Šapoka on the crisis: some companies will certainly not survive

The budget for next year, according to the Minister, will be formed on the basis of the following principles: “First, increase spending only in those areas that affect the most vulnerable sectors of society. Second, we must stop the growth of all other expenses. We need to invest in the future so that the structure of our economy changes as quickly as possible and so that our debt trajectory changes from growth to decline. “

According to V. Šapoka, expenses will increase in the social sphere, the salaries of doctors and teachers.

The risk remains high

The minister also denies statements by some economists that it will not be necessary to repay the debt.

“Definitely will have to pay the debts, we must do everything possible to keep the debt level as low as possible.” The optimal debt level for Lithuania is around 40 percent. of GDP. If the debt grows more and exceeds 60%, investors in public debt and government securities would have doubts about the sustainability of our future, they would start demanding significantly higher interest rates ”, explains V. Šapoka.

He notes that the situation in Lithuania remains one of the best in the EU.

“Our decline will be really insignificant, around 1.5 percent. And growth next year: 3.3 percent. When it was the worst quarter, the Lithuanian economy contracted 4.2 percent, the average for the area. of the euro was – 15 “, – says V. Šapoka in the program” Delfi diena “.

“Both economic stimulus plans have worked. We can see that consumer expectations have recovered very sharply, they are currently among the best in the EU and business expectations have recovered quite steeply. The situation in the markets of Export is also better than expected ”, adds the minister.

He says he doesn’t expect the situation to suddenly deteriorate by the end of the year, but urges residents to be cautious when making important financial decisions.

“When it comes to family finances, I really urge you to self-assess your situation. The risks have not disappeared, they are high and you really do need to think several times before making important financial decisions,” says V. Šapoka.

“When we talk about business, there is a redistribution of markets and we cannot sleep here, we have to look for new markets, new niches, create new products. This is not universal advice for everyone, ”he explains.

It will not be possible to save all companies

According to V. Šapoka, if the Government had not taken measures to stimulate the economy, the recession, the unemployment rate would have been much higher and people’s income would have fallen further: “You can’t do anything, you can start saving, but then the economic consequences would be much worse. “

“Everything possible has been done to save as many jobs as possible, but there will be sectors that, if not restructured, are likely to end.” After such a pandemic, demand for these products is unlikely to recover for a year. I refer to both the inbound tourism sector and the catering sector, which have suffered the most ”, says V. Šapoka.

According to him, state aid to these sectors will not be able to continue for long.

“The aid should be phased out, but it cannot continue indefinitely. Not all companies will survive in those areas, we must think about how to reorient the business, what new areas to turn to,” says the Minister of Finance in the Delfi Day program.