In recent years, the Government, implementing its borrowing strategy, has been distributing GS for EUR 1.2-2.5 billion on an annual basis in domestic market auctions. This year, 3, 5 and 7-year nominal maturity Government bonds for EUR 1.6 billion were issued.
In 2023, 10 Eurobond tap auctions were also organized in the domestic market. Investors were offered 5-10 year nominal maturity issues, EUR 335 million of the aforementioned amount of EUR 1.94 billion was borrowed in these auctions. The total demand in this year's GS auctions reached EUR 4.7 billion.
This year, after the Ministry of Finance resumed the distribution of GSNs, Lithuanian residents purchased GSNs for EUR 163.7 million during the first four issues, the fifth GSNs issue is currently being distributed. Residents can purchase GSNs via distributors selected by the Ministry of Finance – Swedbank and SEB.
"At the end of the previous year, we planned to borrow more than 6 EUR billion in 2023, however, the need for borrowing decreased to EUR 4 billion in the course of the year. This was influenced by the better collection of budget revenue, savings in appropriations, and moreover, at the end of the previous year we had comfortable cash reserves in treasury accounts," says Vice-Minister of Finance Darius Sadeckas.
According to the approved 2024 State budget, Lithuania plans to borrow about EUR 6.1 billion. The largest part of the funds, about EUR 3 billion, is planned to be borrowed on the foreign market by issuing Eurobonds. It is planned to borrow in the domestic market by issuing GS and distributing GSNs, totaling about EUR 2.6 billion. Furthermore, about EUR 0.4 billion is planned to be borrowed from international financial institutions and the European Union under the Recovery and Resilience Facility. To manage the State budget flows, borrowing can be done by issuing treasury bills.
The State budget expenditure in 2024 will be additionally financed from balance of funds of about EUR 1.6 billion accumulated in 2023, and the funds of EUR 0.01 billion relent to municipalities and other entities in the previous year repaid to the general account of the State Treasury.
It is projected that at the end of 2024, the general government debt will amount to about EUR 30.3 billion or 39.9 % of the projected gross domestic product.
Additional information:
- GS is the main instrument of state borrowing. These are debt securities issued in the domestic or foreign markets on behalf of the state, confirming the right of their holder to receive an amount corresponding to their nominal value, interest or other equivalent within the stipulated terms.
- GS auctions are planned and the characteristics of issued GS are determined by the Ministry of Finance, in the domestic market it is organized by AB Nasdaq Vilnius.
- Only those banks and financial brokerage companies can participate in GS auctions that meet the requirements set by the Ministry of Finance for GS auction participants and have signed the GS auction participant agreement with the Ministry of Finance. Currently, AS Citadele banka (Latvian commercial bank), AS Luminor Bank, AB SEB bankas, AB Swedbank, AS Swedbank (Latvian commercial bank), AB Šiaulių bankas and
- Erste Group Bank AG (Austrian commercial bank) participate in the Lithuanian GS auctions. More information about GS auctions is available here.
- GSNs are Government securities that can only be purchased by natural persons. It is a safe and return-generating investment, similar to fixed deposits in a bank, only in this case residents would entrust their savings to the Government. For its part, GSNs is an opportunity for the Government to form another borrowing tool – to borrow directly from the population and thus attract savings not invested elsewhere.
