President Gitanas Nausėda is set to table legislative amendments to increase the share of profit that the Bank of Lithuania transfers to the state budget, hoping to use the additional funds on defence.
Vaidas Augustinavičius, Nausėda’s economic and social policy adviser, was speaking to reporters after the president’s meeting with Gediminas Šimkus, the central bank’s governor.
“During the meeting, it was agreed to prepare amendments to the Law on the Bank of Lithuania and adjust the formula used to calculate the Bank of Lithuania’s profit contribution to the state budget,” Augustinavičius said.
“As a result, the Bank of Lithuania would be able to transfer more money to the state budget,” he added.
While the figures have yet to be finalised, the additional amount from the profit contribution is expected to be significant, the adviser said.
According to Šimkus, he and the president did not discuss how much additional funds the Bank of Lithuania could transfer to the state budget. The Bank of Lithuania made a profit of more than 20 million euros in 2024, he said.
“The Bank of Lithuania not only invests but also has clients to whom it pays interest on deposits. One of the major clients is the Finance Ministry, which holds billions [of euros] in the Bank of Lithuania,” Šimkus told reporters.
“The Bank of Lithuania has set a maximum interest rate, which means that [...] we transferred 110 million euros to the budget as [interest on] deposits in 2023, and 160 million euros last year,” he added.
As Lithuania plans to significantly increase defence funding by 2030, Nausėda suggested earlier this week that foreign currency reserves could also be used for this purpose.
Lithuania’s official reserve assets, which exceed 7 billion euros, are held abroad, with nearly half of them consisting of debt securities.
Augustinavičius said the Bank of Lithuania’s profit is largely tied to the returns on investments from these reserves.
According to Nausėda, Lithuania would need an additional 12–13 billion euros in order to develop a national military division and boost defence funding to 5–6 percent of GDP by 2030.
Other proposals on how to increase defence funding include using people’s deposits in Lithuanian banks.
“One idea is to build on the practice of other euro area countries, whereby residents can freely choose to keep part of their savings in special savings accounts, where the funds would be available to them whenever they need them,” Augustinavičius said.
There are also suggestions to give more power to the State Tax Inspectorate to collect more hidden taxes and to increase borrowing.
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