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Business & Economics

The Forecast of the State Admissible Borrowing Limits: The Case of Lithuania
Žaneta Štuopytė, Andrius Guzavičius

ABSTRACT. The present article analyzes the interaction between the national debt and the budget deficit. The article concentrates on a scientific problem, i.e. a capability to make prognosis related to the limits for a state borrowing acceptability when a real foreseen growth of GDP and an estimate of the budget deficit are known. It is important to know the level of fiscal deficit, which is acceptable for the country, and in what way the mentioned deficit should be managed under certain economical conditions. To select criteria for the acceptable budget deficit level it is necessary to take into account a capability to use them, i.e. to make analysis and prognosis.

This preliminary research paper aims at:

1. Investigating a number of factors that determine the acceptability of the national debt as well as its optimal and effective management.
2. Analyzing by means of mathematical models the state borrowing limits without exceeding the determined (acceptable) state budget deficit.
3. Within the framework of the mathematical model covered in detail, the author proposes the evaluation of the debt limits of the Lithuanian government by drawing on principle economic variables.

KEYWORDS: debt, debt management, budget, deficit, government policy and regulation, Lithuania.

JEL classification: H63, H68, F34, P2.