Lithuania's fiscal-structural plan and national escape clause approved at ECOFIN meeting will allow for more flexibility in the State budget planning
Today's meeting of the EU Council of Economic and Financial Affairs (ECOFIN) in Brussels approved Lithuania's fiscal-structural plan and the Council recommendations, including the national escape clause.
The ECOFIN meeting approved EC recommendations on the application of the national escape clause for 15 countries, including Lithuania.
Lithuania is recommended to stick to the proposed maximum growth rate of net expenditure and to take advantage of the opportunity to ramp up defence spending under the national escape clause.
Also invited to ensure a sufficient funding for healthcare, social protection and general public services. To improve tax compliance and to broaden the tax base to sources whose taxation is less detrimental to growth.
“Council decisions on spending limits and the adopted escape clause are highly important for us in shaping Lithuania's fiscal policy for the coming years”, Minister of Finance Rimantas Šadžius said.
According to the Minister, the aim is not only to ensure sustainable management of public finances, but also to create such public expenditure pattern that promotes long-term economic growth.
“Fiscal discipline clause combined with additional budget revenue due to recently adopted amendments to tax laws, attracted funding from international institutions is a combination of different fiscal measures opening up space to respond to the need for higher spending to finance defence”, R. Šadžius added.
According to Lithuania’s approved fiscal-structural plan (FSP), the average annual growth rate of net expenditure should not exceed 5.2% in the period 2025-2028 and 6.1% in 2025 alone.
During the dialogue with the European Commission, the Ministry of Finance managed to achieve a faster growth rate of net expenditure than foreseen in the initial guidelines for expenditure growth presented to Lithuania by the European Commission.
The growth rates of net expenditure approved by the Council are the highest for Lithuania as compared to other countries in the region. By comparison, the average annual growth rate of net expenditure in 2025–2028 will be 4.1% in Latvia, 4.8% in Estonia and 4.6% in Poland.
The national escape clause provides for the possibility of temporarily (in 2025–2028) additionally exceeding the net expenditure limits approved in the fiscal-structural plan by up to 1.5% of GDP, if expenditure is exclusively allocated to defence. At the end of the period, the Member States commit to remain within the 3 % GDP limits on public finance deficit foreseen in the EU fiscal discipline rules.
The net expenditure reported in the FSP in the new economic governance framework is a key monitored and evaluated indicator for verifying the EU Member State’s compliance with the fiscal discipline rules applicable to the EU Member States. At the same time, it is important to ensure compliance with the Maastricht deficit criterion every year.
Budget planning and execution within these higher expenditure growth limits would ensure sustainability of public finances in the long term (until 2038), also taking into account the costs related to ageing society.
Lithuania’s medium-term fiscal-structural plan is available HERE.
Additional information:
Net expenditure of general government shall be understood as defined in Regulation (EU) 2024/1263 of the European Parliament and of the Council: general government expenditure excluding interest expenditure, EU programme costs (equal to EU revenue), national expenditure on EU co-financed programmes, unemployment benefits of a cyclical nature and considering discretionary revenue measures, one-off and other temporary measures.
When EU Member States prepare their fiscal- structural plans, the Commission provides in advance technical information (expenditure growth guidelines)– indicative maximum limits and limits for net expenditure growth in line with the EU fiscal discipline rules.
EU fiscal discipline rules are embodied in the Stability and Growth Pact Regulation (EU) 2024/1263.
Last updated: 10-07-2025
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