- The Lithuanian Government approves the ratification of the
EU Treaty on Financial Discipline
In today’s sitting, the Government has decided to address the President regarding the submission to the Parliament for ratification of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, signed on 2 March in Brussels by 24 EU member states, including Lithuania.
The Treaty requires its parties to transpose the public finances management rules into their national legal systems, which need to be followed in budget-drafting. This should help to maintain reliable and sustainable public finances, and it would also entrench the balanced budget rule. The Treaty provides that actual ratio of general government deficit to gross domestic product should not exceed 3%, and the ratio of general government debt to gross domestic product should not exceed 60%, or it would substantially decrease while approaching the reference value.
By signing the Treaty, Lithuania considered that in order to effectively address the problems of the financial crisis it is necessary to maintain the integrity of the EU as an economic union, without partitioning it into the countries that are part of the euro zone and those that are not. Compliance with the provisions of the Treaty should create a stable EU internal market and financial environment, which is of great relevance to the Lithuanian economy.
The balanced budget rule would be beneficial to Lithuania in terms of increased financial discipline. Currently, the Lithuanian government finances are subject to the Law on Fiscal Discipline.
The Treaty that obligates the parties to commit to strict adherence of financial and economic coordination rules, particularly the requirements on the balance budget and debt reduction, will help countries to prevent future financial shocks, or face them adequately prepared. The effective implementation of the Treaty will improve the risk assessment of the stability of public finances across the Eurozone and the rest of the EU, and it will reduce government borrowing costs.
The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union was signed on 2 March 2012 by all European Union states except the United Kingdom and the Czech Republic. In Lithuania, it was signed by President Dalia Grybauskaitė.