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Assessment of Lithuania's Stability Programme 2018

An independent assessment of Lithuania's Stability Programme 2018, evaluating the GG balance and debt, fiscal policy stance, and soundness of the GG surplus for 2017 and 2018.

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Assessment of Lithuania's Stability Programme 2018

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  1. The Assessment of the Stability Programme of Lithuania for 2018 Erika Latyšovič Advisor of the Budgetary Policy Monitoring Department. 11th of June, 2018

  2. In 2017, the Ministry of Finance as a starting point for GG budget plansfor 2018 and assessment of the compliance with fiscal rules used the values from the Stability Programme of Lithuania for 2017 (not assessed by IFI) • In 2018, responding to that Lithuania‘s IFI conducted an assessment of the Stability Programme of Lithuania for 2018, which had the following goals: • to provide an independent opinion on the GG balance and debt for 2017 • to assess both thesoundness of the GG surplus and the fiscal policy stancefor 2018 The Assessment of the Stability Programme of Lithuania for 2018 Motivation

  3. The Assessment of the Stability Programme of Lithuania for 2018 General Government Surplus for 2017 Sources: the Ministry of Finance, Statistics Lithuania, fiscal institution’s calculations

  4. The Assessment of the Stability Programme of Lithuania for 2018 2017 GG Surplus is due to temporary and one-off factors Spending on militaryequipment State Company “Deposit and Investment Insurance” Universities Sources: the Ministry of Finance, Statistics Lithuania, fiscal institution’s calculations Others

  5. The Assessment of the Stability Programme of Lithuania for 2018 Nominal and Structural GG Balances in EU Member States, 2017 Sources: Eurostat, European Commission’s 2018 spring projections

  6. The Assessment of the Stability Programme of Lithuania for 2018 Soundness of the GG surplus for 2018 • According to IFI‘s calculations, the estimate of the GG surplus for 2018 was revised downwards from 0.5 %GDP • 0.2%GDP • the failure to execute the major taxes and social insurance contribution plans for 2017 • performance trends for the first quarter of 2018 • municipal budgets approved in 2018 • Governmentdecisions which would likely result in higher expenditures

  7. The Assessment of the Stability Programme of Lithuania for 2018 The Dynamics of Lithuania’s Output Gap in 2014–2021 Sources: the Ministry of Finance, European Commission, fiscal institution’s calculations

  8. The Assessment of the Stability Programme of Lithuania for 2018 Neutral fiscal stance: –0.2 ≤ SPB change< 0.2 The Fiscal Policy of Lithuania will maintainits Pro-cyclical Stance Normal times: –1.5 ≤ output< 1.5 Sources: the Ministry of Finance, European Commission, fiscal institution’s calculations

  9. The Assessment of the Stability Programme of Lithuania for 2018 • 2017 GG surplus is due to temporary and one-off factors • According to fiscal institution’s calculations, the estimate of the GGsurplus for 2018 was revised downwards from 0.5 to 0.2 percent of GDP • Given the reduction of the GG primary structural balance in 2018, the fiscal policy of Lithuania will maintain its pro-cyclical stance Summary

  10. The Assessment of the Stability Programme of Lithuania for 2018 Discussion 3 2 1 Meet ? What are the main goals, challenges and problems that IFI’s have faced with during assessment of the Stability programme? Does your fiscal institution carry out an assessment of the Stability programme and, if no, do you have any plans for such assessment in future? .

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