2025-10-21
National Audit Office makes a recommendation: review and establish principles for the creation and management of reserves
Auditor General Irena Segalovičienė presented to the Seimas the results of the financial audit of the national set of financial accounts for 2024 conducted by the National Audit Office. A qualified opinion was issued on the financial accounts. This means that it contains significant errors. These were caused by misstatements in the sets of financial accounts of public sector entities at a lower level of consolidation, the opinions on which were presented to the Seimas in May.
The Auditor General stressed that the deficiencies identified in the accounts are currently not being addressed. For example, the promise made in spring 2025 to correct the errors in the 2024 mineral resource accounts before the national set of accounts is submitted has not been fulfilled. The Ministry of the Environment also failed to fulfil its promise to take action and correctly organize the accounting processes for forest land and stands. Without correcting the errors, we will not have accurate and reliable data for 2025, which will make it difficult to assess the efficiency of the public sector.
"If identified accounting errors are not corrected, the available data is not reliable. This creates the risk that decisions in the country will be made based on incorrect information. If the data are incorrect, how can we reliably plan next year's budgets and understand where there is potential for savings?" says Ms. Segalovičienė.
The national set of accounts also includes information on public debt. According to the auditors, no significant misstatements were identified there. The Auditor General noted that it is very important to strengthen the public finance system and ensure that public debt management is based on clear rules, long-term objectives, and compliance with the Maastricht criteria.
"However, we must not be tempted by easy solutions to borrow, even if there is still room before reaching the Maastricht criteria. We should not forget that higher revenues are needed to repay the debt," Segalovičienė points out.
According to the Auditor General, the issue of reserves is inseparable from public debt. Public reserves increased by more than a billion in 2024, exceeding EUR 4.8 billion. The significant increase in reserves (78%) was due to the growth of the SODRA reserve. Having reserves is directly related to the state's ability to independently finance unforeseen expenses without having to borrow under unfavourable market conditions. This increases the ability to respond quickly and efficiently to crisis situations. Therefore, it is necessary to justify what risks reserves could cushion in the long term.
Considering that the accumulation and use of reserves is one of the necessary measures to increase the financial resilience of the state, the National Audit Office recommends that the Ministry of Finance systematically review the legal regulation of reserves and establish common principles for their creation and management in line with the state's borrowing policy.
The Auditor General reminded that a new version of the Law on Budget Structure came into force in 2024, providing for the planning and approval of a medium-term consolidated budget (covering central and local government and social funds). Such consolidation will allow for more transparent financial planning, ensuring fiscal sustainability and aligning financial policy with long-term goals. However, no accountability for such a budget has been established. Therefore, already in the previous audit, the National Audit Office recommended to the Ministry of Finance that the annual national set of financial accounts submitted to the Seimas should include not only data from the consolidated financial accounts of the entire public sector but also consolidated budget implementation data. This recommendation should be implemented in the first quarter of 2026.