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05-12-2023

Seimas approved the draft 2024 State budgetary plan

Today, the Seimas approved the draft 2024 State budgetary plan prepared by the Ministry of Finance, which focuses on the implementation of the agreement on education and three priority areas consistently identified by the Ministry of Finance: increasing personal income, strengthening security and investing in Lithuania's future. 73 members of the Seimas voted for the draft State budgetary plan, 52 voted against, and 1 abstained from voting.

"Having honestly assessed the available opportunities and as our firm commitments – to grow and strengthen Lithuania – remain unchanged, the next year's budget responds to essential priorities: education, increasing personal income, strengthening security, investments creating high added value. I am pleased that after the upheavals of the last few years, this 2024 State budget will allow people to really feel the growth of the national economy", noted Minister of Finance Gintarė Skaistė.

Implementation of the Agreement on Education

The draft next year's State budgetary plan prepared by the Ministry of Finance identifies the implementation of the Agreement on Education jointly signed by the political parties as a relevant priority. The Government maintains its commitments to the education community, therefore in the 2024 State budget, additional EUR 390.7 million funding is earmarked for education. The lion's share of this amount of over EUR 219 million will be allocated to increasing the salaries of teachers and pedagogical staff,  over EUR 84 million – to the salaries of lecturers, researchers and non-educational staff. Another amount of over EUR 25 million will be allocated to the preparation for lessons to general education teachers, almost EUR 14 million – for increasing the number of full-time non-contact hours of pre-school and pre-primary education teachers, almost EUR 8 million – for inclusive education, the positions of educational support specialists and for the integration of pupils with special educational needs, as well as almost EUR 8 million – for professional information and consulting and additionally over EUR 7 million – for additional lessons.

Over EUR 48 million is additionally allocated for research and experimental development (R&D), of which almost EUR 27 million is earmarked for salary increases, the remaining EUR 21.5 million – for research, while the total amount allocated to R&D will exceed EUR 345 million.

Directly due to the decisions made by this Government, according to the data published by the SDA, next year the net salary for teachers will increase by an average of EUR 276, of which EUR 130 – from 1 January, for lecturers and researchers, respectively, the salary will increase by EUR 440 next year, of which EUR 140 – from 1 January. Systematic salary increases in the education sector in this term show a significant result: compared to 2020, next year teachers' salaries will increase by EUR 676, lecturers' and researchers' salaries will increase by EUR 804.

In percentage terms: since 2020, teachers’ salaries will have grown by 66 %, lecturers – by 70 %.
Additional EUR 3 million will be earmarked for non-formal education of children, half a million euros – for modernizing the infrastructure of educational institutions in Southeast Lithuania.

Personal income increase

The approved draft State budgetary plan continues to consistently follow the direction of the Government of increasing personal income by allocating more than EUR 1.7 billion for this purpose. Over EUR 1 billion of this amount will be allocated to increasing the income of the employed.

The decisions on increasing the minimum monthly wages (MMW) by 10 % from EUR 840 to EUR 924 and increasing the non-taxable amount of income (NTA) by 20 % from EUR 625 to EUR 747 will mean an additional income growth by EUR 75.22 for the lowest income earners and will affect those earning up to one average wages (AW). In Lithuania, 811 thousand persons earn up to one AW. Comparing the growth of MMW and NTA since 2020 and the influence of the latter on net personal income, it will increase by over EUR 261 for the lowest income earners.

At the same time, more than EUR 697 million is planned for increasing the salaries of teachers, lecturers, staff members of cultural and art institutions, municipal firefighters, doctors, prosecutors, statutory officers, social workers, judges, and other officials.

The approved draft State budgetary plan foresees over EUR 211 million for indexing and increasing the basic amounts of social assistance payments. These funds will be earmarked to increasing children's benefits, support for the disabled, compensation for housing heating costs, benefit pensions, targeted compensation for nursing and care costs. Decisions to increase benefits for children (child money) alone will affect 517 thousand children. In addition to these funds, EUR 55 million is planned for social services.

The amount of EUR 519 million is planned for the increase of old-age pensions by slightly more than 12 %, which will mean an average monthly increase of EUR 70 for seniors with the required length of service (the pension increases from EUR 575 to EUR 644), and as compared to 2020, the net amount increases by 61 % or EUR 244. This decision will affect over 623 thousand persons.

Strengthening security

Consistently implementing the agreement of the parliamentary parties and Lithuania's obligations related to NATO membership, the State budgetary plan prepared by the Ministry of Finance is committed to ensuring equal funding, by further strengthening national defence capabilities and military mobility. Increasing funding for the Ministry of National Defence has been targeted since the beginning of the term, it will be twice as large next year and will exceed EUR 2 billion, and it will account for 2.75 % of Lithuania's gross domestic product (GDP).

