Page 70 - CE Outlook Regions 2022

In 2021, Lithuania borrowed €750mn in the international capital markets
by issuing a 30-year Eurobond. The annual coupon was set at 0.75 per
cent.
At the beginning of 2022, Lithuania is scheduled to redeem a sizeable
amount of government bonds for which cash reserves have been
accumulated already in 2021.

Fitch Ratings affirmed in summer 2021 Lithuania's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'A' with a Stable
Outlook.

4.6 Budget and debt - Slovakia

Slovak fiscal policy was supportive in 2021, but the budget deficit is
forecast to decline in the following years to help contain the public
debt-to-GDP ratio. As stated by the EC outlook, in 2022 the general
government deficit is projected to narrow to 4.2% of GDP, as
economic growth is on its recovery path and most temporary
government support measures for the companies hit by the
anti-coronavirus restrictions are phased out.

The Slovak deficit is projected by the EC to further decline in 2023,
to 3.2% of GDP. While tax income is expected to increase broadly in
line with GDP, expenditures should shift away from
pandemic-related emergency measures towards public investment
aimed at facilitating the green and digital transformation, supported
also by RRF money.

According to Fitch Ratings agency, Slovakia´s economic growth in
2021-23 will be heavily driven by investment, due to the contribution
of the RRF, as well as EU funds under the Multi-Annual Financial
Framework. Investment growth will peak at 13% in 2022, which will
also result in strong import growth (estimated at 7%). The finance
ministry expects Slovakia to draw around 40% of the total funds
from the EU RRF by 2023, mainly for investment.

The EU recovery plan foresees ambitious investment and reforms in
Slovakia, especially for the transition to a low-carbon economy,
education, healthcare, and innovation. The Slovak government is
thus recommended by the OECD to adopt a medium-term fiscal
consolidation strategy to address fiscal challenges, mainly regarding
the rapidly ageing population.

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