Roundup: Lithuanian president to endorse controversial budget bill

Lithuania's President Dalia Grybauskaite said on Tuesday she would sign the country's budget bill for next year despite it being criticized by the European Commission and national auditors.

According to the president, the Lithuanian budget for 2016 is on the verge of infringing the EU's fiscal rules. However, higher defense and social spending have been provided which is important for the country.

"I will sign this budget, it is necessary. We should not slow down or hinder, we must work," ELTA news agency reported Grybauskaite as saying.

Earlier on Tuesday, presidential advisor on domestic affairs Mindaugas Linge criticized the budget as something a student would draft.

"The president has said that the budget is on the verge of risk; it could be called slightly 'student-like'," Linge said in an interview with local broadcaster Ziniu Radijas.

According to him, one of the issues is deficit, as "students' wishes are usually at odds with possibilities."

"Then there is the government's optimism; students also have optimistic expectations about the future, and sometimes even overestimate their abilities and like to risk," he added.

On the other hand, according to Linge, the budget retained and affirmed priorities: funding was allocated for defense and external security. Nonetheless, Linge urged the government to have a responsible view about the future, responsibly implement its revenue collection program, and to accrue some reserve in the future instead of adopting deficit budgets.

EC WARNING

Recently, the European Commission warned that Lithuania's budget spending could exceed the revenue more than the government had planned, thus leading Lithuania to not meet the requirements of the EU stability and growth pact, which decrees a structural budget deficit should not exceed 1.0 percent of GDP.

The EC warned that the Lithuanian government was too optimistic about GDP growth and budget revenue projections.

Rimantas Sadzius, Lithuania's minister of finance, said he expected the country's economy to expand by 3.2 percent in 2016. In the case of slower growth, the budget goals would still be achieved, he noted earlier.

But the European Commission forecast 2.9 percent GDP growth for Lithuania next year, as did Lithuania's central bank.

Vitas Vasiliauskas, the chairman of Lithuanian central bank, earlier expressed his discontent with the government's postponed plans to achieve a balanced budget.

OPPOSITION CRITIQUE

Andrius Kubilius, opposition leader in the Seimas, Lithuanian parliament, agreed that there were good things in the next year's budget, such as an increase of defense funding. However, Lithuania might begin to lose its reputation with international financial institutions and finance markets, Kubilius warned.

"The problem is that the European Commission has expressed fairly strong comments about the excessive deficit in our budget, but the government has decided that there is no need to take the European Commission's comments too seriously," Kubilius said in an interview with Ziniu Radijas.

"The price for the loss of reputation could be quite high, because Lithuania borrows from the international financial markets; after the loss of reputation, we might have to pay more for our loans," the opposition leader underlined.

Lithuanian parliament last week adopted the state budget for 2016. The total revenue of the state and municipal budget is expected to amount to 9.394 billion euros (10.280 billion U.S. dollars) next year. With a total spending of 10.045 billion euros, the budget factors in a deficit of 651 million euros. Endit