The leader of the Lithuanian Farmers and Greens Union (LFGU) says that the makeup of the government coalition remains unchanged after the senior coalition partner on Tuesday signed a deal with the Homeland Union–Lithuanian Christian Democrats under which the opposition party will back the government's planned state forest management reform in exchange for a reduced VAT rate on district heating and hot water services.
Saulius Skvernelis, Ramūnas Karbauskis
© DELFI / Domantas Pipas

"The coalition is not changing. The LFGU and the Social Democratic Party (LSDP) continue to work in the coalition," Ramūnas Karbauskis said at a joint news briefing with Gabrielius Landsbergis, the Homeland Union's leader.

"The coalition parties differ on this issue (of the forest sector overhaul), but what is happening now shows that we manage to find support in the Seimas for all of the proposals formed by this government -- either with the votes of the coalition members or with the help of the opposition," he said.

Prime Minister Saulius Skvernelis, who was appointed to the post by the LFGU, secured the Homeland Union's votes for the forest management reform, which is not backed by the LSDP, the junior coalition partner, in exchange for the ruling party's support for a reduced VAT rate on district heating and hot water services.

The deal, which was signed on Tuesday by Skvernelis, Landsbergis and Karbauskis, calls for passing amendments to the Law on Forests by the end of the current parliamentary session as part of Lithuania's efforts to join the Organization for Economic Cooperation and Development (OECD).

The parties also agreed that "in an effort to alleviate energy poverty and social exclusion", the government would propose to reintroduce a reduced VAT rate on district heating and hot water services in the next heating season, with the necessary legislation expected to be passed by Oct. 1.

Skvernelis described the deal as "acting in the strategic interests of the state".

The VAT rate on district heating and hot water services was raised from 9 percent to the standard 21 percent on June 1.

The prime minister told BNS earlier in the day that the government would consider reintroducing a reduced rate, but added that it would not be 9 percent.

"We will most probably set other rates," he said, adding that the government was already in talks with the European Commission on the issue.

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