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30/03/2016   National Audit Office approves economic development scenario for 2016–2019

As the institution implementing the functions of budget policy control, the National Audit Office (hereinafter the Fiscal Institution) completed an assessment of the 2016–2019 economic development scenario prepared and announced by the Ministry of Finance and issued a conclusion to the parliament (Seimas) regarding its approval.

"Within the process of developing a national budget, this scenario can be compared to the foundations of a house. Projections for public sector income and costs will depend on how realistic the scenario is", explained Auditor General Arūnas Dulkys.

The conclusion revealed that the 2016–2019 economic development scenario prepared by the Ministry of Finance is determined by selected and identified preconditions, based on currently available statistical data and does not contradict economic trends, thereby allowing the Fiscal Institution to issue its approval.

According to the assessment carried out by the Fiscal Institution, if policy does not change, there is a reduced risk of deviating from the overall balance of the public sector set for 2016 because actual labour market indicators for 2015 were better than those projected in the fall of 2015 and their growth projections for 2016 have been revised upward. In retrospect, the scenario prepared by the Ministry of Finance for 2015 proved to be conservative. This had a positive effect on the collection of income: the plans for public sector income in 2015 were implemented, except for value added tax.

Based on the approved economic development scenario, household consumption expenditure will remain the principal driver of economic development this year. Last year's company investments in production capacity are strengthening the potential of export development in the mid-term, therefore, it is likely that the growth rate of exports will increase over this period.

The Fiscal Institution approves the risk factors identified by the Ministry of Finances and points out that if the technical preconditions of the scenario are compared to market futures price quotes for Brent crude oil and USD/EUR exchange rate prices, it is likely that price indicator projections can be revised upward.

The conclusion presents a retrospective evaluation of the 2015 scenario based on published statistical indicators, analysis of macroeconomic indicators, Lithuanian household consumption expenditures and peer reviews of possibilities for Lithuanian fiscal policy to regulate the growth gap between potential and actual GDP in the mid-term.

 

Responsible for the information Communication Division
Last updated on 25 May 2016

National Audit Office of Lithuania

Pamėnkalnio St 27, LT-01113 Vilnius, Phone: + 370 5 266 6793, + 370 5 266 6752, Email: nao@vkontrole.lt.