The Lithuanian Cabinet on Friday endorsed a draft budget for 2015, the first year of the country's eurozone membership. Finance Minister Rimantas Šadžius has said that the bill is to be submitted to parliament for approval no later than 17 October.
© DELFI / Šarūnas Mažeika

"It is for the first time that we are planning our budget in euros. We are already thinking about how we will implement Lithuania's fiscal policies in the 19-strong eurozone," Prime Minister Algirdas Butkevičius said in a press release.

"Our commitments are to continue to comply with fiscal sustainability requirements, ensure consistent economic growth and maintain our position as an economic growth leader in the EU," he said.

The bill provides for increasing national defence spending by a third to 424.5 million euros. The defence budget will account for 1.11 percent of GDP, but will still fall short of NATO's two percent target.

The government also moves to raise excise duties on tobacco and alcohol and to increase the VAT rate for district heating to the standard 21 percent rate, from the current 9 percent rate. However, it proposes to reduce the VAT rate for hotels to 9 percent, from 21 percent.

The country's fiscal deficit is projected to be around 1.2 percent of GDP next year. The central government budget deficit is planned at about 342.4 million euros, 23.2 percent higher than this year.

Consolidated budget revenues of the central government and local governments are forecast to grow by 5.9 percent next year compared with this year's estimate to reach 9.215 billion euros, including 2.321 billion euros in EU funding and other international aid.

The central government's budget revenues, including EU and other international aid, are expected to increase by 5 percent to 7.956 billion euros.

The bill targets a 6 percent increase in total tax revenues to 6.343 billion euros.

Consolidated budget expenditure is planned at 9.557 billion euros, including 8.298 billion euros in the central government's expenditure.

The budget estimates are based on forecasts of 3.4 percent GDP growth in 2015, of 1.2 percent average annual inflation, of 5.8 percent average growth in wages and of unemployment falling to 10.4 percent.

BNS
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