VILNIUS - The Lithuanian economy is headed for a recession and a budget deficit this year, and the severity of the downturn will depend on how fast he coronavirus pandemic is contained, Finance Minister Vilius Sapoka said on Thursday.
"I think we should have no illusion about economic growth," Sapoka told the Ziniu Radijas radio station. "The question is that of recession and its extent. It will depend on how we succeed in containing the pandemic."
"I'm speaking not only about Lithuania, but also about the European Union and the world in general, because the Lithuanian economy is an open one," he added.
"If we manage to contain the virus in the first half, we'll have a single-digit contraction, and if everything moves into the second half, then we'll be talking about double digits," the minister said.
When asked about the impact of the current situation on public finances, Sapoka said it was "definitely negative".
Budget revenue collection is falling short of the target because a part of businesses is in a standstill and generate no revenue, and, on the other hand, some receive state support in the form of tax deferrals, according to the minister.
"Taxes worth over 150 million euros have been deferred in a very short space of time," Sapoka said. "Perhaps no one doubts that we'll have a really large budget deficit this year following several years of public finance surpluses."
"No doubt, we'll have to borrow, and we are doing so very intensively," he added.
Sapoka admitted that the budget revenue shortfall may continue widening, but ruled out spending cuts.
"I believe it's not the right time or the right situation to speak about spending cuts," he said. "First of all, (we must speak) about economic stimulus and cost efficiency."