New coalition promises: Where will the money come from?

Lithuania's incoming coalition government is poised to formalize its agreement, but new spending promises are already sparking debate over fiscal responsibility. While coalition talks have settled ministerial appointments, the inclusion of fresh pledges has drawn scrutiny, particularly from the Lithuanian Bank.

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You don't need to look so strictly by the ledger – whether the income is there or not. You need to model, arrange.

Seimas member Lukas Savickas suggested a flexible approach to budgeting, stating, "You don't need to look so strictly by the ledger – whether the income is there or not. You need to model, arrange." However, the Lithuanian Bank's head, Gediminas Šimkus, advocates for a different strategy, advising a review of the country's numerous subsidies and a cutback in non-essential spending rather than introducing new taxes.

"The state allocates quite large funds to support the second pillar itself. I think that should be an open question, what the second pillar turns into," Šimkus commented, implying a need to re-evaluate existing financial commitments. This contrasts with the coalition's stated priority: family support. "Such a goal is enshrined in the coalition agreement, and I hope we will not change our minds," said Seimas Vice-Chair Rasa Budbergytė.

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The state allocates quite large funds to support the second pillar itself. I think that should be an open question, what the second pillar turns into.

New coalition partners, the Democrats, are demanding additional funds, aiming to ensure young families' incomes do not decrease during childcare leave. "Everyone wants to increase something. In discussions with our new coalition partners, they did not suggest any sources from where we would draw," noted Algirdas Sysas, chairman of the Seimas Budget and Finance Committee.

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Such a goal is enshrined in the coalition agreement, and I hope we will not change our minds.

Mindaugas Sinkevičius, the presumptive prime minister, indicated that increased family funding could materialize next year. Finance Minister Kristupas Vaitiekūnas expressed optimism, stating, "I think that, of course, it is realistic. The state budget is about 20 billion, if we take other budgets – it's 30 billion. It increases every year due to the growing economy." However, the Democrats' calculations suggest that simply removing the cap on childcare benefits would cost 70 million euros, with further resources needed for initiatives like expanding free meals for primary school students. The Social Democrats appear hesitant to revisit tax reforms after a previous overhaul.

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Everyone wants to increase something. In discussions with our new coalition partners, they did not suggest any sources from where we would draw.