Lithuania: Safeguarding the viability of social investment programmes
For many years one of the fastest growing economies in Europe, Lithuania was hard hit by the crisis in 2009. The country has since recovered, but the challenges of unemployment, poverty and social exclusion still remain. In 2012, one third of the Lithuanian population was found to be at risk of poverty and social exclusion.
While Lithuania’s continued investments in public infrastructure contributed to higher growth and social welfare, they have had to be significantly cut – by more than 20% in the latest State Investment Programme compared to the Programme for 2009-2011.
Public Sector Financing Facility
With a Public Sector Finance Facility (PFF) of EUR 100 million, the CEB is providing Lithuania with resources to partially finance its necessary infrastructure investments in the social field.
Piloted in 2014, the PFF is the CEB’s latest financing instrument for maintaining the viability and sustainability of social investment programmes faced with a lack of funding over time.
PFFs will ensure uninterrupted financing for the normal functioning and, in some cases, the modernisation of public services in areas of high social relevance.
The PFF also constitutes a flexible tool for the Lithuanian authorities to address public sector financing gaps and alleviate possible funding pressures when the financial market environment is difficult. It is an opportunity for the government to diversify its borrowing strategy and take advantage of different financing structures offered by the CEB at below market rates. The current loan also builds on a previous effective cooperation with the Lithuanian authorities.
Focus on highly social sectors
Lithuania will use the CEB loan to part-finance priority investment projects in the following sectors: improving living conditions in urban and rural areas, health, education, and administrative infrastructure.
Investments will be made in cultural institutions, sports facilities, and municipality infrastructure projects with the aim of improving living conditions for the inhabitants.
Upgrading, developing and maintaining public healthcare infrastructure, including the modernisation of premises, purchase of health equipment and ambulances, will also be partly financed by the PFF.
The CEB will contribute to the improvement and modernisation of education facilities, the introduction of information technologies in schools and to the construction and renovation of buildings at all levels of educational institutions.
Improved public services
The project is expected to have a positive impact on social cohesion and enable a more rational distribution of the economic and social potential, while minimising the discrepancies in the development of urban and rural areas.
The provision of long-term funding to public, regional and municipal entities will improve the quality, range and accessibility of public services.
In many cases, it will also facilitate access to these services (through improved public transport, for example).