After the European Commission has asked for clarification from Lithuania over its draft 2017 budget, Finance Minister Rasa Budbergytė says that the EU's executive body wants additional information regarding the government's request for a higher deficit due to the so-called social model. The Finance Ministry says, meanwhile, that the Commission does not request additional explanations and does not comment on the draft budget sent to it on October 17, but only reminds the country that its new government, once formed, will have to submit an updated daft budget.
Rasa Budbergytė
© DELFI / Andrius Ufartas

"We are requesting an exception due to a structural reform, the social model, and, therefore, they are asking for explanations to see if they can grant that exception. This is the information we have. There is no assessment yet and that does not mean anything, because they will make their final assessment after the new government submits the draft budget," the minister told BNS.

In Budbergytė's words, it is important that the incoming government and the Seimas do not make the draft budget worse.

"What we should be concerned about is to not make things worse compared with the current draft budget. Our aim is, whoever is in the coalition, to keep to the requirements and seek to achieve our medium-term objective, because it is important what indicators we will have in 2018 and 2019," she said.

The Commission said in its letter, which is publicly available on its website, that it is seeking reassurances from Lithuania that the incoming government will submit an updated draft budget for 2017 as soon as possible and will confirm "its commitment to the continued implementation of the structural reforms legislated in the course of this year".

Budbergytė said while presenting next year's draft budget to the parliament in mid-October that the government was projecting a general government deficit of 0.8 percent of GDP for 2017 due to the new social model and a planned increase in the non-taxable personal income tax threshold.

The social model is a package of legislation on structural labor market and social reforms that is to take effect in next January.

The European Commission said in November 2015 after assessing Lithuania's 2016 budget that there was a risk that the country would exceed its deficit target in 2016. Lithuania then said that Brussels was not taking into account additional budget revenue the government expected from improved tax administration.

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