The Lithuanian government has approved the draft state budget for 2027, BNS reports. Budget revenue, including EU funds, is expected at nearly EUR 22.2bn, which would be up 5.2% from 2026, BNS reports. Budget spending will total EUR 27.9bn, up 1.3% over a year. The State Social Insurance Fund’s (SoDra) revenue is projected at nearly EUR 7bn and expenditure at over EUR 5.5bn, and the National Health Insurance Fund’s (VLK) revenue at nearly EUR 3.3bn and expenditure at almost EUR 3.2bn in 2027. The Finance Ministry estimates that the general government budget deficit will amount to 3.8% of GDP. Deputy Finance Minister Lineta Jakimaviciene said that the government planned to borrow EUR 10.5bn in 2027.
Finance Minister Taurimas Valys said that Lithuania’s general government debt would grow rapidly until 2030, BNS reported. The Finance Ministry projects that the country’s national debt will reach 48.2% of GDP in 2027, rising to 50.7% in 2028 and 54.3% in 2029. Valys said that the debt could decline thereafter as major defence and infrastructure projects are completed. The Finance Ministry expects the government’s debt servicing costs to rise from EUR 753mn in 2026 to EUR 1.12bn in 2027, EUR 1.35bn in 2028, and EUR 1.62bn in 2029, he said. However, the National Audit Office (LRVK) estimates that the debt servicing costs will reach EUR 1bn in 2026, EUR 1.38bn in 2027, EUR 1.68bn in 2028, and EUR 2.13bn in 2029.
Prime Minister Mindaugas Sinkevicius said that most of the budget deficit would be due to defence spending and increases in indexed social welfare benefits. Also, Lithuania’s average old-age pension will rise by 10.4%. The defence budget will total over EUR 4.8bn in 2027, which will be nearly EUR 35mn higher than in 2026. However, due to Lithuania’s economic growth, defence spending will drop from 5.38% to 5% of projected GDP. Meanwhile, MP Remigijus Zemaitaitis, chairman of the far-right populist opposition party, Dawn of Nemunas, criticised the decision to keep defence spending at 5% of GDP, insisting that the funds should be invested in education and boosting economic growth instead, BNS reported.
Meanwhile, the European Commissioner for Defence and Space, Andrius Kubilius, voiced concern about Lithuania’s budget deficit in 2027, BNS reported. He warned that the widening deficit could create risks to Lithuania’s financial stability and credit rating. At the same time, he noted that Lithuania’s defence spending would remain among the highest in the EU, BNS reported. Earlier, Lithuanian President Gitanas Nauseda criticised the failure to spend allocated defence funds, BNS reported. Speaking in an interview with 15min, Nauseda pointed to lengthy procurement, lack of flexibility, and slow cooperation with Ukraine. Sinkevicius urged the Defence Ministry to speed up procurement, BNS reported.