Draft state budget for 2019 presented to the Seimas

Vilius Šapoka, Minister of Finance, presented draft Law No XIIIP-2715 on the Approval of Financial Indicators of the State Budget and Municipal Budgets for 2019 to the Seimas, which focuses on structural reforms in the areas of health, education, social protection, innovation, and taxes and on reduction of shadow economy.

The draft submitted proposes to endorse the state budget revenue of nearly EUR 10.587 billion in state budget revenue and over EUR 11.681 billion in expenditure and acquisition of assets (appropriations exceed the revenue by almost EUR 1.095 billion).

The draft budget for 2019 projects a budget surplus of 0.4% of Gross Domestic Product (GDP). Reserves of public finance are estimated to reach EUR 1.5 billion in late 2019.

“On the one hand, this is investment to our future, education, science, health care, social protection and people. On the other, in the context of the changing international environment, we should behave with caution and care and ensure stability. We should build up reserves to avoid hastiness and prevent expensive credits in the future,” the Minister of Finance underlined as he presented the draft budget.

It is estimated that in 2019, the GDP growth will account for 2.8% with the average annual inflation of 2.5%. The year 2019 will witness a growth of average gross monthly salary by 7.2% and a fall in unemployment rate to 5.9%.

According to the Ministry of Finance, the biggest share of the budget, amounting to EUR 5.472 billion, should be earmarked for social security in 2019.

The Minister of Finance said that “a total of EUR 212.3 million is planned for the indexation of pensions alone. It is also envisaged to raise child allowance from EUR 30 to EUR 50 and increase the financing base for social assistance benefits and targeted compensations. It is also envisaged to allocate EUR 6 million for social enterprises and social workers, including case manager services”. He went on to say that “as much as EUR 11.3 million is earmarked for subsidies to young low-income families to acquire their first home, and as much as EUR 46.7 million is foreseen to increasing basic salaries for public servants and minimum monthly wages.”

In 2019, it is planned to allocate over EUR 948 million to the Ministry of National Defence. It is envisaged that the national defence budget will reach 2% of GDP next year.

Under the draft budget 2019, health care is entitled to EUR 2.155 billion, and education and science are entitled to EUR 1,517 million. The Minister pointed out that funding to culture will increase by EUR 40 million.

The estimate is that the municipal budgets will receive tax revenues and state subsidies of around EUR 2,937 million in 2019.

Following the submission, next year’s state budget will be deliberated in accordance with the procedure established under the Statute of the Seimas. The Committee on Budget and Finance is the lead committee for the consideration of the draft, with all the remaining Seimas Committees functioning as additional committees. The preliminary date for the first reading of the draft at the Seimas plenary sitting is 22 November 2018, while the second reading is scheduled for 6 December 2018.

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