The three budgetary policies of the European Union are: the institutional arrangements, the excessive deficit procedure and the stability and growth pact. Regarding institutional arrangements, these are put in place to enable EU member states to establish sound fiscal policies and have been agreed by member states. These are the institutional provisions which fall under Articles 121 to 126 of the Treaty on the Functioning of the European Union: ban on monetary financing, ban on privileged access to financial institutions, no-bailout clause, tax provisions aimed at avoiding excessive deficits and the stability and growth pact. These institutional arrangements are put in place so that Member States can achieve budgetary balance and strengthen procedures in the event of excessive deficits (ECB, 2018). Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayFor EU budgetary policies, it is included in the Treaty on the Functioning of the European Union that its member states must avoid excessive public deficits. The basic reference for Member States is a public deficit of 3% and a gross debt of 60% in relation to their GDP. However, there is an exemption if a Member State's deficit is temporary and remains close to the reference value. The ECOFIN Council is the one that decides whether a Member State has excessive deficits and it acts if there is a proposal from the European Commission. The Council also sets the deadline for reducing excessive deficits which sometimes lead to the imposition of sanctions on the Member State concerned (ECB, 2018). The Stability and Growth Pact provides operational clarification of EU budgetary rules. The Pact contains the multilateral budgetary surveillance procedures (preventive component) and the conditions for applying excessive deficit procedures (corrective component). The Pact is considered an essential element of the macroeconomic framework of the European Monetary and Economic Union. It urges member states to harmonize their fiscal policies and avoid excessive deficits in order to achieve macroeconomic stability in the EU. The raison d'être of the Pact is to obtain sound budgetary policies on a permanent basis and that Member States adhere to medium-term objectives so that their budgetary positions are "close to balance or in surplus" according to the specific considerations of each EU countries (ECB, 2018). ).However, according to Larry Elliot (2015), the reason Greece and other EU countries are experiencing economic difficulties is the lack of fiscal policy within the union. The union also lacks a common mechanism for transferring resources from one member state to another; Taxes from better performing EU members cannot be transmuted into higher spending for poorly performing EU countries. Yes, there is a single currency and interest rate, but it lacks a fiscal union which should be established at the same time as the monetary union. Apart from this, the EU's obsession with reducing the deficit has hampered growth in the Eurozone. Even though some countries wanted to leave the union (e.g. Italy), they realized that leaving it would plunge their country further into a financial crisis as unemployment rates increased. will increase and its banking system will collapse. Eurozone membership is compared to a curse, Italy is forced to follow the Eurozone's absurd fiscal rules and it has not been allowed to run more budget deficits since theEU rules clearly state that to bring its country back to achieve competitiveness, it must deal with international deflation which involves cost cuts and austerity measures (Elliot, 2018). French President Emmanuel Macron presented his proposal to restore confidence among European citizens in the European project after a decade of financial crisis. crisis and immigration problems in order to stem the rise of far-right and anti-EU parties in Europe. He proposed that the EU should have its own Finance Ministry headed by a Eurozone Finance Minister (Chrisafis, 2017). Another alternative in his proposal is to allow Member States to have more freedom to pursue budgetary policies adapted to their needs (Elliot, 2018). The European Union needs a fiscal union to cushion economic shocks caused by one of its members from spreading throughout the union. Another alternative considered is for Member States to share financial risks in order to provide mutual insurance. An example of this is the proposed EMU-wide unemployment insurance system which will stabilize private incomes alongside a central fiscal capacity which will collect annual contributions from EU member states linked to local shocks and also offer benefits without harmonization of unemployment insurance. system. This facility can smooth economic cycles, guarantee budgetary discipline and prevent moral hazards (Berger et.al., 2018). Eurosclerosis is a term coined by German economist Herbert Giersch which he used to describe the period of economic stagnation in Europe in the 1970s and 1980s. During these decades, the European Community experienced a employment growth at a snail's pace and further European integration has stalled. Giersch identified that the rigid structures of the