Lithuania’s government on Thursday approved the 2024 budget bill. Budget revenue is expected to grow by 9.4 percent to 17 billion euros, and expenditure is estimated to increase by 7.9 percent to 20.5 billion euros, the Finance Ministry has said.
The bill will now be submitted to the parliament.
“After the shocks of the last few years, this 2024 budget will allow people to feel real economic growth,” Finance Minister Gintarė Skaistė said during the cabinet meeting.
The budget deficit is projected to reach 2.9 percent next year, and the government debt will amount to 39.8 percent of GDP.
The parliament-approved state budget for 2023 projected a government deficit of 4.9 percent of GDP, but it is expected to stand around 2 percent this year due to favourable circumstances. Budget revenue is higher than projected this year because businesses have been less active in making use of tax deferrals, while expenditure is lower because only part of the funds earmarked for energy price compensation have been used.
A proposal has also been made to extend for five years the existing corporate income tax breaks for investment projects and film production, which are valid until the end of 2023, the finance minister said.
“These two decisions will no longer affect the 2024 state budget revenue as the corporate tax is paid for the previous year, so they will affect the state budget revenue in 2025,” the minister said.
Meanwhile, some of the decisions made earlier will also have an impact on 2024 revenue. These include the bank solidarity levy that is expected to generate 280 million euros in revenue in 2024, as well as the three-year excise duty plan (43 million euros in revenue), and the green excise duty law (63 million euros).
The 2024 budget bill foresees a 39.1 percent increase to 6.647 billion euros in VAT revenue, a 16.9 percent increase to 2.87 billion euros in personal income tax revenue, a 10.9 percent increase to 1.86 billion euros in excise duty revenue, and a 10.6 percent increase to 1.811 billion euros in corporate income tax revenue.
EU and other financial assistance will go up by 14.6 percent to 2.487 billion euros.
The government plans to spend a total of 1.7 billion euros this year to raise people’s income, 392 million euros on security, and 3.2 billion euros will be allocated for investment in various areas.
The minimum monthly pre-tax wage will rise by 10 percent to 924 euros next year. This will need a budget allocation of 33.7 million euros. Meanwhile, the non-taxable income rate will rise 20 percent to 747 euros, with a budget allocation of 241.2 million euros.
More than 688 million euros are earmarked for pay increases for cultural and arts workers, firefighters, medics, prosecutors, statutory and other officials, social workers, and judges.
The increase in old-age pensions by around 12 percent is estimated to cost 519 million euros, which will raise the average old-age pension by 66 euros to 605 euros, affecting more than 623,000 people.
Lithuanian will also allocate 232 million euros in assistance for Ukraine, including 127.2 million euros for war refugees and social services, 70 million euros for EU and international commitments, and 35 million euros for Ukraine under the European Peace Facility.
Lithuania’s defence spending next year is projected at around 2.06 billion euros or 2.71 percent of the GDP.
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