lithuania ’s public finances in 2011
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Lithuania ’s Public Finances in 2011. Main Macroeconomic Indicators. Inevitable Impact of Global Crisis on Lithuania but Growth has Rebounded. Strong GDP growth during 2001–2007 drove an increase in per capita income levels towards EU average income levels – EUR 7 , 938 per annum in 200 9 - PowerPoint PPT PresentationTRANSCRIPT
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Lithuania’s Public Finances in 2011
Main Macroeconomic Indicators
Economic IndicatorsActual Forecasts
2008 2009 2010 2011 2012
Real GDP growth, % 2,9 -14,7 1,6 2,8 1,2
HICP (12-month average rate of change), % 11,1 4,2 1,2a 1,8 2,5
HICP (annual rate of change in December), % 8,5 1,2 3,6a 2,6 2,5
Growth of average monthly gross earnings, % 19,4 -4,4 -4,3 1,8 2,5
Average monthly gross earnings, EUR 623,2 594,4 569,9 580,2 594,8
Unemployment rate, % 5,8 13,7 17,9 16,2 14,4
Balance of goods and services of the BoP, % of GDPn -10,9 -0,7 0,4 -0,6 -1,3
Real growth of final consumption, % 4,5 -14,1 -6,0 2,1 1,8
Real growth of gross capital formation, % -0,4 -57,7 40,0 14,7 1,5
General government fiscal balance (ESA'95), % of GDP -3,3 -9,2 -8,1 -5,8 -3,0
General government debt, % of GDP 15,6 29,5 37,8 40,3 41,9
a- actual datan – forecast of the national accounts
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Real annual GDP growth (%)
Inevitable Impact of Global Crisis on Lithuania but Growth has Rebounded
• Strong GDP growth during 2001–2007 drove an increase in per capita income levels towards EU average income levels – EUR 7,938 per annum in 2009
• According to preliminary estimates, GDP in 3Q 2010 increased by 7.3% compared to 2Q 2010 and increased by 1.1% compared to 3Q 2009
Source: Statistics Lithuania, Ministry of Finance forecasts (September 2010)
2,9
-14,7
0,1
7,4 7,8
7,8
9,8
1,62,8
1,22,4
-15,0
-10,0
-5,0
0,0
5,0
10,0
15,0
2004 2005 2006 2007 2008 2009 9M2010
2010F 2011F 2012F 2013F
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Proactive Government Measures Lead to Improved Economic Environment Compared to other EU Sovereigns
General government deficit comparison, ESA ‘95 (% of GDP 2009)
-5,2
-9,2 -9,4
-11,1 -11,3
-14,4
-15,4
-10,2
-16
-14
-12
-10
-8
-6
-4
-2
0
Italy
Lith
uani
a
Port
ugal
Latv
ia
Spai
n UK
Irel
and
Gre
ece
Source: Eurostat
-0,5 -0,4-1,0
-3,3
-9,2
-8,1
-5,8
-3,0
-1,5
-10,0
-9,0
-8,0
-7,0
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
2004 2005 2006 2007 2008 2009 2010F 2011F 2012F
Source: Ministry of Finance, Convergence Programme 2009
General government deficit, ESA’95 (% of GDP)
• General government deficit was modest in 2002–2007, however recent financial turmoil pushed it above the Maastricht criteria in 2008 and 2009 and it remains above that threshold
• The general government deficit is on track to meet the 3% Maastricht criteria in 2012
5
Inflation will be Determined by External Factors
Annual average inflation in 2010 (HICP, %)
6,1
4,7
2,7
1,2 1,2 1,1
-1,2
2,1
-2
0
2
4
6
Rom
ania
Hun
gary
Pola
nd EU
Czec
hRe
publ
ic
Lith
uani
a
Croa
tia
Latv
ia
Source: Eurostat
2,7
3,8
5,8
11,1
4,2
1,21,8
2,5 2,5
1,2
0,0
2,0
4,0
6,0
8,0
10,0
12,0
2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F
Source: Statistics Lithuania, Ministry of Finance forecasts (September 2010)
Annual average inflation in Lithuania (HICP, %)
• Inflation began to accelerate rapidly in mid-2008 primarily due to an increase in gas prices• The significant reduction in the growth of the HICP in 2009 was due to the effects of the economic
slowdown• In the second half of 2010 the annual average inflation met the expected Maastricht euro convergence
criteria for inflation• In 2011 Inflation will be determined by external factors particularly by global energy and food prices
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18,0%15,5% 14,6%
10,9%9,6% 9,5%
17,8%
0,0%
4,0%
8,0%
12,0%
16,0%
20,0%
24,0%
Latvia Li thuania Estonia Slovakia Hungary EU-27 Poland
17,4
13,812,4
11,4
8,3
5,64,3
5,8
13,7
17,916,2
14,412,3
0,0
3,0
6,0
9,0
12,0
15,0
18,0
21,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F
Unemployment Expected to Fall after 2010
• After the peak in 2Q 2010, the unemployment rate decreased by 0.5% from 18.3% to 17.8% in 3Q 2010 due to the rise in activity and employment and the slight fall in unemployed persons. The unemployment rate decreased for the first time after a continuous deterioration for two years.
