Recommendation for a COUNCIL DECISION abrogating Decision 2009/588/EC on the existence of an excessive deficit in Lithuania
Date: 2013-05-29
Institutions: European Commission
Subjects: Lithuania, budget deficit, budgetary equilibrium, pension scheme, stability pact, tax reform

EUROPEAN 
COMMISSION 

Brussels, 29.5.2013  
COM(2013) 387 final 

Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2009/588/EC on the existence of an excessive deficit in Lithuania 

EN 

   EN 

 
 
 
  
 
Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2009/588/EC on the existence of an excessive deficit in Lithuania 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 126(12) thereof, 

Having regard to the recommendation from the Commission, 

Whereas:  

(1) 

(2) 

(3) 

(4) 

By Council Decision 2009/588/EC of 7 July 20091, following a recommendation from 
the  Commission  in  accordance  with  Article 104(6)  of  the  Treaty  establishing  the 
European  Community  (TEC),  it  was  decided  that  an  excessive  deficit  existed  in 
Lithuania.  The  Council  noted  that  the  general  government  deficit  reached  3.2%  of 
GDP in  2008,  above the  3%  of  GDP Treaty reference  value and  would according to 
the  Commission  services’  2009  spring  forecast  widen  to  5.4%  of  GDP  in  2009  and 
further to 8% of GDP in 2010. The general government gross debt was 15.6% of GDP 
in 2008, well below the 60% of GDP Treaty reference value.  

On  7  July  2009,  in  accordance  with  Article 104(7)  TEC  and  Article  3(4)  of  Council 
Regulation  (EC)  No  1467/97  of  7  July  1997  on  speeding  up  and  clarifying  the 
implementation  of  the  excessive  deficit  procedure2,  the  Council,  based  on  a 
recommendation  from  the  Commission,  addressed  a  recommendation  to  Lithuania 
with a view to bringing the excessive deficit situation to an end by 2011 at the latest. 
The recommendation was made public. 

On  9  February  2010,  in  accordance  with  Article 126(7)  of  the  Treaty  on  the 
Functioning  of  the  European  Union  (TFEU)  and  Article  3(4)  of  Council  Regulation 
(EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of 
the  excessive  deficit  procedure,  the  Council,  based  on  a  recommendation  from  the 
Commission, acknowledging that the Lithuanian authorities had taken effective action 
in compliance with the Council Recommendation of 7 July 2009 and that unexpected 
adverse  economic  events  with  major  unfavourable  consequences  for  government 
finances had occurred in Lithuania, addressed a revised recommendation to Lithuania 
with a view to bringing the excessive deficit situation to an end by 2012 at the latest. 
This recommendation was made public. 

In  accordance  with  Article  4  of  the  Protocol  on  the  excessive  deficit  procedure 
annexed to the Treaties, the Commission provides the data for the implementation of 
the procedure. As part of the application of this Protocol, Member States are to notify 
data  on  government  deficits  and  debt  and  other  associated  variables  twice  a  year, 
namely before 1 April and before 1 October, in accordance with Article 3 of Council 
Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on 

1 
2 

OJ L 202, 4.8.2009, p. 44. 
OJ L 209, 2.8.1997, p. 6.  

EN 

2 

   EN 

                                                 
the  excessive  deficit  procedure  annexed  to  the  Treaty  establishing  the  European 
Community3.  

(5)  When considering whether a decision on the existence of an excessive deficit should 
be  abrogated,  the  Council  should  take  a  decision  on  the  basis  of  notified  data. 
Moreover, a decision on the existence of an excessive deficit should be abrogated only 
if the Commission services’ forecasts indicate that the deficit will not exceed the 3% 
of GDP threshold over the forecast horizon4. 

(6) 

Based on data provided by the Commission (Eurostat) in accordance with Article 14 
of  Regulation  (EC)  No  479/2009  following  the  notification  by  Lithuania  before 
1 April  2013  and  on  the  Commission  services’  2013  spring  forecast,  the  following 
conclusions are warranted: 

– 

– 

– 

– 

Having  peaked  at  9.4%  of  GDP  in  2009  the  general  government  deficit  in 
Lithuania  has  been  brought  down  to  7.2%  of  GDP  in  2010,  then  to  5.5%  of 
GDP in 2011 and to 3.2% of GDP in 2012. This improvement was driven by 
consolidation  measures  on  the  expenditure  side,  in  particular  a  continued 
restriction of expenditure growth in accordance with Lithuania’s Law on Fiscal 
Discipline, and favourable cyclical conditions.  

Since the deficit of 3.2% of GDP can be considered to be close to the reference 
value  and  Lithuania's  debt-to-GDP  ratio  is  below  the  60%  of  GDP  reference 
value in a sustained manner, Lithuania is eligible to the Stability and Growth 
Pact provisions in the Regulation 1467/97 regarding systemic pension reforms. 
Thus,  the  direct  net  cost  of  the  pension  reform  should  be  taken  into  account 
when  assessing  the  correction  of  the  excessive  deficit.  As  the  net  costs  of 
Lithuania's  systemic  pension  reform  have  been  0.2%  of  GDP  in  2012,  as 
confirmed by the Commission (Eurostat), they explain the excess over the 3 % 
of GDP Treaty reference value in 2012.  

Lithuania's  2013  convergence  programme  projects  the  general  government 
deficit to continue falling to 2.5% of GDP in 2013 and 1.5% of GDP in 2014, 
while the Commission services’ 2013 spring forecast projects an improvement, 
albeit a slower one, of the general government deficit to 2.9% of GDP in 2013 
and to 2.4% of GDP in 2014, based on a no-policy-change assumption. Thus, 
the deficit is set to remain below the reference value of 3% of GDP over the 
forecast horizon.  

The Commission services' 2013 spring forecast project the general government 
gross debt to decrease slightly from 40.7% of GDP in 2013 to 40.1% of GDP 
in 2014.  

The Council recalls that, starting from 2013, which is the year following the correction 
of the excessive deficit, Lithuania should progress towards its medium-term objective 
at an appropriate pace, including respecting the expenditure benchmark. 

In accordance with Article 126(12) of the Treaty, a Council Decision on the existence 
of  an  excessive  deficit  is  to  be  abrogated  when  the  excessive  deficit  in  the  Member 
State concerned has, in the view of the Council, been corrected.  

OJ L 145, 10.6.2009, p. 1.  
In line with the “Specifications on the implementation of the Stability and Growth Pact and Guidelines 
on the format and content of Stability and Convergence Programmes”, of 3 September2012. See: 
http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf 

(7) 

(8) 

3 
4 

EN 

3 

   EN 

                                                 
 
(9) 

In the view of the Council, the excessive deficit in Lithuania has been corrected and 
Decision 2009/588/EC should therefore be abrogated, 

HAS ADOPTED THIS DECISION: 

From an overall assessment it follows that the excessive deficit situation in Lithuania has been 
corrected. 

Article 1 

Decision 2009/588/EC is hereby abrogated. 

Article 2 

This Decision is addressed to the Republic of Lithuania. 

Done at Brussels, 

Article 3 

For the Council 
The President 

EN 

4 

   EN