REPUBLIC OF LITHUANIA                                     
                                                                                
                               LAW                                              
                          ON BUDGETING                                          
                                                                                
                                                                                
                                                                                
                            Chapter 1                                           
                                                                                
                       General Provisions                                       
                                                                                
                                                                                
     Article 1.  The  budgetary  structure  of  the  Republic  of               
Lithuania  shall   be  determined  by  its  state  structure  and               
administrative-territorial division.  The budgetary system of the               
Lithuanian State shall consist of the independent State Budget of               
the Republic  of  Lithuania  and  independent  budgets  of  local               
governments. Budgets  of local  governments shall  be  subdivided               
into the  budgets of  local governments  of the  lower and higher               
levels. Budgets  of local  governments of  the higher level shall               
consist of the budgets of regions and towns (under the Republic's               
jurisdiction); budgets of local governments of the lower level --               
of the  budgets  of  rural  territorial  units,  settlements  and               
regional towns.                                                                 
                                                                                
     Budgets shall  be drawn  up for  the budget year beginning on              
January 1 and ending on December 31 inclusive.                                  
                                                                                
     Article 2.  The budgets  of  Lithuania  shall  include  that               
portion  of   national  revenue   which   is   appropriated   for               
implementing State  programmes for  education, science,  culture,               
health care,  social welfare  and  social  relief,  environmental               
protection, as  well as  for developing  the economy, maintaining               
institutions of  state power  and government,  and for  financing               
national defence.                                                               
                                                                                
     Article 3.  Taxes and  other payments  into budgets shall be               
prescribed by laws adopted by the Supreme Council of the Republic               
of Lithuania. Councils of regions and towns (under the Republic's               
jurisdiction) may introduce local collections.                                  
                                                                                
     All legal  persons located  on the territory of the Republic               
of Lithuania,  as well  as individuals residing on said territory               
shall  pay  the  required  taxes  and  other  payments  into  the               
appropriate budgets of the Republic.                                            
                                                                                
     Article 4.  The  procedure  for  apportioning  revenues  and               
expenditures  between   the  State  Budget  of  the  Republic  of               
Lithuania and  budgets of  local governments shall be established               
under Articles 12, 13, 28 and 29 of this Law.                                   
                                                                                
     Income tax  payable  by  individual  residents,  and  excise               
duties (turnover  tax) shall  constitute the common source of all               
budget revenues.  On the  recommendation of the Government of the               
Republic of  Lithuania, the  Supreme Council shall determine  the               
portion (in  percentage) of  budget revenues that is appropriated               
to  the   budgets  of  local  governments  of  towns  (under  the               
Republic's jurisdiction)  and regions,  including the  budgets of               
local  governments   of  the   lower  level.   The  portions  (in               
percentage)  of   revenues  shall   be  estimated  separately  in               
accordance with  income tax  of  individuals  and  excise  duties               
(turnover tax). (Amended 24 September 1992)                                     
                                                                                
     Article 5.  Institutions financed out of the budget shall be               
allowed to  have non-budgetary  financial resources.  Regulations               
for the  formation and  use  of  resources  by  the  institutions               
maintained  from   the  State  Budget  and  by  the  institutions               
maintained  from  the  budgets  of  local  governments  shall  be               
established by the Government of the Republic of Lithuania and by               
the executive bodies of local governments, respectively.                        
                                                                                
     Article 6. The State Budget of the Republic of Lithuania, as               
well as  the budgets  of local  governments shall be drawn up and               
implemented under  the laws  of the  Republic of Lithuania and in               
accordance with general regulations approved by the Government of               
the Republic of Lithuania.                                                      
                                                                                
     Article  7.   A  uniform   classification  of  revenues  and               
expenditures, established  by the  Ministry  of  Finance  of  the               
Republic of  Lithuania, shall  be applied  to the State Budget of               
the  Republic   of  Lithuania   and  to   the  budgets  of  local               
governments.                                                                    
                                                                                
     Article 8.  Issues concerning the procedure for the drafting               
of the  budgets of  local governments,  as well as the  financial               
plans of  ministries, independent departments, State enterprises,               
and     institutions  of  the  Republic  of  Lithuania  shall  be               
considered  by  the  Ministry  of  Finance  of  the  Republic  of               
Lithuania.                                                                      
                                                                                
     Article 9.  Budget operations  on  a  cash  basis  shall  be               
performed  by   the  Bank   of  Lithuania   through  the   credit               
institutions of the Republic.                                                   
                                                                                
