Budget, EU – Baltic States, Financial Services, Funds, Investments, Lithuania, Loan

Appropriations from the EU and other international financial assistance funds will exceed EUR 2 billion in Lithuania's budget of 2016. These funds include: 2014-2020 EU structural funds and funds of other European programmes (EUR 947 million in 2016 budget), EU aid for agriculture (EUR 782 million), EU support for implementation of internal policies (EUR 213 million), including finances for Ignalina Nuclear Power Plant Programme, External Borders Fund, European Return Fund, European Refugee Fund, the EEA and Norwegian Financial Mechanisms and Swiss Cooperation Programme (nearly EUR 62 million).

In 2016 a major share, more than EUR 1.46 billion, of the EU's investment and other international financial assistance will be devoted for economy. The funds will be used for promotion of small and medium-size enterprises, modernisation of transport infrastructure, improvement of energy efficiency and development of information society. Striving to promote economic competitiveness significant part of funds will be allocated for research and development, technological development and innovation promotion.

Slightly more than EUR 125 million of the EU's and other international financial support funds will be provided for social security. These funds will be invested in active labour market measures, promotion of entrepreneurship and for social infrastructure.

EUR 48 million of international financial support will be distributed for education. Money will be used to improve lifelong learning conditions and research, enhance researchers' skills, develop education and science infrastructure and establish science valleys.

EUR 36 million from the EU's and other international financial assistance funds will be used for environmental protection. The funds will be utilised to promote sustainable consumption of natural resources, enhance the capacity to adapt to climate change, modernise water management systems, for remediation of contaminated sites and development of waste management systems.

EUR 44 million of financial support will be used for healthcare next year – to improve service quality, accessibility and infrastructure.

EUR 106 million will be used for public policy and security.

In 2016, projected appropriations from the EU's and other financial assistance funds will be by EUR 316.5 million, or 13.6%, lower than in 2015.

In 2016, the Lithuanian Government intends to borrow approximately EUR 1.6 billion or twofold less compared to 2015. Approximately EUR 1.1 billion will be borrowed by distributing Government securities in the domestic market and savings certificates for retail investors, first of all residents.

"As the Government is following responsible budgetary policies, the need of borrowing is consistently decreasing. Therefore, we devote our main attention towards repayment of Eurobonds. Having assessed the need of borrowing next year, we have decided to borrow most of the needed funds in the domestic securities market, in order to maintain and develop it," said Finance Minister Rimantas Sadzius.

Domestic Government securities auctions will propose to acquire bonds with 2-3, 4-6 and 7-10 years to maturity. In addition, treasury bonds may be issued or short-term loans taken to manage budgetary flows.

Lithuania intends to borrow around EUR 0.5 billion in foreign markets in 2016.

Most funds, approximately EUR 1.7 billion will be used to return previous debt as in February 2016 Lithuania will buy out Eurobond issuance worth EUR 1 billion. A portion of the amount needed for the buyout will be accrued already in 2015. EUR 0.7 billion of borrowed funds will be needed to finance public finance deficit (the difference between revenue and expenses). Of this amount the state budget deficit stands at EUR 0.6 billion while the State Social Insurance Fund (Sodra) budget deficit is at EUR 0.1 billion. Moreover, EUR 0.3 billion will be allocated to refinance Sodra's debt.

EUR 0.6 billion will be allocated from the state budget next year for public debt management, in essence repayment of debt interest.

It is projected that public debt by the end of 2016 will total approximately EUR 15.8 billion or 40.8% of Lithuania's GDP.