The Lithuanian government’s revenue last month fell 31.1 percent below target, Finance Minister Vilius Šapoka says. To make up for the shortfalls and fund economic stimulus, the government has already borrowed 4.3 billion euros.
According to preliminary data, the central government collected 221 million euros less than planned in April.
Meanwhile in March, the budget revenue was 13.8 percent, or 95.6 million euros, short of the target.
“In March, the performance was mainly undermined by liquidity problems encountered by businesses that used the opportunity to defer paying their taxes. In April, a steeper decline in revenue was also driven by poorer performance of the country’s businesses in March,” Šapoka said at a news conference on Tuesday.
So far this year, the central government’s revenue missed the target by about 10.5 percent, or nearly 300 million euros, the minister said, citing preliminary estimations.
Hard-pressed businesses were allowed to defer paying their taxes. Nearly 200,000 businesses and self-employed people made use of the option which cost the government over 330 million euros, according to Šapoka.
“Given the significant revenue shortfall [and also the need] to support and stimulate the economy, the state has now turned to borrowing,” the minister said.
Since the beginning of the year, the government has raised 834 million euros in the domestic market, according to Šapoka, issued 2-billion-euro-worth of Eurobonds and signed agreements to borrow 1.5 billion from international financial organisations.
“In total, the government has raised 4.3 billion euros so as to make sure that the treasury is not short of funds to cover the tax revenue shortfall, to invest into the future and to pay subsidies to businesses and people.”
This year’s central government budget is estimated at 9.548 billion euros in annual revenue, excluding EU funds, and 11.53 billion euros including EU funds.
Social insurance fund to tap into cash reserves
Lithuania’s social insurance fund SoDra will tap its cash reserve after recording a revenue shortfall and an increase in social benefit payments following the introduction of a nationwide lockdown in the country.
“Employers furlough their employees or use a possibility to defer the payment of social contributions to SoDra, which leads to our revenue shortfall. The results for April show our revenue about 55 million euros below the target,” SoDra director Julita Varanauskienė told LRT RADIO on Tuesday.
SoDra has already paid out nearly 40 million euros in childcare benefits to around 60,000 parents and grandparents on leave during the coronavirus quarantine.
Meanwhile, the increase in unemployment benefits has not been significant so far, Varanauskienė noted.
“We still anticipate an increase in unemployment benefits, since people who left their jobs in April will start receiving payments only in late May,” she explained.
To cover the growing expenditure, SoDra asked the government to allow tapping into the fund’s reserve, she said.
“If the quarantine does not last long, the reserve should be sufficient,” Varanauskienė said, adding that SoDra had nearly 200 million euros accumulated in in its reserve in 2018.
SoDra’s planned revenue was to be 4.894 billion euros this year and expenditure, nearly 4.55 billion.