• To stabilize the unemployment, the government adopted necessary legislation to liberalise the labour market, frontloaded EU financial resources and has taken action against the frictional unemployment
• In 2009 average gross monthly earnings fell by 4.4% as compared to 2008 and by further 2,8% in 3Q 2010 as compared to 3Q 2009 which shows high flexibility and ability to retain competitiveness if needed.
• Following the recovery of exports and an increase in the volume of work and number of working hours, in 3Q 2010 wages increased by 1.3% as compared to 2Q 2010
Source: Statistics Lithuania, Ministry of Finance forecasts (September 2010)
1 Activity rate – a ratio of the labour force aged 15–64 to the total population of the same age group2 Employed people – persons aged 15 and older doing any kind of work, for which they are remunerated in cash or in kind, or have income or profit3 Less individual enterprises
Unemployment rate (%)
Source: Eurostat, Statistics Lithuania, Latvia and Estonia
Unemployment rate, 3Q 2010
2006 2007 2008 2009 3Q 2010
Labour force (thousands) 1 588 1 603 1 614 1 641 1 643
Activity rate1 67,4 67,9 68,4 69,8 71,4
Employed people2
(thousands) 1 499 1 534 1 520 1 416 1 351
Average gross monthly earnings (LTL) 1 496 1 802 2 152 2 056 2 0823
Source: Statistics Lithuania
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Exports Well Diversified and Recovering• EU remains the main trading partner for the Republic of
Lithuania with 61.4% of total exports in Jan-Nov 2010• EU membership has accelerated export growth since 2005• The strong recovery of exports from the beginning of 2010 is
based on the recovery in trading partners. In Jan-Nov 2010 exports of goods increased by 31,9% as compared to the same period of 2009
• The recovery of exports markets is broad based
Source: Statistics Lithuania
19,4
13,2
2,3 2,53,1
-12,7
11,6
3,0
12,0
17,7
4,4
6,9
21,2
-15
-10
-5
0
5
10
15
20
25
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
F
2011
F
2012
F
2013
F
Source: Statistics Lithuania, Ministry of Finance forecasts (September 2010)
Exports of goods in Jan-Nov 2010
Export growth of goods and services (% Chg YoY)
1,2
-21,1-14,3
-2,15,5
21,314,6
-12,4
10,1
10,5
15,410,1
-0,7
9,9
1,4
-30
-20
-10
0
10
20
30
40
2007Q1
Q2 Q3 Q4 2008Q1
Q2 Q3 Q4 2009Q1
Q2 Q3 Q4 2010Q1
Q2 Q3
Export growth of goods and services vs. corresponding quarter of previous year (%)
Source: Statistics Lithuania
Wood and articles of wood and paper;
5,4%
Live animals and animal products;
5,0%
Miscellaneous manufactured
articles (including furniture); 5,9%
Base metals and articles of base
metals; 4,5% Other goods; 3,9%
Textiles and textile articles; 6,0%
Vegetable products; 6,1%
Prepared foodstuffs; 6,6% Plastic and rubber;
6,9%
Mineral products; 23,6%
Machinery and mechanical
appliance; 10,3%
Products of chemical industry;
8,0%
Vehicles; 7,8%
2010-2011 National Budget (State Budget and Municipal Budgets) (LTL million)
2010 year 2011 year 2011 compared to 2010 (%)
Revenue
National Budget Revenue (EU Assistance included) 24 398,9 26 830,2 10,0
National Budget Revenue (EU Assistance excluded) 16 507,0 19 907,8 20,6
Expenditure
National Budget Expenditure (EU Assistance included) 29 328,8 29 390,4 0,2
National Budget Expenditure (EU Assistance excluded) 21 436,9 22 468,0 4,8
Deficit -4 930,0 -2 560,2
GDP 83 524 98 793
% of GDP -5,9 -2,6
2010-2011 State Budget Revenue (LTL thous.)
