EU joins criticism of Lithuania's 2016 budget

By bne IntelliNews November 17, 2015

The European Commission reported on November 17 that Lithuania's 2016 budget may not meet requirements of the EU Stability and Growth Pact (SGP) due to overly optimistic assumptions on growth and budget revenue.

The criticism, published alongside opinions from the EU executive on the financial plans for next year submitted by 16 Eurozone countries, only adds to the doubt surrounding the budget put forward by Vilnius. The Lithuanian National Audit Office offered similar warnings on November 16.

Although none of the 16 budget plans was found to be in particularly serious non-compliance, Estonia and Slovakia submitted plans that are compliant with the targets; Latvia's draft budget is "broadly compliant".

Lithuania was joined by Austria and Italy in presenting budgets that the EU says are "at risk of non-compliance with the requirements for 2016 under the SGP".

“The Commission … invites the authorities to take the necessary measures within the national budgetary process to ensure that the 2016 budget will be compliant with the SGP,” it said in a statement.

Lithuania’s National Audit Office claimed the day before that the budget is “on the brink of violating fiscal rules,” and hampers the potential to deal with financial shocks. The body criticised the government’s mid-term proposal for 2016-2018 for a deficit of around 1% of GDP per year. It insists the deficit should be limited to 0.5% to ensure long-term financial stability. 

The audit office also criticised the bill for overly optimistic projections for tax revenue. The finance ministry rejected the auditors’ claim, saying the forecasts are “very conservative”.

Cyprus and Greece did not submit plans as they are under economic adjustment programmes. Portugal missed the deadline,, while an opinion has already been issued on Spain's budget.

Related Articles

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

Central European and Baltic economies shrugging off political uncertainty

Medium-term economic growth forecasts for Central Europe and the Baltics have been raised by The Vienna Institute for International Economic Studies (wiiw) in a report issued on June 29. The most ... more

Germany and Gazprom question need for EU talks on Nord Stream 2

A joint EU mandate to discuss the operating rules that would apply to Russia's planned Nord Stream 2 gas pipeline is not necessary, Angela Merkel said on June 15. Russian state-controlled ... more