In 2012 Lithuania continued to implement fiscal consolidation measures in the framework of the Excessive Deficit Procedure (EDP). The data has been calculated in accordance with the procedural rules.

The deficit has dropped from LTL 2.2 billion to LTL 3.7 billion. The largest share - 53.2% consists of the deficit of the social security funds (Social Insurance Fund "Sodra", Compulsory Health Insurance, Employment Funds).

The resulting rate is 0.2 percentage points higher than expected in 2012 in the convergence programme of Lithuania. The discrepancy has led to two main reasons: the policy of municipal expenditures and specifics of accounting public dividends. Municipalities have spent all the surplus revenue which, according to the estimate of the Ministry of Finance, amounted to 0.2% of GDP value. On the basis of Eurostat accounting standards, when the entity pays dividends from the accumulated reserves or profits earned in the previous years, such transactions are not recognised as revenue of the relevant budgetary period. For this reason, in the previous year, a part of the dividends paid by state-owned enterprises (which was 0.3% of GDP) was not recognized as state budget revenues.

However, the result of the previous year corresponds to the deficit of 3.2% of GDP which the European Commission forecasted for Lithuania for the year 2012.

The general government deficit is one of the Maastricht criteria which must be met in order to adopt the euro. It is required that this ratio does not exceed 3% of GDP. This year Lithuania's government deficit is projected to be lower than the threshold and will reach about 2.5%t of GDP.

The general government deficit for 2012 estimated by the Ministry of Finance following the methodology of the Government Finance Statistics Manual 2001 (GVSM 2001) of the International Monetary Fund amounted to 3.3% of GDP.

The difference between the deficit of EDP (Maastricht) and the deficit estimated and published by the Ministry of Finance following the GVSM 2001 is due to the different methodological requirements for some flows associated with derivative financial instruments. According to the EDP methodology the deficit includes interest rate swap flows which remained positive in 2012, therefore, the EDP interest and deficit are lower than calculated by the GVSM 2001 or ESA 95.

Lithuania's public finance deficit calculated in accordance with the EDP in the last 4 years has been consistently decreasing: it reached 9.4% of GDP in 2009, 7.2% of GDP - in 2010, 5.5% of GDP - in 2011, 3.2% of GDP – in 2012.

Ministry of Finances Public Relations Office

l24.lt