     Article 10. Information of the Government of the Republic of               
Lithuania and  of executive  bodies of  local governments  on the               
approved budgets  and performance  thereof shall  be published by               
state statistical  agencies.  Information  on  the  approval  and               
performance  of   the  budgets  of  local  governments  shall  be               
submitted to the Ministry of Finance of the Republic of Lithuania               
in accordance with the procedure established by the Government of               
the Republic of Lithuania.                                                      
                                                                                
                                                                                
                                                                                
                            Chapter 2                                           
                                                                                
          The State Budget of the Republic of Lithuania                         
                                                                                
                                                                                
     Article 11.  The State  Budget of  the Republic of Lithuania               
shall be  a centralised  fund of  financial resources  wherein  a               
certain portion of the national revenues of the Republic shall be               
accumulated and reapportioned.                                                  
                                                                                
     Financial resources  accumulated in  the State  Budget of the              
Republic of  Lithuania shall be used for financing national needs.              
In addition,  reapportionment of financial resources for the needs              
of local  governments shall  be performed through the State Budget              
of the  Republic of  Lithuania in  accordance with  the  procedure              
established by this Law and other laws of the Republic.                         
                                                                                
     Article 12.  The sources  of revenues of the State Budget of               
the Republic of Lithuania shall be taxation under the laws of the               
Republic of  Lithuania, and  other  required  payments  into  the               
Budget.                                                                         
                                                                                
     The following  taxes and payments shall be paid to the State               
Budget of the Republic of Lithuania:                                            
                                                                                
     (1) taxes on profits of legal persons;                                     
     (2) exise duties (turnover tax);                                           
     (3) income tax of individuals;                                             
     (4) customs duties;                                                        
     (5) income  received  from  the  exploitation  and  sale  of               
stateowned property;                                                            
     (6) payments  collected by the traffic control inspectorate;               
and                                                                             
     (7) other payments.                                                        
                                                                                
     The tax  under paragraph  1 hereof  shall be  paid into  the               
State Budget  by legal  persons  that  do  not  belong  to  local               
governments by  ownership right.  Sums amounting to 20 percent of               
the profit tax paid by said taxable entities shall be transferred               
into the budgets of [appropriate] local governments.                            
                                                                                
     After required sums of taxes under paragraphs 2 and 3 hereof               
have been paid to the budgets of [appropriate] local governments,               
the remaining amounts shall be included in the State Budget.                    
                                                                                
     The revenues  under paragraph  5 hereof shall be included in               
the State  Budget provided said revenues have been generated from               
the exploitation and sale of state property.                                    
                                                                                
     Other payments,  specified in paragraph 7, shall be included               
in the  State Budget  or in  the  budgets  of  local  governments               
according to  the procedure  established by  relevant laws or, in               
the absence  of such,  by directives  of the  Government  of  the               
Republic of Lithuania.                                                          
                                                                                
     Article 13.  Appropriations from  the State  Budget  of  the               
Republic of  Lithuania shall  be made  for the following national               
needs:                                                                          
                                                                                
     (1) implementation of educational, cultural, health care and               
sports programmes;                                                              
     (2) social welfare and social relief;                                      
     (3) scientific research and technological progress;                        
     (4) environmental protection;                                              
     (5) regulation of economic development;                                    
     (6) national defence;                                                      
     (7) maintenance  of state  power, state  government and  law               
enforcement institutions;                                                       
     (8) subsidies to regional and town budgets;                                
     (9) development of the Republic's foreign relations; and                   
     (10) implementation  of other  measures pursuant to the laws               
of the Republic of Lithuania.                                                   
                                                                                
     Article 14.  The State  Budget of  the Republic of Lithuania               
shall include  the Reserve Fund of the Government of the Republic               
of Lithuania;  the total amount of said Fund shall be established               
upon approval  of the  State  Budget.  On  the  decision  of  the               
Government of  the Republic  of Lithuania,  amounts of  the  Fund               
shall be  appropriated for  expenditures that  cannot be provided               
for  upon   approval  of   the  Budget  (with  the  exception  of               
expenditures  for   the   maintenance   of   the   administrative               
organizational structure).                                                      
                                                                                
     Article 15.  The State  Budget of  the Republic of Lithuania               
shall include  a working  cash balance  that shall be formed from               
the budgetary  surplus or,  if said  amount proves  insufficient,               
from planned  budgetary revenues.  The amount of the working cash               
balance shall be established upon approval of the State Budget of               
the Republic of Lithuania.                                                      
     The working   cash  balance shall be used to cover temporary               
cash deficit  and must  be reimbursed no later than by the end of               
the current budget year.                                                        
                                                                                
