Finance Ministry predicts large 2008 deficit

Oct 12, 2008
TBT Staff in cooperation with BNS

VILNIUS – The Lithuanian finance ministry has predicted that this year the country will have a deficit of 2.69 billion litas (779.13 million euros) – amounting to 2.35 percent of the GDP.

The prediction marks a significant change from the government’s previous goal of a 0.5 percent deficit. The ministry still left room for doubt, however, saying that the deficit could be smaller than predicted.

“This forecast may change depending on the collection of budgets and social funds and their expenditures,” a statement from the ministry said.

The deficits of Social Security Fund and Mandatory Health Insurance Fund would account for the largest chunk of overall deficit. As estimated late in September, the expenditures of those two funds would exceed the revenues by 1.112 billion litas this year.

The central government would run a deficit of 1.289 billion litas, and local authorities a deficit of 287 million litas.

Despite these numbers, Prime Minister Gediminas Kirkilas said that blame for the increased deficit should not be placed at the government’s feet.

“It was not Lithuania's government to ruin the banks. The banks and finance institutions collapsed due to other reasons - first, irresponsible bankers, second, lax control and regulation of finance institutions. I have no doubts that the next EU Summit will adopt a decision on regulation,” Kirkilas told the reporters

The prime minister also downplayed the significance of the increased deficit, saying that the new figures are not “dramatic.”

“The deficit of 2.3 percent, which is being planned by Lithuania, is not dramatic at all. As we know, we should not cross the limit of 3 percent. With economic growth slowing down, we have to take decisions and protect the social welfare of our people in the first place, retain the growth of their wages, and not just stick to various criteria,” he said.

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