Deficit to rise next year

  • 2008-10-22
  • From wire reports
VILNIUS - Despite repeated calls by leading politicians to cut spending levels for next year's budget, Lithuania's parliament is to start debate on Oct. 28 on a draft national budget that promises a fiscal deficit of almost 3 percent of GDP.

"The morning session on Oct. 28 will be devoted entirely to the presentation of the draft budget and accompanying legal amendments," Ceslovas Jursenas, the speaker of the Seimas, told lawmakers.
The government on Oct. 17 sent to the parliament a draft 2009 national budget which plans that next year's expenditures will exceed revenues by 2.64 billion litas (765.2 million euros), a fiscal deficit targeting 3 percent.
"No way [should it be signed]," says Dalia Grybauskaite, the European Union (EU) commissioner responsible for financial programming and budgeting. She has urged Lithuania's President Valdas Adamkus to reject the proposal.

Adamkus believes that the government has failed to pay due attention to the calls to reduce expenditures and eliminate tax breaks in the context of the economic slowdown, according to his spokeswoman, Rita Grumadaite.
Grybauskaite says that the expenditures can be cut considerably. "I gained solid experience during the critical situation in 1999 and 2000 when all public expenditures were trimmed, by more than 10 percent, and not just 5 percent. Such reserves exist. The authorities should buy fewer limousines and should rather think and balance the appetites of individual departments with the economic and fiscal policy, financial resources. They should start there instead of doing harm to people," she said.

The government has put its 2009 borrowing needs at 5.8 billion litas, of which 2.6 billion litas will be used to cover the budget deficit and 2.5 billion litas to repay domestic debt.
The authorities plan next year to borrow some 3 billion litas on foreign markets through the issuance of Eurobonds and other borrowing instruments, with some 1.5 billion litas to be borrowed on the domestic market via the issuance of government securities. An additional 900 million litas will be borrowed on domestic market in the form of loans.

Government debt will grow to approximately 20 billion litas by the end of 2009 approximately 17.4 percent of GDP, which is forecast to reach 114.7 billion litas next year, down slightly from this year's expected 115.2 billion litas' GDP.
The government doesn't expect to breach the public debt-to-GDP ratio limit of 60 percent, as required by the Maastricht Treaty.