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Aspects of the 2015 Budget: Defence, Economic Growth, Social Security and Municipalities

Date

2014 10 21

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Vilnius, 21 October. Today Minister of Finance Rimantas Šadžius presented to the Seimas the draft Law on the Approval of Financial Indicators of the State Budget and Municipal Budgets for 2015, where for the first time revenue and expenditure are calculated in the euro.

“This is the budget we will enter the euro area with. The priorities for 2015 are the following: national security, promotion of economic growth, fulfilment of social commitments to the residents and enhancement of financial independence of municipalities,” stated the Minister of Finance.

Budget Indicators

It is planned that consolidated total revenue of the State budget and municipal budgets (including EU and other international assistance of almost EUR 2.3 billion) make up about EUR 9.2 billion in 2015 or  5.9 % more than planned this year.

The projected State budget revenue, including EU and other international assistance, will make up EUR 7.957 billion or 5 % more, as compared with the plan approved in 2014.

The consolidated total tax revenue of the State budget and municipal budgets will be about EUR 6.3 billion, i.e. about EUR 359 billion or 6.0 % more than planned in 2014. The major share of revenue – almost EUR 3 billion – is planned from the value added tax. It is planned to generate EUR 1.4 billion from the personal income tax, EUR 1.1 billion – from excise duties, EUR 522 billion – from corporate income tax.

Planned consolidated expenditure, including EU assistance, will amount to EUR 9.558 billion, while the State budget expenditure – EUR 8.299 billion.

Budget indicators are prepared on the basis of the projections published by the Ministry of Finance in September. It is calculated that in 2015 GDP will grow 3.4 %, average annual inflation will account for 1.2 %, wages will grow, in average, 5.8 %, unemployment rate will decrease down to 10.4 %.

In 2015 the State budget deficit will make up about EUR 342.4 million (on cash basis), planned public sector finances deficit – about 1.2 % of GDP.

It is planned that at the end of 2015 the State debt will represent about 40 % of the projected GDP (42.6 % of GDP, if calculated accumulation of the reserve for redemption of the bond issue in 2016).

Financing of Defence, Economy and Social Security Increases

The major share of the State budget expenditure, as compared with the 2014 budget, is increased for defence (EUR 114 million), promotion of economy (EUR 77 million, of which almost EUR 49 million – for road maintenance and development), social security – EUR 55 million.

Next year debt servicing costs will decrease by EUR 17 million. In order to optimise public sector expenses, management costs of appropriation managers will be reduced by almost EUR 12 million.

 

Municipalities Will Get More Revenue from PIT

In order to improve for municipalities their long-term financial sustainability, the draft Law Amending the Law on Methodology for Calculating Municipal Budget Revenue has been submitted to the Seimas. According to modifications of the methodology, along with the national economic growth and better collection of the personal income tax to the National budget, municipal budget revenue will grow proportionally.

Moreover, in 2015 the PIT share falling on municipalities will be increased from 67.78 % to 72.15 %. Due to this change, the State budget revenue from the personal income tax will be lower by 3.4 % in 2015, while municipal budget revenue by 12.5 % higher than planned this year.

Expenditure by Area

The State budget expenditure, excluding EU Funds investments and other international assistance, will amount to EUR 5,977.4 billion or make up 4.8 % more than according to the plan approved in 2014.

In 2015 the major share of expenditure is planned for: education – almost EUR 1.1 billion, social security – EUR 842 million, economy – EUR 774 million, debt servicing – EUR 638 million, health care – EUR 524 million, public order and safety – EUR 502 million, defence – EUR 481 million, contributions to the EU budget – EUR 417 million, culture – EUR 208 million, environmental protection – EUR 73 million.

In 2015 EU Funds investments and other international assistance in the State budget will make up EUR 2.3 billion. This is by EUR 163 million more than in 2014. The major share of these funds – EUR 1.5 billion – falls on economic sector, of which EUR 379.2 million – the Ministry of Transport and Communications, EUR 85.3 million – the Ministry of Energy, EUR 227 million – the Ministry of Economy, EUR 809 million – the Ministry of Agriculture and its management area.

Public Relations Division
vrs@finmin.lt