Lithuania's 2017 draft budget plan may fall short of the provisions of the Stability and Growth Pact, however, this could be avoided by way of an exception, if the social model is listed as a structural reform, the European Commission has said.
The European Commission Building
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On Tuesday, EC gave its opinion on Lithuania's improved 2017 budget, saying that the country may this year may strongly stray off the medium-term objective (deficit of 1 pct of GDP), however, Lithuania has requested additional flexibility under the Stability and Growht Pact (up to 0.5 pct of GDP) to be able to implement the planned major structural reforms of the labor market and the pension system.

According to the EC statement, Lithuania has enough room for fiscal maneuvers to be able to take advantage of the temporary deviation in 2017.

"Lithuania's budget deficit and debt are well below the required targets of 3 percent and 60 percent of GDP respectively. Its draft budgetary plan is currently seen as at risk of non-compliance with the rules of the Stability and Growth Pact, but this would no longer be the case if the flexibility requested by Lithuania is granted this spring," Valdis Dombrovskis, EC Vice-President for the Euro and Social Dialogue, said in a press release.

The commission will assess the compliance of the social model, as a social and labor market structural reform to the reservations of the Stability and Growth Pact this spring during the evaluation of Lithuania's 2017 stability program.

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