Šadžius says that, public sector debt amounted to 38.2% of the country's gross domestic product (GDP), or EUR 29.9 billion, at the end of 2024 and will grow next year.
„According to our forecasts, if we do not change anything and live according to this year's budget, next year we will increase spending on national defence to the planned high levels, and by the end of 2027, we will exceed the 60% debt-to-GDP ratio. Long-term curves that predict slower debt growth may be misleading,“ Šadžius said on Wednesday at a conference of the Seimas Audit Committee and the State Audit Office.
In 2025–2028, the average growth of expenditure financed by Lithuanian national funds is expected to reach 5.2%, excluding the increase in defence spending.
„To ensure controlled and adequately financed ageing of the population, our security, and social and fiscal sustainability in the future, we need structural changes in public finances,“ said the minister.
Šadžius claims that as debt grows, not only do the costs of servicing it increases, but Lithuania's ability to borrow on global financial markets may also decline.
„Of course, there is the European Stability Mechanism, so emergency assistance (in the event of a sharp increase in debt – ELTA) would arrive, but that does not mean it would be pleasant to live with a wound later,“ added the minister.
„Public investment is cited as one of the key factors for economic development in countries. Unfortunately, when financial crises hit, public investment is the first to fall in all countries,“ said the government official.
On Wednesday, the minister presented a Financial Stability Plan, which aims to set guidelines for fiscal policy focused on long-term financial sustainability and reforms.
„Each EU member state must adopt a financial stability plan which, according to calculations made by the European Commission and agreed with the country's government, sets out a trajectory for expenditure growth,“ explained Šadžius.
According to the Ministry of Finance, even considering the costs of ageing, the general government balance will not exceed 3% of GDP in 2038, and debt will not exceed 60% of GDP.
Lithuania's ageing costs (additional expenditure on pensions, health, and education) will gradually reach 1.6% of GDP between 2029 and 2038.
Eurostat data states that at the end of the last quarter of 2024, the ratio of general government debt to gross domestic product (GDP) in the euro area was 87.4%. In the European Union (EU), it was 81%.
Lithuania has the sixth-lowest debt (38.2% of GDP) in the EU. Neighbouring Estonia has the lowest debt in the EU relative to GDP, at 23.6%.