Three-Year Budgets Will Ensure Funding Continuity and a More Sustainable Country's Fiscal Policy
The Ministry of Finance has prepared amendments to the Law on the Budget Structure, which propose to establish a three-year budget. This would allow for more efficient planning of expenditure, would ensure the continuity of funding in the medium term, and would form a more sustainable fiscal policy of the country. Some of the proposed changes will be applied already this year, and they will come into full effect during the preparation of the draft budget for 2025-2027.
"Currently, one-year budget expenditure planning is legally established, and the following two-year budget indicators - revenue and expenditure - are only indicative. Our goal is to actually plan and submit three-year budgets to the Seimas for approval. In the medium-term budget, three-year budget expenditure will be planned according to the country's financial capabilities, and the impact of the adopted decisions on the expenditure of subsequent years will be evaluated. In this way, the appropriation managers will be assured of the continuity of funding in the medium term, as well as the impact of the adopted decisions on future budgets will be evaluated, accordingly a more sustainable fiscal policy of the country will be formed," says Vice-Minister of Finance Gediminas Norkūnas.
Amendments to the Law on the Budget Structure propose establishing a three-year budget system, which would include drawing up and approving expenditure limits and other indicators of the consolidated medium-term budget (State budget, municipal budgets, State Social Insurance Fund budget and Compulsory Health Insurance Fund budget) at the level of law.
It is expected that after the implementation of the planned changes, the efficiency of the use of budget funds will also increase, since the unused funds remaining at the end of the year can be transferred to the next budget year, thus ensuring the consistent fulfilment of assumed obligations and the implementation of progress measures. "Our target is to prevent the continuation of such a practice, when the appropriation managers, who did not succeed in using the funds for the specified purposes, allocate them at the end of the year to whoever they can, so as not to lose them. The amendments to the law provide for the possibility to transfer the allocations to the next year under certain conditions," notes the Vice-Minister of Finance.
Already during the formation of the 2024-2026 budget, part of the aforementioned new changes to the Budget Structure System will be applied in practice - great attention will be paid to justifying the need for three-year budget funds, and decisions on financing are also made for at least three years. It is planned that the fully updated rules on the medium-term budget will be applied in the preparation of the first consolidated draft medium-term budget for 2025-2027.
The draft law amending the Law on the Budget Structure and the draft laws amending the laws related thereto prepared for coordination with the institutions are available here.
Last updated: 13-04-2023
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