“Making difficult decisions today is essential: massive long-term investments are necessary both to strengthen the defence capabilities of the Baltic States and to increase innovation and competitiveness of the countries. Therefore, this challenging time is a great opportunity to change our well-established thinking and actions, only when we achieve a breakthrough in the areas of crowdfunding and investment will we solve the emerging tasks", Minister of Finance K. Vaitiekūnas states.
According to the Minister, public funds alone are not sufficient to achieve the objectives stated, therefore, the mobilisation of public and private capital through mixed finance models is necessary. And in order to attract private funds on a large scale and expeditiously, it is inevitable to use capital markets.
The Baltic Capital Markets Initiative is an example of how small, open economies can combine their strengths to overcome scale constraints. However, there are also things that need to be corrected.
Private investors are still not always willing to invest in defence infrastructure projects.
According to K. Vaitiekūnas, the main obstacles preventing private capital from investing in defence are the lack of high-quality, financially attractive, sustainable and competitive projects, which is mainly due to limited institutional capacity. There are also long deadlines and complex regulations that increase legal and transaction costs.
"These barriers could be removed by simpler regulation, the provision of guarantees to mitigate potential risks and the wider use of investment instruments to achieve scale. In addition, the Baltic financial markets should be even more visible internationally. It is also necessary to expand the participation of different investors in projects", K. Vaitiekūnas notes.
One such step in Lithuania is the ILTE Advisory Centre, which will act as a project development centre to help the municipal public and private sectors to develop high-quality, financially sustainable, competitive and financing-attractive projects.
According to the Minister, by being competitive, innovative and having sufficient resources to counter potential threats, Lithuania will ensure essential preconditions for sustainable growth in the future.
