Improved expectations bring an additional € 1 billion to the renewed budget – less need to borrow

“The budget is being adjusted to take into account the improvement in the epidemiological situation, which is also affected by the rate of vaccination. The projected budget deficit will be significantly lower, as well as additional expenses related to tensions on the Belarusian border and additional funds for defense in compliance with NATO commitments, ”said Finance Minister Gintarė Skaistė during the second reading of the budget.

The minister assured that this year most macroeconomic indicators are expected to be better than expected in March: the economy will grow 4.1 percent this year and wages will grow 7.9 percent. However, price growth is also expected to be higher: inflation will reach 2.6 percent.

“Wages will grow three times faster than inflation, so people’s purchasing power will grow in any case,” said G. Skaistė.

In the state budget project for 2021 presented in April, it was projected 8.4 percent. gross domestic product deficit. Now it is projected to reach 6.9 percent. GDP. Consequently, this will reduce the need to borrow.

“This is a better indicator than that of the EU,” said G. Skaist, comparing that the average in the euro area will be 8%. GDP deficit.

The bill predicts that state budget revenues will reach $ 12.44 billion this year. 1.19 billion euros. 613 million euros more than what was foreseen in the December law. more than expected in April.

State budget allocations in 2021 should reach 16.62 billion. 773.88 million euros. 42 million euros more than expected in December and more than proposed in April.

In June, the government revised the project to 20.7 million. EUR is allocated to the Ministry of National Defense to guarantee 2.03%. GDP for defense, and with growing border tensions, 16.96 million. An additional € 1 billion is allocated to reinforce border security with Belarus and improve infrastructure at the Lavoriškės, Šalčininkai and Raigard border checkpoints.

At that time, the budget deficit is expected to fall to $ 4.18 billion. euros. It would be 412 million. 571 million euros less than expected in December. less than proposed in April.

The budgets for Sodra and the Compulsory Health Insurance Fund have been submitted and amended by the Seimas.

Sodra’s revised budget foresees 5.33 billion. 5,090 million euros in revenue. 245 million euros. euro result.

The latest draft budget of the PSDF proposes 2,590 million euros. 2.49 billion euros in revenue. costs.

The Seimas plans to approve the budgets on June 22, but will still vote on a specific date.

Members of the Seimas were more concerned with salaries, firefighters and transparency in the distribution of funds.

Seimas Algirdas member Butkevičius asked the Finance Minister what budget deficit is expected for 2022.

“Preliminary figures for budget negotiations, we plan that 3.5 percent. GDP budget deficit in the coming years, but everything will depend on the changing situation, because the uncertainty is still high enough,” answered G. Skaistė.

Members of the Seimas expressed various wishes, for example, Antanas Vinkus, a member of the Lithuanian Peasants and Greens Union faction, saw to it that no funds were allocated to the Palace of the Counts of Tiškevičius in Kretinga, and other members of the Seimas does not finance certain areas, such as firefighters.

G. Skaistė explained that investment projects are decided by ministries, and at that time systemic problems are solved by negotiating next year’s budgets. This year’s budget has been revised due to the situation on COVID-19 and the situation on the Belarusian border, with additional funding. G. Skaistė pointed out that an additional € 141.1 million has been earmarked for municipalities.

Vytautas Bakas was surprised that Lithuania ranks second in the world in terms of transparency in managing a pandemic: “We are one of the least transparent countries managing a pandemic, what will you do to change that situation? Because here too there are large reserves, where transparency is often difficult? “

G. Skaistė recalled that the pandemic was managed during the previous period, decisions were made by increasing the loan limit, there were few safeguards, uncertainty was high and perhaps that is why the decisions were not transparent enough.

“Part of those costs were not related to the management of the coronavirus, including lump sums and various investment projects,” the minister said, acknowledging that the decisions raised questions about their validity.

According to her, the new government has introduced more fuses and reduced the cost of managing the pandemic this year.

“When it comes to managing a pandemic, I have to say that last year we spent too much time on public finances, both on the left and on the right, in some cases just covering the management of the pandemic,” said the former prime minister. A. Butkevičius.

Social Democrat Algirdas Sys pointed out that the salaries of public sector employees are not growing enough.

“Will everyone feel the increase in wages, or again, as the first quarter showed? The rich will get even more and the low-income will not increase it? Because I see no way to increase it. If they receive the minimum wage or close to the minimum So there is no indexation law for them ”, said A. Sysas, noting that in the public sector, the basic salary has increased only by 1 euro.

He was outraged that the government “takes maximum forecasts” when calculating funds for national defense, but when it proposes a change in the minimum wage, the forecasts are “reduced to the minimum.”

Labor member Vigilijus Jukna took on the mounting public debt: “We all know the simple truth that there is still no free money. This year, the level of public debt is projected to reach 50 percent. next year will be even bigger. (…) We see trends that the debt is clearly growing. Another detail, the state reserve will increase significantly. This means that the government will provide almost a billion euros in money that will be available to repair the financial holes of expensive ideas. But the time will come when debts will have to be paid off. And then taxes will have to go up relentlessly. “

At the same time, he proposed to increase the salaries of teachers, doctors, increase the income of the lowest-income recipients.

The president of the Budget and Finance Commission of Seimas Mykolas Majauskas assured that a clear sky awaits the country’s economy.

“The good news is that revenues are increasing. VAT revenues are increasing by as much as 382 million. Income tax revenues – almost 40 million. Excise income: almost 30 million. 232 million euros, GPM euros. Plus. , there is an increase in income from dividends and corporate taxes, and an increase of € 25 million. Ladies and gentlemen, I don’t remember much when the budget revision increases state income by € 600 million. I would say that it really awaits me a clear sky ”, said M. Majauskas.

However, he was concerned about growing “financial populism” as increasingly expensive populist offers were made, such as a VAT refund on hot dogs. He suggested looking at public finances responsibly.