"I we didn't help Vilnius' local government financially, the city would be insolvent by September," he told the Žinių Radijas radio station.
"We, as the government, had to take concrete measures. We couldn't wait for bankruptcy to happen. Local government employees have not received their salaries for four months," the prime minister said.
During a meeting with Vilnius Mayor Arturas Zuokas on Tuesday, Butkevičius promised to provide a loan of around 12 million litas (EUR 3.5m) to the capital city and to allow it to keep 50 percent of the income tax collected in the city next year, up from the current 42 percent. That would bring about 70 million litas in additional revenue.
The share of the tax going to Vilnius this year was raised to 42 percent, from 40 percent. The city estimates that only around 366 million litas in income tax revenue is left to it, compared with the collection target of some 1.52 billion litas.
The local government's debt currently stands at 1.1 billion litas, according to the mayor.