Three-year budgets: ensuring funding continuity and a more sustainable fiscal policy of the country

On Wednesday, the Government approved the amendments to the Law on the Budget Structure and relevant legislation prepared by the Ministry of Finance, which propose to establish a three-year budget. This will ensure the continuity of funding in the medium term and form a more sustainable fiscal policy of the country. It is also expected that the efficiency of the use of budget funds will increase, making it possible for institutions to carry over a part of the unused funds to the following year. The proposed changes would enter into force during the preparation of the draft budget for 2025-2027.

"Three-year budget expenditure will be planned according to the country's financial capabilities, and at the same time, the impact of the adopted decisions on the expenditure of not only the first, but also the remaining two years will be assessed. Funding continuity will be ensured for institutions in the medium term, which will mean more effective and consistent implementation of public policy. Accordingly, a more sustainable fiscal policy of the country will be formed", says Minister of Finance Gintarė Skaistė.

Currently, the approval of one-year budget expenditure is valid, and the following two-year budget indicators – revenue and expenditure – are only indicative. These amendments to the law aim to plan and submit three-year budgets to the Seimas for approval.

Amendments to the Law on the Budget Structure propose establishing a three-year budget system, which would include drawing up and approval of the medium-term consolidated budget (the State budget, municipal budgets, State Social Fund budgets and Compulsory Health Insurance Fund budget) spending limits and other indicators at the level of the law.

Implementation of the proposed changes is expected to reduce the year-end spending problem as well. Currently, the institutions that did not manage to use the funds for the intended purposes try to use all the planned funds to the maximum at the end of the year, and due to rush the efficiency of their use may suffer.

"Amendments to the law provide for the possibility to carry over the unused funds at the end of the year to the following budget year under certain conditions. In this way, the efficiency of the use of budget funds will increase, the consistent fulfillment of assumed obligations, and the implementation of progress measures will be ensured," notes the Minister of Finance.

It is planned that the medium-term budget rules will be applied during the preparation of the first draft consolidated medium-term budget for 2025-2027.