Finance Minister Vilius Sapoka says the government should not raise its 2021 spending for boosting consumption, as the country is close to breaking eurozone rules on government debt.
“The Finance Ministry will propose a safe government budget,” Sapoka told the parliamentary Budget and Finance Committee, which was working on next year’s government spending bill, on July 29. “What does “safe” means? Raising spending for consumption would not be safe.”
He later said that Lithuania’s government debt, which shot up in the wake of the coronavirus pandemic, would reach nearly 50% this year. As a member of the eurozone, Lithuania has committed to keeping it within 60% under the Maastricht Treaty.
“We must think about the debt level. If we break the Maastricht criteria, there’s a big chance that the debt will start growing exponentially in the future. For the trajectory of our debt, the coming years, 2021-2023, will be crucial,” Sapoka said.
The government is not planning to introduce any new taxes next year, according to him, except perhaps for the plastic waste tax considered by the EU.
Sapoka refused to estimate the effects of the coronavirus on Lithuania’s economy, saying at this point it would be tantamount to “telling fortune from coffee grounds”. (LRT/Business World Magazine)