     Article 16.  The Government  of the  Republic  of  Lithuania               
shall organise  the  preparation  of  the  State  Budget  of  the               
Republic of  Lithuania. The  Draft  Budget  of  the  Republic  of               
Lithuania shall  be prepared  by the  Ministry of  Finance of the               
Republic of Lithuania.                                                          
                                                                                
     The Draft  Budget of  the Republic  of  Lithuania  shall  be               
prepared based  on legislative  acts of the Republic, information               
from state  statistical agencies,  socio-economic programmes  and               
scientific-technolgical projections.                                            
                                                                                
     Article 17.  The Government  of the  Republic  of  Lithuania               
shall consider  the State Budget of the Republic of Lithuania and               
submit it  to the  Supreme Council  of the Republic of Lithuania.               
The Draft Budget shall include the following:                                   
                                                                                
     (1) the  total amount  of the revenues and the apportionment               
thereof according to the budget items;                                          
     (2) the total amount of appropriations and the apportionment               
thereof for ministries, independent departments, enterprises, and               
institutions of  the Republic of Lithuania, separately indicating               
social economic  programs. The  appropriations shall  be  divided               
into the  estimated expenditures (including payment of wages) and               
unanticipated expenditures; (Amended 24 September 1992) and                     
     (3)  budgetary   resources  for  forming  the  working  cash               
balance.                                                                        
                                                                                
     Article 18.  The standing  committees  of  deputies  of  the               
Supreme Council  of the  Republic of Lithuania shall consider the               
Draft Budget  of the  Republic of  Lithuania and prepare relevant               
proposals and  conclusions to be submitted to the Supreme Council               
of the Republic of Lithuania.                                                   
                                                                                
     Article 19. The Supreme Council of the Republic of Lithuania               
shall consider  the Draft  Budget of  the Republic  of  Lithuania               
taking into  consideration the  report of  the Government  of the               
Republic of Lithuania, proposals, and conclusions of the standing               
committees of  the Supreme  Council of the Republic of Lithuania,               
as well as additional information.                                              
                                                                                
     Article 20.  The Supreme Council of the Republic of Lithuania              
shall approve  the State Budget of the Republic of Lithuania based              
on the  indices specified  by paragraphs 1, 2, and 3 of Article 17              
of this Law.                                                                    
     The approved State Budget of the Republic of Lithuania shall               
be enacted  as a  Law of  the Supreme  Council of the Republic of               
Lithuania.                                                                      
                                                                                
     Article 21.  The State  Budget of  the Republic of Lithuania               
shall be approved no later than two weeks before the beginning of               
the budget year.                                                                
                                                                                
     If the  State Budget is not approved in a timely manner, the               
monthly budget outlays at the beginning of the budget year (prior               
to its  approval) may  not exceed one twelfth of the State Budget               
outlays in the prior budget year.                                               
                                                                                
     Article 22.  The Government  of the  Republic  of  Lithuania               
shall organise  the maintenance  of the  State Budget through the               
Ministry  of  Finance  of  the  Republic  of  Lithuania  and  its               
agencies,  as  well  as  through  other  state  institutions  and               
enterprises.                                                                    
                                                                                
     Article 23.  Pursuant to the directives of the Government of               
the Republic  of Lithuania,  additional  revenues  of  the  State               
Budget of  the Republic  of Lithuania received during the current               
budget year  and   the amounts of appropriations not applied to a               
specified purpose  shall be  used to  meet   additional  national               
demands.                                                                        
                                                                                
     Article 24.  The Ministry  of  Finance  of  the  Republic  of              
Lithuania shall  prepare a  report on the maintenance of the State              
Budget and  submit  it  to  the  Government  of  the  Republic  of              
Lithuania in  accordance with the procedure established by law and              
at the prescribed time.                                                         
                                                                                
     Article 25.  The Government  of the  Republic  of  Lithuania               
shall consider  the report on the maintenance of the State Budget               
and submit it to the Supreme Council of the Republic of Lithuania               
for approval. The report on the State Budget performance shall be               
approved on  the basis  of the indices specified by Article 17 of               
this Law.                                                                       
                                                                                
                                                                                
                                                                                
