Extra-EUR 55 mln for pandemic management will push budget deficit up
As the Lithuanian government plans to review this year’s budget, the now-approved state budget deficit is estimated to go up from 7 to 8.1 percent as more than 500 million euros in additional funding will be allocated for fighting the pandemic, a finance vice minister says.
“As the budget and what we have in the Stability Program is set to go under review, the included number is minus 8.1 percent. The major part of this impact and that increase in the minus has to do with budget funds allocated for financial measures related to the COVID-19 pandemic. We plan to add over 500 million euros,” Mindaugas Liutvinskas told the parliamentary Committee on Budget and Finance, on Wednesday.
In his words, budget losses, for example, due to the proposed reduced VAT rate for catering, event organization, sport, cinema and cultural activities, as well as corporate tax deferrals, are not estimated yet.
Liutvinskas says that if the parliament adopts amendments on temporary reduction of VAT rates, the budget deficit will further go up by 0.2 percentage to 8.3 percent.
Under the government’s Stability Program approved in late April, the government plans to allocate a total of 1.6 billion euros for the management of the COVID-19 pandemic and its negative consequences this year, with 1 billion euros already allocated in the existing budget.