The Seimas Adopted the Budget for 2021


2020 12 31

The Seimas_ministre.jpg

The Seimas adopted the budget for 2021, which focuses on containing the effects of coronavirus.

”The budget for 2021 adopted by the Seimas today is not traditional. We could normally talk about revenue, expenditure and deficit lines, try to rationalise some or other figures, argue about ambition and opportunities. This time, however, we are forced to forget this and to talk about much more important things. The budget adopted stands out in the fight against the pandemic and its consequences that we have not yet seen. To this end, we are allocating a billion euros, which will guarantee the purchase of a vaccine against COVID-19, the preservation of businesses and jobs, a reduction in the cost of medical equipment and research, medical bonuses and other hard work every day. The health of the Lithuanian people is our priority, therefore we are making every effort to make sure that in the near future the reality in which we live now will change for the better“, said Prime Minister Ingrida Šimonytė.

The total budget for 2021 amounts to more than EUR 18 billion of expenditure, of which more than EUR 4.7 billion is earmarked for social protection. The economy will receive EUR 3.5 billion, of which for education more than EUR 2.8 billion and health care around EUR 1.2 billion.

”The adopted budget for the next year, in addition to the funds allocated to combat the challenges of the pandemic, increase of the minimum monthly wage, the funds are also earmarked for indexing pensions, which the former Government failed to include in the budget, the child’s money, minimum monthly wage, and pensions are increasing significantly“, said Minister of Finance Gintarė Skaistė. At the same time, the expenditure planned in the budget is optimal, bearing in mind that the main focus is on managing the COVID-19 pandemic, what we expect to do in the next half-year. If the situation does not stabilise as projected, it will be possible to adjust the costs allocated to coronavirus in the Spring session of the Seimas, but we do not concentrate on this scenario yet”.

The budget for 2021 designates about EUR 1 083 million for the management of the negative consequences of the COVID-19 pandemic:

  • about EUR 573 million for sickness (incapacity) benefits, subsidies during downtime, benefits for both self-employed and jobseekers;
  • approximately EUR 230 million is earmarked for grants, soft loans, partial interest compensation and other business support for companies affected by the COVID-19 pandemic;
  • approximately EUR 65 million is allocated to finance the purchase of the COVID-19 vaccine;
  • approximately EUR 45 million for financing of expenditure of the Compulsory Health Insurance Fund to ensure medical bonuses;
  • approximately EUR80 million for the purchase of medical treatment and medical equipment, laboratory tests, etc.
  • approximately EUR 90 million for other different institutions involved in containing the negative effects of the COVID-19 pandemic, etc.

The total pension increase in the budget for 2021 is about EUR 353 million. The average old-age pension for elderly people is expected to increase by EUR 38 next year (from EUR 377 to EUR 415) and for those with experience, it will increase by about EUR 40 (from EUR 399.4 to EUR 440).

An additional EUR 29 million is earmarked in the budget for 2021 for social assistance benefits and indexation of state pensions. For employees, the minimum monthly earnings before tax will increase by EUR 35 (from EUR 607 to EUR 642).

In 2021 the child’s money will increase from EUR 60 to EUR 70, while for the disabled children, children from large and poor families – from EUR 100 to EUR 110. To this end, the budget for the coming year is EUR 63 million.

The municipal budget revenue, including the State budget grants, will grow by almost 11 per cent up to EUR 358 million. In the event of unusual circumstances due to the coronavirus and the impact of the collection of municipal budget revenue, the funds will be allocated from the State budget for the next year to compensate  the revenue loss  in 2020. Municipalities will also be able to borrow up to EUR 58 million, if necessary. 

As the epidemiological situation deteriorates and the negative impact of the pandemic on the economic field economy strengthens, Lithuania’s economy is expected to shrink by 1.5 % this year, but in the second quarter of 2021 the economic activity is expected to grow by 2.8 per cent over the whole year 2021.

The general government deficit will amount to 7 %. GDP (of which 2 % GDP for expenditure related to the measures to  contain the effects of the COVID-19 pandemic).

The revenue and expenditure related to projects funded by the Recovery and Resilience Facility (REF) are not included in the updated budget. This decision was made because the plan for the use of funds of the Recovery and Resilience Facility of the Instrument for Recovery and Resilience is being prepared and co-ordinated with the European Commission, it is not known when the share of these funds that will reach Lithuania in 2021. The expenditure and revenue related to the implementation of the Economic Recovery and Resilience Action Plan will be evaluated in the general government finance projections presented in the Stability Programme of Lithuania for 2021. 

On the basis of the legal acts of the European Union, on 21 December Lithuania submitted to the European Commission and the Eurogroup the draft budget plan of Lithuania for 2021 adjusted according to the decisions adopted by the new Government  concerning the budget for 2021.