Sinkevičius says EU will launch deficit procedure against Lithuania

Virginijus Sinkevičius, leader of the Democrats for Lithuania party, said he was certain the European Commission would launch an excessive deficit procedure against Lithuania, LRT reported. The government plans a fiscal deficit of 3.8% of gross domestic product next year, above the 3% limit set by the Maastricht criteria.

“I have no doubt it will start, because it is started automatically,” Sinkevičius told journalists in Brussels on Thursday. He said Lithuania would need a strong case to avoid the procedure and that citing higher defence spending alone would not be enough. Social policy, particularly the indexation of benefits, also accounts for a substantial share of budget spending, he said.

Sinkevičius said the greatest risk was that the procedure could lead to a downgrade of Lithuania’s borrowing rating. He said the country needed a convincing plan showing how it would return to sustainable fiscal policy and what measures it would take to balance the budget.

He noted that the State Audit Office had identified 2035 as the target year for balancing the budget, while the prime minister had cited 2034. The finance minister, he said, had suggested the deficit could be brought down to 3% by 2029, but Sinkevičius had not seen a specific plan setting out when or how that would happen.

He also said European Commission proposals on taxing car emissions could add pressure alongside fuel prices for people whose car is their only means of connecting with civilization.

State Auditor Irena Segalovičienė and Bank of Lithuania Governor Gediminas Šimkus had earlier warned of a very high risk that an excessive deficit procedure would be opened against Lithuania.