                            Chapter 3                                           
                                                                                
                  Budgets of Local Governments                                  
                                                                                
                                                                                
     Article 26.  The budgets  of local  governments shall  be  a               
constituent part of the State budgetary system of the Republic of               
Lithuania. The  budgets of  local governments shall be consist of               
resources appropriated  for financing  local  socio-economic  and               
other programmes,  as well  as for  operating and maintaining the               
institutions of local governments.                                              
                                                                                
     Article 27.  Each local  government of  a region, town (under              
the Republic's  jurisdiction), rural territorial unit, settlement,              
as well as  [regional] town shall have its own independent budget.              
The budgets  of local governments must be adopted without deficit.              
(Amended 2 September 1992)                                                      
                                                                                
     Article 28.  The sources  of revenue of the budgets of local               
governments shall be:                                                           
                                                                                
     (1) taxes on profits of legal persons;                                     
     (2) excise duties;                                                         
     (3) income tax of individuals;                                             
     (4) income  received  from  the  exploitation  and  sale  of               
property owned by local governments;                                            
     (5) land tax;                                                              
     (6) real estate tax;                                                       
     (7) motor vehicle duties;                                                  
     (8) stamp duties;                                                          
     (9) other payments; and                                                    
     (10) subsidies.                                                            
                                                                                
      100 percent of taxes under paragraph 1 hereof shall be paid               
to the  budgets of  local governments  by the taxable entities in               
which   [appropriate] local  governments  have  property  rights;               
stock companies  and private  stock companies  shall pay  to said               
budgets 50  percent of the above taxes. The tax revenues shall be               
apportioned among  the budgets  of the regional local governments               
and the  local governments  of  the  lower  level  based  on  the               
subordination of  the economic units to the appropriate Councils.               
An additional  amount equal to 30 percent of the taxes on profits               
of legal  persons paid  by the  taxable  entities  in  which  the               
[appropriate] local  government has  no property  rights shall be               
transferred  to   the  budgets  of  local  governments.  Regional               
Councils shall  apportion said tax revenues among the  budgets of               
                                                                                
the regional  local governments  and the local governments of the               
lower level. (Amended 12 October 1993)                                          
                                                                                
     The portion (in percentage) of tax revenues under paragraphs               
2 and  3 hereof,  as established  by the  Supreme Council  of the               
Republic of Lithuania in accordance with the procedure prescribed               
by Article  4 of  this Law,  shall be  included in the budgets of               
towns [under  the Republic's jurisdiction] and regions along with               
the budgets  of the  local governments  of the  lower level.  The               
portion (in  percentage) of  said tax  revenues  established  for               
regions shall  be apportioned among the budgets of the region and               
of the  governments of  the lower  level by  the Councils  of the               
appropriate regions.                                                            
     Tax revenues  under paragraph  5 hereof shall be included in               
the budgets  of towns  [under  the  Republic's  jurisdiction]  or               
regions, and of local governments of the lower level.                           
                                                                                
     Tax revenues  under paragraphs  4, 6, 7, 8 and 9 hereof shall              
be included  in the  budgets of  local governments pursuant to the              
laws on  taxation of the Republic of Lithuania, and in the absence              
of such  -- pursuant  to the  directives of  the Government of the              
Republic of  Lithuania. If  under said legislative acts any of the              
indicated tax  revenue is not included in the appropriate budgets,              
such tax revenue shall be apportioned by the regional Councils.                 
                                                                                
     Subsidies under  paragraph 10  hereof shall  be  transferred               
from the State Budget of the Republic of Lithuania to the budgets               
of  towns   [under  the  Republic's  jurisdiction]  and  regions.               
Subsidies to  the budgets of local governments of the lower level               
shall be disbursed from the budgets of regions.                                 
                                                                                
     Article  29.   Appropriations  from  the  budgets  of  local               
governments shall be applied to:                                                
                                                                                
     (1) financing  local governments'  programmes for education,               
culture, health  care, sports,  and environmental  protection, as               
well as for social relief;                                                      
     (2)  developing   and  regulating   the  economy   of  local               
governments;                                                                    
     (3) maintaining  bodies of  state power and executive bodies               
of local governments; and                                                       
     (4) implementing  other programmes  pursuant to  the laws of               
the Republic  of Lithuania  and resolutions  of Councils of local               
governments.                                                                    
                                                                                
     Article 30.  The budgets  of local  governments shall  have a              
working cash  balance that  shall be  formed from  the appropriate              
budget surplus  or, if  said amount  proves insufficient  --  from              
planned  revenues.  The  amount  of  the  cash  balance  shall  be              
established upon approval of the budgets of local governments.                  
                                                                                