European Community caused such an event, but this is not the only cause. He also blames industries that have become dependent on tariffs and government aid that should have been used to improve competitiveness; the rigidity of the labor market has prevented it from releasing and incentivizing businesses to use technologies that enable To save work, the social benefits paid to the population have dissuaded them. work, and excessive regulations have created barriers to entry for new workers and new businesses. The era of Eurosclerosis ended with a stronger push toward European integration in the 1990s and 2000s and when the European Union improved its regulatory flexibility (Investopedia, 2018). However, Lithuania was not yet part of the European Community when it suffered from Eurosclerosis in the 1970s and 1980s. The Baltic state is still part of the Soviet Union and faces the same problem of economic stagnation . The Soviet Union grew rapidly in the 1950s thanks to its command economy, which within Soviet authorities coordinated economic activity through social and economic guidelines and goals. and regulation. However, they also control the social and economic activity of the Union, since the Soviet Union does not have an open market that provides price signals and incentives to guide economic activity, which led to economic inefficiencies and waste. Due to the Soviet Union's fixation on industrialization and urbanization; a formerly backward economy has modernized by adopting various Western technologies at the expense of personal consumption. The Soviet authorities knew the inefficiency of the command economy becausethey were short of Western economic models to imitate (Johnston, 2016). In the 1950s, Nikita Khrushchev attempted to decentralize economic control to allow a second economy to manage the complex affairs of the Union, however, he had to return to a centralized economy because it was destroying the foundations of the command economy. Reforms resumed in the 1970s to allow the Soviet economy to have a liberal market system but with the foundations of centralized economics, but the Soviet economy still stagnated. Mikhail Gorbachev's radical economic reform, Perestroika, created an atmosphere of openness and encouraged individual private incentives. This sense of openness emboldened Soviet citizens, and they took advantage of this freedom to obtain information about their struggling economy. Soviet authorities further relaxed their control to help their ailing economy, leading to its dissolution when the union experienced economic contraction between the late 1908s and the 1990s (Johnston,2016). The Stability and Growth Pact is a set of rules aimed at preventing EU member states' fiscal policies from moving in a problematic direction and correcting excessive budget deficits or excessive public debts (ECB, 2018) . The SGP is a binding agreement between EU member states. States must coordinate their economic policies and activities in a coherent manner to ensure the stability of the Economic and Monetary Union. The Pact sets two limits for EU member states: a member state's public deficit cannot exceed the 3% benchmark and the national debt cannot exceed 60% of the country's GDP; sanctions are imposed in the event of non-compliance. The agreement is often criticized for failing to include sanctions against large EU economies, such as Germany and France, even though they did not respect the limits, while smaller countries such as Greece and Portugal are facing heavy sanctions (Investopedia, 2018). it also faithfully reduced its public deficit between 2008 and 2014 in order to reach the Maastricht criterion of a public deficit of 3%. Lithuania presented its stability program in 2017, which is in line with the European Union's Stability and Growth Pact and aims to achieve an annual general budget surplus of 0.3% of the Baltic States' GDP and hopes balanced economic growth with an average of 2.5% between 2018 and 2020 thanks to domestic and external demand. To achieve this, Lithuania plans to improve its tax administration, promote the activities of state-owned enterprises so as to increase the return on state capital, and place greater emphasis on results-oriented public finances (Anskaitienė , 2017). In an OECD report, the Lithuanian economy has been quite resilient to external changes since it experienced a rapid recovery during the 2008 global financial crisis thanks to the high flexibility of the Lithuanian economy. Even though Lithuania has strengthened its financial and fiscal framework in order to adapt to the fiscal compact and the supervision of the European Union; inequality indicators remain high and the share of informal activities in Lithuania is significant. Lithuania is also affected by the Russian countersanction, which has led to a decrease in Lithuanian exports by 40%, but which will not hinder the growth of the Baltic state. The reason for Lithuania's volatility is due to the fact that it is a small economy dependent on exports, which account for 81% of its GDP (OECD, 2016). Lithuania's GDP growth between 1991 and 2015. Lithuania achieved a GDP of -1.13% during the crisis..