Deficit bound to widen this year

  • 2003-04-10

The central government collected 2.1 billion litas (626 million euros) in total revenues in the first quarter of this year, some 2.2 percent less than planned, according to preliminary data provided by the Finance Ministry.

The ministry cited persisting deflation, depreciation of the U.S. dollar, a lower tax base and cheaper imports behind the shortfall.

"It is likely that we are beginning to feel the effects of global tensions," said Finance Minister Dalia Grybauskaite.

After her meeting with Parliamentary Chairman Arturas Paulauskas, Grybauskaite said she regarded the slumping U.S. dollar against the litas, a drop in the tax base and a 90.6 million litas shortfall in customs revenues as "very serious" reasons behind the failure to achieve the planned revenue collection levels.

In the minister's words, Lithuania will have to adhere to a tight budget in 2004 due to EU integration costs. A few borrowing options will be proposed to Parliament as the government will need to borrow about 600 million litas for cofinancing EU-funded projects.

What's more, following the accession to the EU, the government will be under an obligation to pay out extensive direct subsidies to farmers from the state budget.

Grybauskaite forecast that the budget deficit - the annual budget revenue target is 9.5 billion litas - will widen even more in 2004.

"The deficit will be higher compared with the figure this year, but we will make every effort not to exceeded the recommended ceiling of 3 percent," the minister said.