Finance minister urges austerity as Lithuania’s debt risks breaking EU rules

Lithuania’s Finance Minister Vilius Šapoka says the government should not raise its 2021 spending for boosting consumption, as the country is close to breaking eurozone rules on government debt.

“[The Finance Ministry] will propose a safe government budget,” Šapoka told the parliamentary Budget and Finance Committee, which is working on next year’s government spending bill, on Wednesday. “What does ‘safe’ means? Raising spending for consumption would not be safe.”

He later told BNS that Lithuania’s government debt, which shot up in the wake of the coronavirus pandemic, would reach nearly 50 percent this year. As a member of the eurozone, Lithuania has committed to keeping it within 60 percent under the Maastricht Treaty.

“We must think about the debt level. If we break the Maastricht criteria, there’s a big chance that the debt will start growing exponentially in the future […]. For the trajectory of our debt, the coming years, 2021–2023, will be crucial,” Šapoka said.

The government is not planning to introduce any new taxes next year, according to him, except perhaps the plastic waste tax considered by the EU.

Šapoka refused to estimate the effects of the coronavirus on Lithuania’s economy, saying at this point it would be tantamount to “telling fortune from coffee grounds”.


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