Lithuanian balanced budget plans under pressure: minister

Lithuanian government plans to submit next year's balanced budget draft law this autumn, however, upcoming national elections may influence the budget, Rasa Budbergyte, the Baltic country's finance minister, said on Monday.

"Next year's national budget must be balanced, that said, with no deficit," Budbergyte was quoted as saying by local website vz.lt.

The minister was speaking after a close-door meeting with Labor party's group at the country's parliament, the Seimas. Labor party is one of Lithuania's ruling parties.

According to the minister, it is stated in the country's legislation that the government should prepare and submit balanced budget draft law for the year 2017 to the parliament. However, she admitted that approval of the balanced budget depends on a political will, as well as on economy and political situation.

"We should wait for September and see renewed macroeconomic projections which will determine the next year's budget structure," Budbergyte said.

She also mentioned that upcoming national elections in Lithuania are weighing on spending plans as some members of ruling coalition push to increase expenditures for socially sensitive groups within the country's society.

"Elections are already having an impact (on the budget); however, my duty is to ensure that the budget to be submitted to the parliament is not grounded on populism," the minister underlined.

Lithuania's national elections will be held in October this year.

Budbergyte stressed that fiscal discipline must be respected, alongside with efforts to reduce social exclusion in the country. Spending for defence must remain a priority, the minister added.

Meanwhile, Lithuania's Labor party questioned the possibility to submit next year's balanced budget.

"We indeed committed to have balanced budget, however, it is a subject of discussions; (...) probably this target is too ambitious," Valentinas Mazuronis, leader of Labour party, was quoted as saying by vz.lt.

In his words, budget is an issue of political will, and "increase of social spending is on the political agenda in the meantime".

"Lithuania's residents' purchasing power should increase, this is the priority to which other budget-related priorities must be adapted, including balanced budget; only a few members of the European Union have balanced sheets at the moment, so we can consider if it is necessary for us next year," Mazuronis added.

Other members of Labor party propose to repeatedly increase minimum monthly wage in Lithuania next year, despite it was already increased twice this year and now amounts to 380 euros (424 U.S. dollars).

Budbergyte, the finance minister, pointed to the limited space for spending in the country.

"We must allocate the limited amount of resources in an effective way, so that 'wish list', surrounding the budget preparatory and approval phase, is as short as possible," the minister stressed.

Budbergyte was appointed as Lithuania's new finance minister this June. The newly-appointed minister faces a challenge of tackling financial populism in the country despite short period of time at the office until this fall.

According to the government's forecasts, Lithuania's public sector budget deficit will amount to 0.8 percent of gross domestic product (GDP) this year. Budget revenues were higher than projected in the first half of 2016 and deficit amounted to around 0.04 percent from GDP during the period.

The country's presidency said earlier that national defence and social security are the priorities in terms of next year's national budget. Endit