‘Once our economy is back on track and the COVID-19 pandemic is under control, we will focus on gradually bringing down the general government deficit and stabilising the debt level, and thus ensuring the sustainability of the general government sector in the medium to long term. The COVID-19 has led to a higher general government debt in 2020, which stood at 47.3% of GDP at the close of the year. Our projection for 2021 would be 52.1%. We understand that stabilising the growth of government debt is key in ensuring the long-term sustainability of government finances’, said the Prime Minister.
The Head of Government noted that this year’s state budget was currently under review, and that extra half a billion euros were planned for COVID-19-related measures, considering the development of the pandemic. The measures under the New Generation Lithuania plan financed by the EU are also expected to add to the national economy and growth in the medium term. In this difficult time, efforts will be made to manage public finances responsibly, finding the right balance between the need to support the economy and the need to ensure the sustainability of government finances.
The general government fiscal projections show that the general government deficit in 2022-2024 will be 6.4% and 2.2% of GDP respectively. The need to improve the balance reflects the Government’s objective to manage public finances in the medium term so as to maintain long-term financial sustainability, and the need to be from 2023 onwards in compliance with the rules of fiscal discipline, which are most likely to return with the pick-up of growth.
‘We hope to implement these fiscal policy guidelines through reviewed tax burden imbalances, improved structure of taxes and social benefits, revised tax incentives and steps to reduce the shadow economy and the value added tax gap. The review of the functions performed by the state is also considered. We will do our best to have results-driven budget, strong medium-term budget planning, more efficient public property management and we will take other relevant measures to improve the quality of public finances’, emphasised the Head of Government.
The Government is now working on Lithuania’s long-term progress strategy Lithuania 2050 which largely rests on the priorities outlined in the programme of the Government. Recently drafted, the Prime Minister’s portfolio of strategic projects includes civil service transformation, the progress programme Millennium Schools, EDtech digital education transformation, development of programmes for innovation ecosystem in research centres and innovation agencies and mission-based science and business innovations, and the development of a model for service delivery in long-term care.
