loaned.
The thirteenth pension, which would require about 172 million. The inventors have not proposed any sustainable source to finance these costs. And that means it would lend money to further increase public debt.
Photo by Julius Kalinskas / 15min / Vilius Šapoka
Such a statement by the Minister enraged S. Skvernel, who stated that these matters are not decided by the Minister of Finance; your job is to find funds for such decisions.
The child’s money will increase
Although no new economic commitments are foreseen in the state budget, the previous commitments are maintained: the child’s money for all families increases from ten euros to 70 euros and 110 euros for older children and people with disabilities.
The monthly minimum wage “on paper” is 35 euros: from 607 euros to 642 euros. Due to indexation, the average old-age pension increases from 377 euros to 404 euros, and the old-age pension with the required time of service, from 399 to 429 euros.
The budget does not foresee a cut in these benefits, since these measures could have the opposite effect, generating greater savings for the population.
Budgetary spending in 2021 is mainly focused on four whales: social protection (783 million euros), health (396 million euros), economy (1,060 million euros) and education (683 million euros). In economics, the focus is on the DNA plan.
The biggest cost increase is for the economy, the DNA plan for the future economy, which is largely financed by European funds.
12 percent of taxes are collected. Less
Not only expenses but also revenue are expected to increase next year; Although the growth of the economy will also contribute, growth will be determined mainly by funds from the European Union Recovery and Resilience Fund. It is true that it is planned to collect less than all taxes, except the personal income tax, especially VAT.
In the 2021 budget, VAT revenue will represent 22%, personal income tax 19%, social security contributions 27% and EU money 12%.
By the way, the general delay in collecting taxes from the plan is currently 12%, but this is due to the fact that companies can defer taxes.
In terms of municipal financing, revenues will grow to $ 289 million. EUR (8.8%), because either the state will compensate for the revenue lost this year, or the municipalities will be able to borrow up to 53 million euros. euros.
By the way, the Baltic countries are planning a similar public finance budget deficit – Estonia about 6 percent, Latvia – about 4 percent.
Sodra’s budget will be positive (a surplus of 14 million euros is expected) and the PSDF budget will be balanced.
Lithuania will finance the public finance budget deficit with borrowed money, although it will have built up a reserve of 1 billion euros by the end of this year. It is true that while it is possible to borrow cheaply in the market, you do not want to move it; In such cases, you are protected if you need to borrow suddenly, but the market situation would be bad. The reserve is intended to support the liquidity of the budgetary treasury.
Once the government approves the budget bill, he will travel to the Seimas. The final version of the state budget will already be adopted by the newly elected Seimas.
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