"Assessing the geopolitical context and aiming for Lithuania to prepare faster for possible risks, we are speeding up the implementation of military infrastructure and military mobility projects by allocating additional funds still this year. The security of the people of Lithuania is the Government's priority, so we are trying to work purposefully for national security, especially at the border of democracy and the European Union," noted Minister of Finance Gintarė Skaistė.
By the resolution adopted by the Government, EUR 128.3 million are allocated to the Ministry of National Defence for the implementation of projects for the creation (development) of military sub-infrastructure, the design and construction of ammunition and explosive storage shooting ranges and other training infrastructure, as well as the design and construction of the internal road network of Rūdninkai military training ground, the access road to Rūdninkai military training ground from public road No. 176 for the implementation of projects of reconstruction, expansion of water supply networks and wastewater treatment networks up to the border of Rūdninkai military training ground and in the village of Rūdninkai.
At the same time, EUR 148.42 million are allocated to the Ministry of Transport and Communications for military mobility and dual-use projects on national roads: for the capital repair of Pabradė-Meškerinė section from 5,258 to 11,128 km, for the installation of access roads to Rūdninkai military training ground, for the reconstruction of the public border road Molėtai-Pabradė from 10,985 to 15,405 km, the public border road for major repairs of Molėtai–Pabradė section from 17,925 to 23,074 km, for the expansion of VIA BALTICA section from Marijampolė to the Lithuanian–Polish border (stages I–III), and for reconstruction of the middle bridge over the Neris and viaducts located on the public highway A1 Vilnius–Kaunas–Klaipėda section from 99.03 to 100.47 km.
The draft resolution prepared by the Ministry of Finance, which received the Government's approval, was submitted after the meeting of the Military Mobility Transport and Military Infrastructure Project Supervision Commission held at the beginning of July.
It should be noted that on 9 May the Seimas approved the Law on Temporary Solidarity Contribution, by which part of the unexpected net interest income of banks is channeled to finance the projects of military mobility and dual-use (civilian and military) transport, as well as the adaptation and/or creation of military infrastructure necessary for the support of the host country.
The temporary solidarity contribution is calculated without causing negative consequences for Lithuania's competitiveness, as it would be applied only to the unexpected part of credit institutions' interest income, which is not related to business decisions. The temporary solidarity contribution is to be paid for the years 2023 and 2024, separating unexpected income from normal income. The rate of 60% for the temporary solidarity contribution was set for a fixed term only on part of the net interest income, which is above more than 50% increase of the average net interest income in four financial years. Thus, the contribution is set so that it would be applied only to credit institutions receiving unplanned income and would be valid for a limited time. In the absence of excess net interest income, the contribution does not apply. In addition, a sufficient income reserve is left to cover possible losses due to loan quality deterioration, increased operational and other expenses.
The need for the temporary solidarity contribution stems from the temporary potential for a significant increase in banks’ profits, mainly due to the economic and geopolitical factors of the past two years and the response to them and not due to businesses decisions. During the outbreak of the coronavirus pandemic, the state allocated the unprecedented support to business and people. This has not only reduced the credit risk of businesses and households as well as the loss potential for banks, but also increased the level of liquidity in the financial system. In Lithuania this led to the fastest growing level of deposits in the euro area — 52 % — and the residents’ deposits accumulated were by EUR 11 billion higher than the loans. The European Central Bank (ECB) significantly increased reference interest rates as a result of the war erupted by russia in Ukraine and a significant increase in inflationary processes. The current excess limits banks’ incentives to raise deposit interest rates, while historically the largest liquidity excess is held by banks mainly in the central bank account. The ECB pays interest to commercial banks on these funds. As a result of the huge and unusual excess of liquid assets in such a situation, this income does not depend on business decisions taken by banks and is therefore regarded as unexpected.
