Macroeconomic Forecast Lithuania

November 2005 | Macroeconomic Forecasts

BMI View: Preliminary monthly data suggest that the budget of the consolidated central government moved from a small deficit in H105 to a small surplus by end-September, owing to buoyant tax revenues linked to robust economic activity and increased profits at oil refiner Mazeikiu Nafta, the country's largest taxpayer. Despite a supplementary budget geared to social needs, the budget is on track to register a smaller-than-planned deficit of around 1.7% of GDP in 2005. A cut in the personal income tax rate to 27% from 33%, effective July 2006, may result in a slightly larger deficit next year, although the impact on annual revenues will be partly offset by a solidarity tax on corporate profits.

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