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Presidential adviser Simonas Krėpšta said the new budget provides more funds for pensions. It is said to be directly related to the vision of the presidential welfare state.
“The state budgets and other social funds approved by the government respond to certain changes, of which the president spoke in October,” the adviser said in a remote conference.
According to him, it is good that spending in the social sphere has increased, because even during a pandemic, it is necessary to address social problems.
High levels of retiree poverty and income inequality can only be reduced if pensions grow faster than workers’ wages.
“This revised budget project provides more funds for social security. For example, for additional indexation of pensions. The previous government’s budget did not foresee those additional 75 million euros, which are planned now.
This is directly related to the vision of the presidential welfare state, since we see a long-term systemic problem in the country: the poverty of pensioners. It reaches almost 35 percent. and it can only be reduced by constantly investing in additional and faster indexation and pension increases every year, bypassing average income growth, ”explained S. Krėpšta.
Higher disbursements cause a significant increase in the general government deficit and total accumulated debt.
“In the longer term, it is necessary to put in place a plan to reduce public debt so that we can re-accumulate fiscal reserves after the crisis,” the adviser warned, adding that crises that require financing are repeated approximately every 10 years.
S. Krėpšta also pointed out that Lithuania’s public finances are too small and the Government will have to address this problem in the next four years.
According to the advisor, the tax revenue must be at least 35 percent. gross domestic product so that there are sufficient funds to guarantee adequate public services.
This is the optimal level that corresponds to the level of economic and social development of the country and allows financing public services at the appropriate level of quality and ensuring sufficient quality of services as important as medicine or education. Here, the health care budget must be balanced and larger than it is now, ”said the advisor.
According to him, to increase state revenue, collect more taxes by destroying the unaccounted for economy and giving up tax breaks. The president welcomes the expectation of the new coalition to adequately fund public services and increase the equity of the tax system.
In the draft law on the state budget, the state budget revenue for 2021, including the European Union and other international financial aid, amounts to LTL 11.2 billion. euros.
State budget allocations for the acquisition of expenses and assets in 2021, including the European Union and other international financial support, amount to 15.82 billion. euros.
Budget appropriations exceed revenue by € 4.57 billion. euros. Lithuania will need to borrow these funds next year and repay them in the future.
According to the Ministry of Finance, the updated budget has increased spending by more than 1.23 billion. euros. Most of them will be used to reduce the effects of the coronavirus.
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