Lithuania to raise benefits, pensions to tackle effects of rising inflation

The Lithuanian government has unveiled a plan, worth over 2 billion euros, to tackle the effects of rising inflation. The proposed measures include increasing the non-taxable income threshold, old-age pensions, social benefits and child allowances. The range of those eligible for heating subsidies will also be expanded.

According to Finance Minister Gintarė Skaistė, the total value of the anti-inflationary package stands at more than 2 billion euros. Over 1 billion euros will be spent on various social payments to people and businesses to compensate them for the increase in electricity and gas prices, and another 1 billion euros for measures to increase energy independence.

"We want to protect and strengthen people's purchasing power at this difficult time, when energy prices are rising sharply as a result of Russia's military aggression and previous deliberate actions, and when the trend for the coming periods is bad as well," she told a press conference on Friday.

The package earmarks 315.3 million euros to increase people's incomes, including 106.3 million euros to raise old-age pensions by 5 percent, 103 million euros to increase the income threshold from 460 euros to 540 euros, and 30.3 million euros for higher benefits and compensation for heating costs.

Shops in Lithuania (associative image) | J. Stacevičiaus / LRT nuotr.

Up to 570 million euros in state budget funds would be spent to partially subsidise electricity and gas prices for households and 120 million euros for businesses. Support to businesses and other affected sectors would amount to 142 million euros.

According to Skaistė, the government aims to keep gas and electricity prices for consumers from rising by more than 40 percent.

In the minister's words, if the government takes no additional measures, natural gas and electricity prices for household consumers will more than double from July.

"The government proposes certain solutions [...] so that prices should rise by no more than 40 percent and that the difference should be subsidised from the state budget," she said. "The forecast is then that electricity prices could rise by up to 22.9 cents or so, but the prices will still have to be set by the state regulator."

The ruling coalition plans to table draft amendments to the 2022 budget to the Seimas in mid-April, with the parliament expected to pass them in May.