It is expected that Lithuania budget 2012 will be able to achieve the targeted fiscal deficit of 2.8 percent, which will be 50 percent of the targeted deficit for 2011 fiscal. The amount of fiscal deficit for 2012 is expected to amount to 708.899 million Litas.
Highlights of Lithuania Budget 2012:
The 2012 Lithuania Budget will look to stabilize the financial reserves of the national government.
The Ministry of Finance, Lithuania has forecast that in 2011 fiscal, the national economy will grow at 5.8 percent. It was expected that the GDP will grow at a higher rate in 2012 fiscal but recently the projected economic growth rates have been revised to 3 to 4 percent because of the global economic condition. Lithuania s income plans have also been altered as a result of the same.
The government estimates that in 2012 fiscal its expenses will amount to approximately 36.5 billion Litas, which is the same as 2011 fiscal. There will be a deduction of almost 2 percent in the budgets of various ministries. It is expected that this will help them save almost 200 million Litas.
The revenues expected for 2012 fiscal are almost 33.7 billion Litas. This implies a minimum increase of 9.1 percent, which translates to approximately 2.179 billion Litas. To add to this, they will also receive 7.2 billion Litas from investments made by European Union s structural funds. Factors like shadow economy and governmental assets are supposed to be the major contributors to the increased revenue as well.
The government is also expected to deduct its investments, which will contribute to the revenues earned by Lithuania in 2012.
State owned enterprises in Lithuania are expected to pitch in with dividends worth almost 540 million Litas in 2012 fiscal. Visaginas Nuclear Power Plant is expected to contribute 250 million Litas, 120 million Litas is expected from Lithuanian Railways and 50 million is expected to come from Klaipeda Oil. This will make up almost 0.5 percent of the GDP. In 2011 the Lithuanian companies will be providing dividends amounting to 86 million Litas.
The Lithuanian government plans on spending approximately 500 billion Litas on pensions.
In 2012 budgetary allocations are expected to reach the 26.709 billion Litas mark, which will be almost 1.2 percent or 328.2 million Litas more than what was allotted by the 2011 budget.
It is estimated that in the upcoming fiscal the government will need to borrow almost 9.4 billion Litas.
For fiscal 2011 the VAT rate for heating products is 9 percent and for medicines, it is at 5%. The economic policymakers in Lithuania are willing to maintain the same rates in 2012 as well. The government is looking to do away with VAT break provided to hotels. As of now they are subjected to a reduced VAT rate of 9 percent.
In 2012 Lithuania s state owned companies will be providing dividends from their profits with the upper limit being 50 percent. With parliamentary approval these enterprises will be paying dividends more than once a year.
The excise duty applicable for cigarettes can be increased slightly in order to supplement the budget, which sees a decrease of 1.2 percent on estimated national income.
The qualifying threshold for taxpayers willing to identify themselves as VAT payers has been revised from 100,000 to 155,000 Litas from 2012. The base for the 5 percent corporate taxes will be increased to a million from 500,000.
The estimated 2012 budget of SODRA (The State Social Insurance Fund Board), the governmental board for social insurance, will operate with a deficit of 2,071 billion Litas, which is 7 percent lesser than that of 2011.
It is expected that SODRA s earnings will go up by almost 7 percent in 2012 fiscal and reach the 11.902 billion Litas mark. But its expenses will also touch 13.974 billion Litas, an increase of 5 percent.
The combined expenditure and earnings of the Mandatory Health Insurance Fund will be equal 4.141 billion Litas. This represents a decrease of 0.7 percent.
Expectations from Lithuania Budget 2012:
Andrius Kubilius, the Prime Minister, has stated that Lithuania was among the first countries to have initiated the process of fiscal consolidation with some well developed and firm policies. He feels that his administration is at the ideal place to deal effectively with the high fiscal deficit and start the process of achieving a balanced budget.
Kubilius has further stated that in the 2012 budget some institutions will be provided increased financial assistance while for some it will change. These spending patterns will help them save 2 percent more than what had been achieved during the 2011 fiscal.
It is being estimated that in 2012 a significant portion of the revenue will come from the different taxes. The breakdown may be provided as below:
VAT addition of 12.9 percent
Income taxes addition of 23.8 percent
Corporate taxes addition of 12.7 percent