Defence bonds legalised by the Seimas of Lithuania as part of the defence tax package will start to be issued after October 1, when the Law on the Defence Fund enters into force, Finance Minister Gintarė Skaistė has said.
Defence bonds would replace government savings certificates but would pay lower interest rates, she said.
According to the minister, there is no specific date for the first bond issue yet, and the terms are currently being negotiated.
“The Law on the Defence Fund itself comes into force on October 1, and current laws allow borrowing without the adoption of the Law on the Defence Fund. However, the specific regulation of defence bonds is linked to the adopted package,” Skaistė told reporters on Tuesday.
According to the minister, defence bonds will replace savings certificates, even though the issue of certificates launched in July carries an interest rate of 3.2 percent, while the interest rate on defence bonds cannot exceed 2 percent.
It was agreed during political discussions that the state should borrow at a lower rate for defence than it borrows on the market, Skaistė said.
At the end of June, the Seimas adopted the law on the establishment of the State Defence Fund and related laws on corporate income tax, excise duties, public debt, and others, including plans to issue defence bonds, aimed at increasing the defence budget.
The government will also set up a special fund to accumulate defence funds from higher taxes, which will also be open to donations from the public.
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