Municipal grant
What are the benefits?
The objective of the facility is to ensure the contribution of municipalities to projects co-financed by European Union funds under the 2014–2020 Operational Programme for the Investment of European Union Funds. It provides grants in cases where municipalities are not in a position to finance the projects from their own resources, as they would exceed the limits on the size of appropriations and the debt and borrowing limits imposed by the law.
The facility will help ensure the implementation of projects planned by municipalities under the Operational Programme: achievement of the objectives and targets set out in the Operational Programme and the timely achievement of the indicators set.
Who can apply?
The facility is aimed at municipalities investing in projects funded by the European Union Structural Funds that save their budgets and increase their income.
The grant application must be submitted through the application system.
| Applications and repayment schedules will not be accepted in paper form. |
- form of grant agreement;
- form of grant reimbursement schedule;
- sample form for the list of projects to be implemented;
- estimates of the municipalities’ share of own resources, which must contribute to the implementation of EU projects in accordance with the relevant criteria of Resolution No 1326 of the Government of the Republic of Lithuania.
- Resolution No 1294 of the Government of the Republic of Lithuania of 12 December 2018 ‘On amendment of Resolution No 1326 of the Government of the Republic of Lithuania of 26 November 2014’ and ‘On the Adoption of the Annex to the Operational Programme for the Investment of European Union Funds 2014–2020’ (new wording in force from 1 March 2019);
- Order No 1K-213 of the Minister for Finance of the Republic of Lithuania of 26 May 2016 ‘On the Approval of the Procedure for Awarding and Repaying Grants to Municipalities’;
- Regarding Order No 1K-213 of the Minister of Finance of 26 May 2016 ‘On the Amendment of the Procedure for Awarding and Repaying Grants to Municipalities’.
How much?
This year, EUR 54 million was allocated for grants under the programme ‘Ensuring the Implementation of European Union and Other International Financial Assistance Programmes and Projects’ administered by the Ministry of Finance of the Republic of Lithuania. In subsequent years, the need for funds will depend on the debt and borrowing limits set for municipalities in the relevant year, the actual debts of municipalities and the volume of projects being implemented.
Time frame
The term of the grant to the municipality shall be up to 5 years, but not later than by 2028.
The municipal administration must submit an application to INVEGA not later than by the end of the implementation of the project activities. Where an application for a grant is submitted to INVEGA in the year following, the grant may not be awarded to cover the costs of the project which have been paid from the municipality’s own funds in the previous year.
How does it work?
In accordance with Paragraph 2 of Resolution No 1326 of the Government of the Republic of Lithuania of 26 November 2014 ‘On the approval of the Annex to the Operational Programme for the Investment of European Union Funds 2014–2020’ on average, municipalities have to ensure that up to 15% of the eligible costs of projects is financed from their own resources.
The main steps for completing and submitting an electronic application are:
- Sign up using electronic authentication tools by opening a link http://gssd.vipa.lt.
- Log on to the system and complete the electronic application form.
- After completing the application data and attaching the necessary documents, click Sign. (Only one document can be attached per field. If you want to submit more, the document is in zip format.)
- The application must be signed in one of the following ways: mobile signature, Smart ID, smart card or USB stick.
A grant to the municipality is awarded to cover the cost of the municipality’s own contribution or part of the project’s eligible EU Structural Funds, required under the description of the conditions for financing projects under the facility concerned. This is where the municipality is not in a position to finance the project from its own resources and/or become a final beneficial owner of a financial instrument of the EU Structural Funds (hereafter referred to as the ‘financial instrument’). It may be unable to commit to the energy efficiency projects where the energy service provider model is applied, and/or not in a position to enter into commitments under a public–private partnership agreement within the framework of a project. This is because of the limits on the amount of appropriations for the municipality, laid down in the Constitutional Law on the Implementation of the Fiscal Compact of the Republic of Lithuania. Also, the debt and/or borrowing limits set out in the Law on Approval of Financial Indicators of the State Budget and Municipal Budgets of the Republic of Lithuania for the respective year might be exceeded when all the conditions for the award of this grant are met. The conditions are:
- The municipality has complied with the requirements set out in Article 4(2) or (4) of the Constitutional Law on the Implementation of the Fiscal Compact in the last completed year.
- The municipality lacks at least EUR 15,000 for the project’s own funds.
- The amount of the municipality’s own contribution or planned contribution to all projects in the relevant year, as provided for in the municipality’s budget appropriations, is more than 0.5% of the municipality’s planned revenue for the relevant year. This is calculated excluding the amount of the special-purpose grants to the municipality from the state budget of the Republic of Lithuania and the funds of the EU and other international financial support. The contribution (hereafter referred to as the amount of the municipality’s own contribution) is that for which no grant is requested.
- The municipality participates or undertakes to participate in the implementation of financial measures during the project implementation period.
- Certain income is specified in the Law on the Approval of Financial Indicators of the State Budget and Municipal Budgets for the relevant year to compensate for the changes in expenditure (hereafter referred to as ‘the income specified in the Law on the Budget’). If, excluding the variable part of the personal income tax, this increases compared to the income specified in the Law on the Budget of the last year ended, the following applies:
- Not exceeding 10%: the amount of the municipality’s own contribution shall be 5% of the amount of the increase in revenue as specified in the Law on the Budget for the year in question. This is after taking into account the deviation of this revenue from the average revenue of all municipalities as specified in the Law on the Budget.
- More than 10%, but not more than 20%: the amount of the municipality’s own contribution shall be 10% of the amount of the increase in the revenue referred to in the Law on the Budget for the year concerned. This is after taking into account the deviation of that revenue from the average revenue referred to in the Law on the Budget for all municipalities.
- More than 20%: the amount of the municipality’s own contribution shall be 15% of the amount of the increase in the revenue specified in the Law on the Budget for the year in question. This is after taking into account the deviation of that revenue from the average revenue specified in the Law on the Budget for all municipalities.
- Where the municipality is a partner in a project implemented by an undertaking controlled by the municipality (hereafter the ‘enterprise’), the enterprise is not in a position to finance the project, or part of it, from borrowed funds. This also applies to the situation where the municipality is the project promoter and the enterprise is a partner in the project.
