Lithuania’s government presented its 2027 state budget draft to the Seimas on 20 October 2026, proposing increased spending on defence, public sector salaries, pensions and social benefits. The draft projected state budget revenue of EUR 22.2 billion and expenditure of EUR 27.9 billion, without proposing changes to tax rates or substantive tax rules.
Lithuania’s government submitted the draft 2027 state budget to the Seimas on 16 October 2026, prioritising national defence, income growth and social protection while aiming to maintain sustainable public finances.
The draft budget, designated No. XVP-1980, projected total state budget revenue of EUR 22.2 billion, an increase of EUR 1 billion, or 5.2%, compared with 2026. Expenditure was forecast at EUR 27.9 billion, up EUR 363 million, or 1.3%, from the current year.
The proposal did not introduce changes to tax rates or substantive tax rules. Instead, it set out the government’s revenue and spending projections for 2027, alongside measures intended to strengthen defence capabilities, increase household purchasing power and support vulnerable groups.
Finance Minister Taurimas Valys said the budget was designed to accelerate defence investment, ensure that citizens’ incomes outpaced inflation and finance these priorities while preserving fiscal sustainability.
Revenue, deficit and public debt
The Ministry of Finance projected Lithuania’s general government deficit at 3.8% of gross domestic product (GDP) in 2027, with general government debt expected to reach 48.2% of GDP.
State debt was projected to rise to approximately 54% of GDP by 2029, largely reflecting the accelerated development of defence capabilities. Valys said borrowing would help finance urgent military equipment purchases and infrastructure, while future debt-servicing costs would be taken into account.
The minister expected initial investment requirements to ease once major procurement and infrastructure projects were completed. Supported by continued economic growth and revenue increases, the debt-to-GDP ratio was projected to begin declining from 2030.
Municipal revenue was forecast to exceed EUR 8.1 billion in 2027, an increase of EUR 660.8 million, or 8.8%, compared with 2026. Municipalities’ own-source revenue was expected to rise by EUR 489 million, or 10.6%, while state budget grants to municipalities were projected to increase by EUR 171.8 million, or 6%.
Defence spending to reach 5% of GDP
The draft allocated EUR 4.8 billion to the Ministry of National Defence and the Defence Fund in 2027, equivalent to 5% of GDP.
Of this amount, EUR 896.4 million was expected to come from the State Defence Fund. Including the EUR 60 million carried over from 2026, the fund’s total available resources for 2027 would reach EUR 956.4 million.
Direct funding for the Ministry of National Defence was set to increase by EUR 34.8 million compared with 2026. However, defence spending as a share of GDP was projected to decline from 5.38% in 2026 to 5% in 2027, reflecting overall GDP growth.
The government said the funding would support the establishment of a national division, weapons procurement and defence infrastructure development.
Public sector salaries and minimum wage
The budget earmarked EUR 450.2 million for measures to increase workers’ incomes as part of nearly EUR 1.8 billion in additional social security funding.
Salary increases were planned for teachers, researchers, sports coaches, cultural workers, statutory officers, environmental protection officers and other public sector employees.
The allocations included:
- EUR 245.1 million for teachers, academic and scientific researchers, and sports coaches.
- EUR 45.3 million for statutory officers and environmental protection officers.
- EUR 21.8 million for cultural and arts personnel.
- EUR 3.2 million for judicial assistants and court secretaries.
- EUR 71.1 million for other public sector employees, reflecting a 2.5% increase through a base rate adjustment.
Average monthly take-home pay for teachers was projected to increase by EUR 92 to EUR 130, equivalent to 7.56%. Researchers were expected to receive increases of EUR 132 to EUR 152, while sports coaches’ monthly pay was projected to rise by EUR 125.
Cultural and arts workers were expected to receive an average monthly increase of EUR 96, while statutory and environmental protection officers were projected to gain EUR 128. Judicial assistants and court secretaries were expected to receive an increase of EUR 48 a month.
The government also proposed raising the minimum monthly wage by 8%, from EUR 1,153 to EUR 1,245. The increase was expected to provide minimum-wage earners with an additional EUR 55.66 in net monthly income.
Overall wage growth was projected at 9.4% in 2026 and 7.2% in 2027. The government expected wage increases to exceed inflation, gradually improving purchasing power over the medium term.
Old-age pensions and social benefits
The draft allocated an additional EUR 715.5 million for old-age pension increases, including supplementary pension increases administered through Sodra.
The average monthly old-age pension was projected to rise by 10.4%, or EUR 78, from EUR 747 to EUR 825. For pensioners with the required work history, the monthly amount was expected to increase by 10.9%, or EUR 88, from EUR 807 to EUR 895.
The increases were expected to benefit approximately 659,000 people.
A further EUR 142 million was earmarked for the indexation of social assistance benefits, while EUR 304 million was allocated to state health insurance contributions.
Of the health insurance allocation, EUR 172.8 million was associated with new regulatory requirements taking effect in 2027. These would increase the annual state contribution per insured individual from EUR 780.69 in 2026 to EUR 1,009.90 in 2027.
Family support measures
The government submitted a family welfare package alongside the main budget, with funding for childcare, housing, pensions and school-related expenses.
The proposed allocations included EUR 61.35 million for childcare and after-school coverage vouchers, which could be used for babysitting services, extended-day groups and camps.
Another EUR 40 million was earmarked for housing acquisition assistance, including targeted incentives for regional areas. The package also included EUR 25 million for enhanced pension credit guarantees for parents raising children and EUR 23.65 million for a starter voucher providing primary school pupils with lump-sum assistance for school supplies.
Road infrastructure investment
Funding for national road infrastructure was projected to reach EUR 749.3 million in 2027.
The allocation comprised EUR 436 million for the Road Maintenance and Development Programme, EUR 240.7 million from the State Road Fund and EUR 72.6 million in EU financial assistance.
National road funding was set to increase by EUR 47.1 million, or 7.6%, to EUR 667.1 million. The increase was expected to offset a reduction in EU funding as the current EU programming period came to an end.
Parliamentary consideration
The budget draft will be reviewed under the Seimas’ parliamentary procedures. The Committee on Budget and Finance was designated as the lead committee, while other parliamentary committees were assigned supplementary review responsibilities.
The first reading of the draft was tentatively scheduled for 19 November 2026, followed by a second reading on 1 December 2026. The proposed budget will require parliamentary approval before its measures can take effect.
This announcement was made on 20 October 2026.
