Passing the budget

VILNIUS - The Lithuanian parliament votes on next year’s budget on Dec. 10. President Dalia Grybauskaite on Dec. 7 met with leaders of all parliamentary factions urging them to pass the 2010 budget. The budget approval day will also be a day for a protest rally by pensioners. The ruling center-right coalition waits for this day with caution.

The biggest controversy among Lithuania’s population is provoked by the 2010 budget for SoDra, the country’s social insurance fund. According to SoDra’s budget draft, all pensions higher than the 650 litas (188 euros) monthly minimum should be reduced by 3.3-12.4 percent. The size of the cut depends on the amount of the pension. Those pensioners who still work will get cuts in their pensions from 2.5 percent to 70 percent. The size of this cut depends on the amount of the wage. The maximum monthly unemployment benefit will be 650 litas instead of the current 1,041 litas.

“It will be the first time in Lithuania’s history, after re-establishment of independence, when the pensions will be cut,” opposition Social Democrat MP Edvardas Zakaris said during the parliamentary debates on Dec. 8.
“We are not different from the other Baltic states,” Prime Minister Andrius Kubilius told the parliament on Dec. 8. He stated that Lithuania, with its most educated population in the world and its world leadership in the usage of IT technologies, will overcome the current crisis. Kubilius also stated that Lithuania’s industry suffered less from the crisis than the industrial sector in the UK and France. He confirmed his words with slides from Eurostat and other statistics gathering organizations. The slides were shown on the screen in the parliament during his speech.

On Dec. 8, some 800 demonstrators gathered for a protest rally in front of the parliament. The rally to protest against cuts in social spending was organized by Arturas Paulauskas, a lawyer and leader of the New Union (Social Liberals). His party has just one MP, Valerijus Simulik, in the parliament. The mounted police was present at the site.
On Jan. 16, Lithuania saw its first social unrest with broken windows in the parliament building, and several of the protesters injured by police-shot rubber bullets. Currently 29 protesters await trial. The riots of Jan. 16 started after a protest rally which was organized by the Lithuanian Trade Union Confederation. The rally of Dec. 10 is organized by the pensioners’ branch of the confederation.

“I don’t think that there is a sense to protest against the global situation,” Grybauskaite said during her press conference at the presidential office on Dec. 7.
“We have a plan which includes the usage of our special measures,” stated Vizgirdas Telycenas, general commissioner of the Police Department at the Interior Ministry, during a briefing on Dec. 4. He said that the police drew a lesson from the events of Jan. 16, and protesters will not be allowed to get closer than 75 meters to the parliament building.
“I can always be afraid of something, but I believe that people are rational and they understand that any provocation would be against the people,” Kubilius said during his briefing on Dec. 4, answering journalists’ questions regarding the potential social protest on Dec. 10.

Seeking to pass the budget, the ruling center-right-controlled parliament’s leadership recalled all foreign trips by MPs. The ruling center-right coalition now possesses 71 MPs in the 141-seat parliament. The ruling coalition also can expect some votes from the 11 MP-strong parliamentary faction named Viena Lietuva (United Lithuania), which is balancing between position and opposition in the parliament. One of the Viena Lietuva faction’s members, Aleksandr Sacharuk, was asked by the ruling coalition to attend the parliamentary sessions despite his illness with swine flu.

The budget, with a fiscal deficit gap of 9.5 percent of GDP, will rely heavily on borrowing. According to analysts, by refusing to take IMF help, Lithuania condemns itself to heavy borrowing on the international markets, where interest rates are three times higher than in the case of IMF loans. According to Lithuanian Finance Minister Ingrida Simonyte, next year’s Lithuanian state debt will be 41 percent. The Maastricht criteria allows 60 percent. Lithuania moves at high speed closer to that red line, although Grybauskaite still expects euro introduction in 2013-2015.

On Dec. 8, the ruling center-right coalition suffered its first defeat - the 2010 SoDra budget did not receive the parliament’s approval: only 66 MPs did register for the vote. The faction Viena Lietuva joined the opposition in boycotting the vote on Dec. 8. The minimum number of participating MPs required is 71 in the 141-seat Lithuanian parliament. However, this failure of the ruling coalition does not mean that the 2010 SoDra budget has been rejected - the parliament has the right to make more attempts to pass this law on SoDra.