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The Government Approves the Revised Draft Budget for 2021

Date

2021 05 15

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Today, the Government approved the revised draft State budget for 2021 prepared by the Ministry of Finance, where the majority of funds are earmarked for the management of negative coronavirus pandemic effects.

The revised draft budget is prepared in order to finance newly emerging and lasting longer than planned needs and measures for reducing the COVID-19 effects. The revised draft budget also takes into account the investments from the European Economic Recovery and Resilience Fund earmarked in the plan “New Generation Lithuania” as well as other financial needs of the State and its population. 

“Today we presented the updated draft budget to the Government, which focuses on mitigating the effects of the protracted pandemic and creating mechanisms for the transition to the post-pandemic phase. Accelerated vaccination and short-term vaccination plans give hope that we will return to normal pace of life already this year,” said Minister of Finance Gintarė Skaistė.

Additional funds for the management of coronavirus effects

“In the updated budget we commit a substantial funding to social and health care systems, which are currently under the greatest pressure in combating the COVID-19 effects. We also have earmarked funds for wage supplements for medical staff with regard to COVID-19, as well as for education, transport and tourism sectors which have been affected by the pandemic,” said G. Skaistė.

In total, the revised draft State budget for 2021 earmarks additional EUR 731.7 million, including the European Union assistance and other international financial support. Where EUR 581.3 million is planned for financing the COVID-19 measures.

Most of the funding, i.e. EUR 265.3 million, is earmarked for health care sector for purchase of vaccines and vaccination measures, wage supplements for healthcare staff with regard to COVID-19, medicines, necessary equipment and laboratory tests.

EUR 238.5 million is planned for social security for sickness, maternity and unemployment social insurance and such employment measures as downtime subsidies, job search or sickness benefits and benefits for self-employed persons. Also, almost EUR78 million is earmarked for other institutions involved in the management of the coronavirus pandemic.

Public needs and investments

In order to improve the situation for the most vulnerable groups of society, additional funds were earmarked for payment of universal single person benefits (EUR 15.3 million) and financing of measures for the employment of people with disabilities (EUR 2.4 million). 

Focusing on investments ensuring economic transformation, the revised draft budget also earmarks EUR 149.3 million for investments of the plan “New Generation Lithuania” and subscription of electronic scientific databases (EUR 5 million).

Revenue collection is growing

The State budget revenue for 2021 in the revised draft, as compared to the 2021 plan approved in December last year, increases by 0.7 %, i.e. EUR 58.7 million.

Though, due to better than expected wage fund and GDP growth, revenue is growing faster, however such business support measures as temporary reduced VAT rates for catering, culture and sports sectors, one-off possibility for businesses that suffered a loss in 2020 to compensate it with the corporate income tax declared in 2019 and tax deferral extended for businesses affected by the COVID-19 pandemic for another four months, until 31 August, reduce part of the increase. It is projected that due to these measures, in total, the State budget will lose approximately EUR 207.5 million of revenue in 2021. In the medium term, however, the impact of these fiscal support measures on sectors affected by the pandemic will enable more accelerated return to a sustainable path.