Lithuania to spend 4.6 % of GDP to fight inflation, boost energy independence
The government of Lithuania on April 1 proposed spending EUR 2.26 billion to reduce the impact of higher energy prices and resulting inflation as well as to increase the Baltic country’s energy independence and shift to energy saving and renewable energy sources. The total spending amounts to around 4.6 percent of Lithuania’s latest reported GDP of EUR 48.9 billion in 2020.
Minister of Finance Gintare Skaiste said in press release that the Russian invasion of Ukraine had caused a rapid rise in energy prices, therefore “we are presenting a package of measures of EUR 2.26 billion, which will significantly contribute to the absorption of energy prices, mitigation of the effects of inflation and will give an impetus to the transition to more predictable and independent energy sources from Russia and to ensuring lower bills in the future.”
Spending in two directions
The funds will be spent in two general directions — some EUR 1.14 billion to mitigate rising energy prices and inflation generally for private consumers and businesses and some EUR 1.12 billion on increasing Lithuania’s energy independence,
According to the Finance Ministry, some EUR 570 million will be spent on “the compensation of the share of gas and electricity prices for people” or household consumers, with businesses offered some EUR 262 million for price subsidies and other related measures.
The government will also boost old-age pensions by 5 percent and raise the minimum tax exemption by EUR 80 and increase various benefits, including child benefits and payments to low-income persons to compensate higher heating costs, spending a total of EUR 315.3 to boost personal incomes in the largest of the Baltic countries by population.
The energy independence direction of the spending plan includes investments and subsidies for a range of measures to improve energy efficiency in housing, including EUR 277 million in grants to upgrade multi-tenant apartment houses. EUR 60 million will be spent to build solar power stations and EUR 46 million to install electric vehicle charging stations near multi-dwelling buildings, private homes and businesses.