Budget, EU – Baltic States, Financial Services, Lithuania, Taxation

The official statement issued after the Eurogroup’s meeting in Brussels on Monday also emphasizes the importance of Lithuania’s tax administration reform.

“We agree with the Commission’s assessment that the budget [Lithuania’s 2016 budget] is at risk of non-compliance with the requirements of the Stability and Growth Pact (SGP). However, we note the uncertainty surrounding the evaluation of cyclical developments,” the statement said.

In the Eurogroup’s view, the Commission’s conclusions on Lithuania’s draft budget did not take into account the tax measures that could improve tax collection.

“The overall assessment does not take into account the full effect of the tax administration reform, which, if fully realized, would reduce the risk…We welcome the commitments of Lithuania to implement the measures necessary to ensure that the 2016 budget will be compliant with the rules of the preventive arm of SGP,” the statement said.

Last week, the Commission warned that Lithuania’s budget expenditure might exceed revenue by more than estimated next year. In Brussels’ view, Lithuania might fail on its commitment to have a structural deficit of no more than 1 percent of GDP and is therefore at risk of non-compliance with the provisions of SGP.

The Commission also believes that the Lithuanian government is too optimistic in its forecasts of the country’s economic growth.