The Ministry of Finance has informed assignation holders about the financing limits that have been included in next year’s state budget. The limits are calculated based on the current year’s funding levels and aim to keep the budget deficit below 2 pct. of Gross Domestic Product (GDP). However, institutions are not going to settle easily with this financing proposal. The Lithuanian News reported that initial strategic plans that were submitted included higher expenses for various needs and goals, delfi.lt wrote on 9 August.
Minister of Finance Ingrida Simonyte explains that the growth of budget expenditure is controlled by the Fiscal Discipline Pact. Therefore, next year’s spending should not grow more than 1.9 pct. – approximately 350 million Litas.
According to Simonyte, “The growth of cost is only possible if taxes are increased significantly, not only to compensate the higher spending, but, additionally, reduce the deficit by 2 pct. of GDP. Contributions to EU budget will increase inevitably next year, as well as expenses for debt management. We will also have to spend considerable amount of money for EU Presidency. To give larger funds for activities or institutions not mentioned previously is only possible if less money is given for others.”
Simonyte also stated that the goal is for the budget deficit to not exceed 2 pct. of GDP. She asserted, “Whether it is possible or not highly depends on the income layout, which is defined after macroeconomic forecasts. In any case, the Stability and Growth Pact forces us to lower our deficit at least by .5 pct. of GDP, i.e., to 2.5 pct. However, we must do much more to balance the public finance in at least the next three years time.”
Social Democrats support quite different budget planning and spending strategies. The leader of the opposition, Social Democrat Algirdas Butkevicius, stated, “Some programs are going to be reviewed and funding might be withdrawn. Unlike now, we will not follow the practice of reducing the funds by the same percentage for all the programs.”