Lithuania Pushes Balanced Budget Target Date Back a Year to 2016

Lithuania plans to balance its budget in 2016, a year later than earlier projected, as the country’s new government seeks to stimulate growth and jobs.

The fiscal deficit will shrink from last year’s 3.2 percent of gross domestic product to 2.5 percent this year, 1.5 percent in 2014 and 0.5 percent in 2015, the Finance Ministry in Vilnius said in an e-mailed statement today, citing a draft of the Baltic country’s revised European Union convergence program. A surplus of 0.5 percent is planned in 2016, it said.

“Lithuania is committed to implementing a budget policy that will ensure economic growth, boost employment and reduce poverty,” the ministry said. Qualifying for euro adoption “in the medium term” by meeting the deficit, debt and inflation criteria in a sustainable way is also a priority, it said.

Prime Minister Algirdas Butkevicius’s four-party Cabinet took office in December after elections during which the eventual coalition members pledged to boost social spending. The government has a goal of adopting the euro in 2015.

Under the new plan, public debt will be reduced from 40.7 percent of GDP at the end of 2012 to 34.5 percent by 2016, the ministry said.

The deficits for this year and next were narrower by 0.5 percentage point under Lithuania’s 2012 EU convergence program, which foresaw a balanced budget in 2015.