Revenue items 2010 budgeted 2011 budgeted
Change in revenue, compared to 2010
budget (LTL thous.)
Change in revenue, compared to
2010 budget (%)
PIT 877 793 1 407 671 529 878 60,4
CIT 907 741 1 178 639 270 898 29,8
VAT 6 077 864 8 259 201 2 181 337 35,9
Excises 3 257 424 3 476 455 219 031 6,7
Other revenues 2 257 250 2 575 877 318 627 14,1
Total 13 378 072 16 897 843 3 519 771 26,3
EU and other financial assistance 7 891 894 6 922 365 -969 529 -12,3
Total revenue 21 269 966 23 820 208 2 550 242 12,0
2010-2011 State Budget Expenditure (LTL thous.)
2010 year 2011 year 2011 compared to 2010 (%)
General services of the State, of which: 6 812 696 7 777 895 14,2
payments to the EU 1 030 247 1 089 004 5,7
debt servicing 1 592 420 1 917 445 20,4
grants to municipalities 2 901 544 3 509 059 20,9
other 1 288 485 1 262 387 -2,0
Defence 989 781 1 038 634 4,9
Public order and society protection 1 964 615 2 071 451 5,4
Economy 6 969 495 6 956 454 -0,2
Environment protection 1 015 415 959 776 -5,5
Accommodation and municipal economy 38 070 20 717 -45,6
Public health 2 391 093 2 059 011 -13,9
Recreation, culture and religion 515 463 552 548 7,2
Education 2 904 999 2 475 239 -14,8
Social security 2 598 326 2 468 662 -5,0
TOTAL 26 199 953 26 380 387
78,373,6
51,0
35,4 35,9 35,7 36,1
7,2
29,5
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
Hun
gary
EU-2
7
Pola
nd
Czec
h Re
publ
ic
Slov
enia
Slov
akia
Latv
ia
Lith
uani
a
Esto
nia
15,617,018,0
29,5
37,8
19,418,4
40,3
41,9
10
15
20
25
30
35
40
45
2004 2005 2006 2007 2008 2009 2010F 2011F 2012F
Government Debt Rises but to Still Moderate Levels
• Positive trend supported by tight fiscal policy and strategic debt management• Conservative debt management approach• Lithuania’s General Government debt compares well to credit peers
Source: Ministry of Finance, Eurostat as at 10 January2011 Source: Ministry of Finance
General Government debt in 2009 (% of GDP) comparison General Government debt (% of GDP)
Source: Ministry of Finance, December 2010
Domestic debt redemptions EUR 0,7 bn
Net budgeted requirements EUR 1,1 bn
Total EUR 1,8 bn, of which:
International bonds EUR 0,7 bn
IFIs’ loans EUR 0,1 bn
Domestic bonds EUR 0,5 bn
Domestic bills and credit lines EUR 0,5 bn
Borrowing requirement breakdown (EUR bn) Financing plan (EUR bn)
Planned Borrowing Requirement Financing in 2011
• Gross borrowing requirements in 2011: EUR 1,8 bn• Net borrowing requirements in 2011: EUR 1,1 bn• Net borrowing limit in 2011: EUR 1,1 bn (an additional EUR 0,5 bn limit earmarked for prefunding)
Total EUR 1,8 bn, of which: