Lithunia to trim deficit by fighting shadow economy

  • 2010-10-15
  • TBT Staff

The government has said it hopes to raise 1 billion Litas by cutting down the shadow economy.

VILNIUS -- The Lithuanian government has approved a budget for next year that will further trim the deficit on the assumption of increased revenue from corruption fighting measures.

The budget will cut the deficit to 5.8 percent of GDP - down from this year's projected budget deficit of 8.1% - keeping the country within the limits outlined by it's plan to join the eurozone in 2014.

Though there is a planned reduction of the deficit, overall spending in the budget will increase by about 700 million Litas.

The government hopes additional revenues will be secured through a reduction of the country's sizeable shadow economy, which is one of the largest in Europe. The finance ministry announced earlier this week that the government hoped to gain 1 billion Litas from a reduction in the shadow economy.

“The plan to boost revenue from eliminating the shadow economy is ambitious but realistic”, finance minister Ingrida Simonyte said at a press conference on Thursday. “This will require a consensus in the society to reduce tolerance for illegal activities.”

According to a World Bank report released this summer, Lithuania's shadow economy makes up 31.9% of the country's GDP.