Lithuania’s 2016 draft budget projects lower revenue, but higher spending

In line with the budget bill submitted by the Ministry of Finance, the structural general government deficit next year will account for 1.1 percent of GDP.

The government will on Monday start discussing the 2016 budget bill, which shows that budget revenue next year will decrease by 1.2 percent, or 96 million euros, as compared to the figure projected for this year, and will amount to 7.893 billion euros. Meanwhile spending will grow by 1 percent, or 88 million euros, to 8.485 billion euros.

The revenue will decrease due to a decline of 13.6 percent, or 317 million euros, in EU and other international aid, which will amount to 2.006 billion euros. Budget revenue, not including that aid, is projected to increase by 3.9 percent, or 221 million euros, to 5.887 billion euros. However, spending, not including aid, would grow by 6.7 percent, or 405 million euros, to 6.479 billion euros.

The deficit next year is expected to reach 592 million euros, which is 45.1 percent, or 184 million euros, above the amount projected for this year (EUR 408m).

Value-added tax (VAT) will remain the biggest source of budget revenue next year. Revenue from this tax is expected to increase by 3.7 percent, or 110 million euros, to 3.054 billion euros.

The draft budget has been worked out in view of plans to increase pensions, minimum wage and non-taxable income, wages for social and cultural workers as well as defense spending.

The bill envisages additional appropriations of 149 million euros for the Defense Ministry and extra 18.957 million euros in national support to farmers. Moreover, it sets aside 5.64 million euros for the resettlement of refugees to Lithuania and their integration.