On Tuesday 17 January, the Commission decided that Lithuania's revised draft budget for 2017 presented risks of non-compliance with the Stability and Growth Pact pending a decision, in May, on the country's eligibility for budgetary flexibility related to the implementation of reforms.
For 2016, the European institution and the Lithuanian authorities have agreed on a predicted government deficit of 0.6%, whilst for 2017, the Commission anticipates a deficit of 0.8% of GDP, or 0.1% more than the Lithuanian forecasts.
On the basis of the draft Lithuanian budgetary plan updated for 2017, there may be a risk of departing significantly from the medium-term budgetary objectives over the same financial period, the Commission notes.
However, Lithuania has applied for additional flexibility, which can be up to 0.5% of GDP, as provided for by the Pact, in order to implement the ambitious structural reforms scheduled for the employment market and pension regime.
The Commissioner with responsibility for the euro, Valdis Dombrovskis said that Lithuania's budgetary deficit and debt are considerably below the required objectives of 3% and 60% of GDP respectively. He went on to say that its draft budgetary plan is currently considered to present a risk of non-compliance with the rules of the Stability Pact, but that this will no longer be the case if the flexibility requested by Lithuania is granted to it this spring.
A full assessment of the eligibility of Vilnius for this flexibility will be carried out in May 2017.
The Commission also calls upon the Lithuanian authorities to make changes to the tax collection system in order to stimulate economic growth. (Original version in French by Mathieu Bion)