In the next year’s budgetary plan, EUR 280 million is allocated for military mobility and military infrastructure from the Temporary Solidarity Contribution, almost EUR 3 million is earmarked for arming the Public Security Service (PSS), another over EUR 19 million – for cyber security, and over 30 million – for strengthening for the preparation for a possible accident at Ostrovets NPP.

Additional EUR 43.1 million will be earmarked to the Ministry of National Defence; these are the funds from the European Peace Facility, which were granted by the European Commission to Lithuania as compensation for active support to Ukraine.

At the same time, in response to the ongoing geopolitical uncertainty, a change in the right to borrow is also proposed. The Government supports the proposal to consolidate the provision that the right to borrow is granted for the needs of the national defence of the Republic of Lithuania and for the development or adaptation of dual-use (military-civilian) transport and other infrastructure necessary to ensure the support of the host country. This decision can be implemented by maintaining the general indicator of the general government balance and the borrowing limit of the Government specified in the budget law.

Investments for the future of Lithuania

In 2024, Lithuania plans to invest EUR 3.3 billion, of which the largest share of funds, over 1 EUR billion, will be allocated to the green transformation. In this area, it is planned to ensure cheap and non-polluting energy for energy communities, involving the most vulnerable residents, to promote the development of high added value and green technologies with loans to companies, and also to provide loans to public and private individuals for renewable energy sources (RES) power plants and renovation of multi-apartment buildings. 34 % of funds are planned for green transformation.

EUR 94 million investments are planned for the digital transformation, focusing on the digitization of business processes of high added value industrial companies, as well as the transformation of state information technology management and the development of digital competences in the areas of high performance and artificial intelligence cyber security.

EUR 467 million is also planned to be invested in the fields of research, business and innovation by strengthening innovation in research centres, expanding their supply and promoting the development and expansion of start-ups.

Moreover, respectively, EUR 178 million of investments will reach health care, emphasizing the quality and availability of health care services, EUR 200 million will be allocated to measures for jobseekers, improving the quality and accessibility of social services, and ensuring the effectiveness of social assistance in crisis situations.

EUR 695 million is planned for the transport sector. These funds will be used to adapt the railway network for international military mobility and to improve rail and road traffic.

Moreover, additional funding for Lithuanian roads is planned, namely over EUR 872.6 million, of which EUR 583.2 million is earmarked for the Road Maintenance and Development Programme, EUR 130.5 million is planned to be allocated from the Temporary Solidarity Contribution, and EUR 158.9 million from EU financial support (European infrastructure networking measures).

Support to Ukraine

Another priority area in the next year's State budgetary plan prepared by the Ministry of Finance is support to Ukraine and its citizens fleeing the war waged by russia and finding refuge in Lithuania.

Over EUR 127 million is planned to be allocated to education and social services to the war refugees who came to Lithuania, another EUR 70 million – for Lithuania's obligations to participate in the EU and international formats, and EUR 35 million – for the agreement on the defence measure for Ukraine "European Peace Facility".

Other needs

Also, the State budget for 2024 plans EUR 450 thousand to be allocated for financing to the Public Procurement Service (to ensure the performed functions), EUR 120 thousand – to the Communications Regulatory Authority, EUR 30 thousand – to the Consumer Rights Protection Service (for the implementation of the EU regulation on a single market for digital services and amending directive), EUR 45 thousand – to the Migration Department (for the development of the migration information system).

Balance dynamics

The draft 2024 State budgetary plan includes almost EUR 17 billion of revenue (as compared to the 2023 plan, revenue grows by 9.2 % or EUR 1.4 billion), and EUR 20.6 billion of expenditure (it increases by 10.6 % as compared to the year 2023, or by over EUR 2 billion).

In 2024, the largest share of appropriations is allocated to social security – more than EUR 10.103 million (additional EUR 987 million, as compared to the year 2023). EUR 3,836.2 million will be allocated to health care (additional EUR 456 million), for education – EUR 3,846.1 million (additional EUR 543 million), for defence – EUR 2,134.8 million (additional EUR 48 million), for economy – EUR 2,041.8 million (additional EUR 291 million), EUR 938.2 – for public order and public security (additional EUR 82 million), for the areas of recreation, culture and religion – EUR 828.6 million (additional EUR 88.6 million), for housing services and utilities – EUR 577.0 million (additional EUR 147 million), for environmental protection – EUR 403.1 million (additional EUR 16.6 million), for general public services – EUR 2,340.8 million.

Municipal revenue is also growing; it will exceed EUR 5.8 billion (increase by EUR 823 million or 16.4 %, as compared to the year 2023). In addition, municipalities will be able to borrow up to EUR 103.7 million.

The draft 2024 State budgetary plan prepared by the Ministry of Finance provides for that in 2024  the general government deficit will amount to -3 % of the gross domestic product (GDP), of which -2.5 % – after deduction of temporary measures (support to Ukraine), and general government debt will be 39.9 % of GDP.