     The working  cash balance  shall be  used to cover temporary               
cash deficit  and must  be reimbursed no later than by the end of               
the current budget year.                                                        
                                                                                
     Article 31.  Additional revenues  of the  budgets  of  local               
governments received  during the  current budget year, as well as               
the amounts  of appropriations not applied to a specified purpose               
shall be  placed at the disposal of the local government Councils               
and, on  their decision, shall be used to meet additional demands               
of [appropriate] local governments.                                             
                                                                                
     Article 32.  If the  Supreme  Council  of  the  Republic  of               
Lithuania, the Government of the Republic of Lithuania, or bodies               
of local  governments of  the higher  level adopt decisions which               
bring about  changes in the revenues or outlays of the budgets of               
local  governments,   appropriate  inter-budgetary  disbursements               
shall be  made between  the State Budget and the budgets of towns               
(under the  Republic's  jurisdiction)  or  regions,  as  well  as               
between  the   budgets  of  regions  and  the  budgets  of  local               
governments of the lower level.                                                 
                                                                                
     Article 33.  Draft budgets  of local  governments  shall  be               
prepared by  the executive  bodies of  the appropriate  Councils.               
Draft budgets  of local  governments shall  be prepared  based on               
legislative acts  of the Republic, on portions (in percentage) of               
revenues from  excise duties  (turnover tax)  and income  tax  of               
individuals payable  to  local  budgets  as  established  by  the               
Supreme Council  of the  Republic of  Lithuania  or  by  regional               
Councils, as  well  as  on  information  from  State  statistical               
agencies,   and   socio-economic   programmes   and   scientific-               
technological projections.                                                      
                                                                                
     Article 34.  The executive bodies of local governments shall               
submit the prepared draft budgets to the appropriate Councils.                  
                                                                                
     Article 35.  Standing committees of the appropriate Councils               
shall consider the draft budgets of local governments and prepare               
proposals and conclusions for the Councils.                                     
                                                                                
     Article 36.  Local government  Councils shall consider draft               
budgets taking  into consideration reports of executive bodies of               
the [appropriate]  Councils, and  proposals  and  conclusions  of               
standing committees.                                                            
                                                                                
     Article 37.  The  budgets  of  local  governments  shall  be               
approved by  the appropriate Councils. The approval of the budget               
shall be enacted by a resolution of the local government Council.               
The resolution shall indicate:                                                  
                                                                                
     (1) the  total amount  of the revenues and the apportionment               
thereof according to the budget items;                                          
     (2) the total amount of appropriations and the apportionment               
thereof for  the one-type  enterprises and  institutions  of  the               
[appropriate]  local  government,  separately  indicating  social               
economic programs.  The appropriations  shall be divided into the               
estimated  expenditures   (including  payment   of   wages)   and               
unanticipated expenditures; (Amended 24 September 1992) and                     
     (3)  budgetary   resources  for  forming  the  working  cash               
balance.                                                                        
                                                                                
     Article 38.  The  budgets  of  local  governments  shall  be               
approved not  later than  two weeks  before the  beginning of the               
following budget year.                                                          
                                                                                
     If the  budgets of  local governments  are not approved in a               
timely manner, the monthly budget outlays at the beginning of the               
budget year  (prior to  its  approval) may not exceed one twelfth               
of the outlays of said budgets of the prior year.                               
                                                                                
     Article 39.  The budget  performance  of  local  governments               
shall  be   organised  by   the  Boards  of  [appropriate]  local               
government Councils  through administrative bodies formed by said               
Boards, as  well as  through other  institutions and  enterprises               
subordinate to the Councils.                                                    
                                                                                
     The administrative  bodies formed  by the Boards of Councils               
of regions  and towns  (under the  Republic's jurisdiction) shall               
control  the   budget  performance   of  local  governments.  The               
computation and  payment of taxes and other required amounts into               
the budgets of local governments shall be controlled by state tax               
                                                                                
inspectorates under  the Ministry  of Finance  of the Republic of               
Lithuania.                                                                      
                                                                                
     Article 40.  The executives  bodies of  the Councils  of  the              
appropriate local  governments shall prepare reports on the budget              
performance of  local governments  and submit  said reports to the              
local government  Councils for approval. The reports on the budget              
performance of local governments shall be approved on the basis of              
the indices specified by Article 37 of this Law.                                
                                                                                
                                                                                
                                                                                
Vytautas Landsbergis                                                            
President                                                                       
Supreme Council                                                                 
Republic of Lithuania                                                           
30 July 1990                                                                    
No. I-430