Central government's budget revenues from taxes are expected to increase by 939 million litas (EUR 272.2m) next year, compared with a projected increase of 222 million litas in overall budget revenues.
"Tax revenues, which perhaps better reflect our economy, will be well above this figure (of 222 million litas) next year. (Tax revenue) growth will be nearly 6 percent and the economy itself will grow by almost as much in nominal terms. Provided, of course, there are no surprises, which we have pointed out in our macroeconomic projections. Amid continuing uncertainty in the European Union and the eurozone, our macroeconomic projections are based on the assumption that, nevertheless, both the EU and the eurozone economies will return to growth next year," Šimonytė said.
The finance minister said that external risks are quite high.
"But if these risks do not materialize, then tax revenues will grow considerably, matching the economic growth, but revenues from other sources will decline. I think the tax revenue growth is quite good and it will be even better in 2014 and 2015, if we have no surprises from outside the country," she said.
Šimonytė noted that, in any case, the Law on Fiscal Discipline sets limits on expenditure growth, providing that spending next year cannot exceed this year's expenditures by more than 220 litas, not including EU funds.
The Finance Ministry forecasts that the central government will collect 16.587 billion litas in budget revenues from taxes next year, which is 6 percent above this year's estimate of 15.648 billion litas.
Borrowing limit
Lithuania’s net borrowing limit planned for next year would slightly exceed 1 billion litas (EUR 289.85m) and would be one of the lowest in the country’s recent history, Finance Minister Ingrida Šimonytė said. The country would borrow 7.5 billion litas but the bulk of this amount would go for redeeming maturing debt.
“Next year the net borrowing limit will slightly exceed 1 billion litas. Although the amount to be raised by the state will be similar to this year’s, that is 7.5 billion litas, but 6.5 billion litas will in fact be allocated for the redemption of existing debt... I do not remember when the net borrowing was that small before,” the minister told reporters after the Cabinet’s meeting on Tuesday.
The country’s expenditures on debt administration should start to decline from 2014 after growing, hopefully, for the last time in 2013, she said.
“Contributions to the European Union’s (EU) budget will increase next year as a result of growth in Lithuania’s GDP. Moreover, the country will have to increase its debt administration expenditures, hopefully, for the last time. And starting from the subsequent year, the debt administration charge will start to decline,” Šimonytė said.
The fiscal deficit target of 2.5 percent was bigger than expected due to deterioration in the economic growth outlook, the minister said.
“The public deficit projected for next year will reach 2.5 percent of GDP. The deficit is larger than we hoped we could achieve but this fall the Finance Ministry had to revise down its economic projections due to economic uncertainty and the economy will probably grow by 3 percent instead of 3.7 percent. Moreover, there are many downside risks,” Šimonytė said.
The government planned in spring that the fiscal deficit would be 2 percent of GDP next year.
