Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Lithuania and delivering a Council opinion on the 2022 Stability Programme of Lithuania
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Lithuania, economic policy, economic recovery, economic reform, energy policy, organisation of health care, public finance, social services, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 617 final  Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Lithuania and delivering a Council opinion on the 2022 Stability Programme of Lithuania {SWD(2022) 617 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2022 National Reform Programme of Lithuania and delivering a Council opinion 
on the 2022 Stability Programme of Lithuania 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

1 
2 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021  establishing  the  Recovery  and 
Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Lithuania as one of the Member States for which 
an in-depth review3 would be needed. On the same date, the Commission also adopted 
a recommendation for a Council recommendation on the economic policy of the euro 
area, which was adopted on 5 April 2022 by the Council as well as the proposal for the 
2022  Joint  Employment  Report  analysing  the  implementation  of  the  Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  was 
adopted by the Council on 14 March 2022.  

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered4    for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU, as well as access to 
education  and  training,  labour  market,  healthcare,  housing  and  social  welfare. 
Exceptional  support  is  made  available  to  Lithuania  under  the  Cohesion’s  Action  for 
Refugees in Europe (CARE) initiative and through additional pre-financing under the 
Recovery  Assistance  for  Cohesion  and  the  Territories  of  Europe  (REACT-EU) 
programme  to  urgently  address  reception  and  integration  needs  for  those  fleeing 
Ukraine. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20205. In its Communication 
of  3  March  20216,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 

Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the  Council  of  16  November  2011  on  the  prevention  and 
correction of macroeconomic imbalances (OJ L 306, 23.11.2011, p. 25). 
Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass influx of displaced persons 
from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and having the effect of introducing temporary protection, 
OJ L 71, 4.3.2022, p. 1. 
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 

Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

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(6) 

(7) 

in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Following the approach in the Council opinion of 18 June 2021 on the 2021 Stability 
Programme,  the  fiscal  stance  is  currently  best  measured  as  the  change  in  primary 
expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19  crisis-
related  temporary  emergency  measures  but  including  expenditure  financed  by  non-
repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  relative  to  medium-term  potential  growth7.  Going  beyond  the  overall  fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed8  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination9.  The  Commission  noted  that,  based  on  the  macroeconomic  outlook  of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

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9 

The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  

Not financed by grants from the Recovery and Resilience Facility and other EU funds. 

Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

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(9) 

On 14 May 2021, Lithuania submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance  with  the  assessment  guidelines  of  Annex  V  to  that  Regulation.  On  20 
July2021, the Council adopted its Decision on the approval  of the assessment of the 
recovery and resilience plan for Lithuania10. The release of instalments is conditional 
on  a  decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of 
Regulation  (EU)  2021/241,  that  Lithuania  has  satisfactorily  fulfilled  the  relevant 
milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

(10)  On 27 April 2022, Lithuania submitted its 2022 National Reform Programme and, on 
29 April 2022, its 2022 Stability Programme, in line with the deadline established in 
Article 4 of Regulation  (EC) No 1466/97. To take account of their interlinkages, the 
two  programmes  have  been  assessed  together.  In  accordance  with  Article  27  of 
Regulation  (EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects 
Lithuania’s  bi-annual  reporting  on  the  progress  made  in  achieving  its  recovery  and 
resilience plan.  

the 

(11)  The Commission published the 2022 country report for Lithuania11 on 23 May 2022. It 
assessed  Lithuania’s  progress 
relevant  country-specific 
in  addressing 
recommendations adopted by the Council in 2019, 2020 and 2021, and  took stock of 
Lithuania’s  implementation  of  the  recovery  and  resilience  plan,  building  on  the 
Recovery  and  Resilience  Scoreboard.  Based  on  this  analysis,  the  country  report 
identified gaps with respect to those challenges that are not addressed or only partially 
addressed  by  the  recovery  and  resilience  plan,  as  well  as  new  and  emerging 
challenges,  including  those  emerging  from  Russia’s  invasion  of  Ukraine.  It  also 
assessed  Lithuania’s  progress  on  implementing  the  European  Pillar  of  Social  Rights 
and on achieving the EU headline targets on employment, skills and poverty reduction, 
as well as progress in achieving the UN’s Sustainable Development Goals. 

(12)  On  23  May  2022,  the  Commission  issued  a  report  under  Article  126(3)  TFEU.  This 
report discussed the budgetary situation of Lithuania, as its general government deficit 
in  2022  is  planned  to  exceed  the  3%  of  GDP  Treaty  reference  value.  The  report 
concluded that the deficit criterion was not fulfilled. In line with the Communication 
of  2  March  2022,  the  Commission  did  not  propose  to  open  new  excessive  deficit 
procedures  in  spring  2022  and  it  will  reassess  the  relevance  of  proposing  to  open 
excessive deficit procedures in autumn 2022. 

(13)  On  20  July  2020,  the  Council  recommended  Lithuania  to  take  in  2020  and  2021  all 
necessary measures, in line with the general escape clause, to  effectively address the 
the  ensuing  recovery.  It  also 
pandemic,  sustain 
recommended  Lithuania  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat,  Lithuania’s  general  government  deficit  fell  from  7.3%  of  GDP  in  2020  to 

the  economy  and  support 

10 

11 

Council  Implementing  Decision  of  20  July  2021  on  the  approval  of  the  assessment  of  the  recovery  and  resilience  plan  for 
Lithuania (ST 10477/2021; ST 10477/2021 ADD 1) 
SWD(2022)617 

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1.0%  in  2021.  The  fiscal  policy  response  by  Lithuania  supported  the  economic 
recovery in  2021, while temporary emergency support measures  declined from  3.9% 
of GDP in 2020 to 2.8% in 2021. The measures taken by Lithuania in 2021 have been 
in  line  with  the  Council  Recommendation  of  20  July  2020.  The  discretionary 
budgetary  measures  adopted  by  the  government  in  2020  and  2021  were  mostly 
temporary.  At  the  same  time,  some  of  the  discretionary  measures  adopted  by  the 
government over the period 2020 to 2021 were not temporary or matched by offsetting 
measures,  mainly  consisting  of  higher  compensation  for  public  sector  employees. 
Based on data validated by Eurostat, general government debt stood at 44.3% of GDP 
in 2021. 

(14)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Stability Programme is realistic. The government projects real GDP to grow by 1.6% 
in  2022  and  2.5%  in  2023.  By  comparison,  the  Commission’s  2022  spring  forecast 
projects a real GDP growth of 1.7% in 2022 and 2.6% in 2023.  In its 2022 Stability 
Programme, the Government expects that the headline deficit will increase to 4.9% of 
GDP in 2022 and decrease to 2.4% in 2023. The increase in the deficit in 2022 mainly 
reflects measures to contain the impact of high energy prices, to support lower income 
households and to accommodate the flows of people fleeing Ukraine. According to the 
Programme,  the  general  government  debt-to-GDP  ratio  is  expected  to  decrease  to 
43.3% in 2022, and to remain stable in 2023. Based on policy measures known at the 
cut-off  date  of  the  forecast,  the  Commission  2022  spring  forecast  projects  a 
government deficit for 2022 and 2023 of 4.6% of GDP and 2.3% respectively. This is 
in  line  with  the  deficit  projected  in  the  2022  Stability  Programme.  The  Commission 
2022  spring  forecast  projects  a  similar  general  government  debt-to-GDP  ratio,  of 
42.7% in 2022 and 43.1% in 2023.  

(15) 

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 3.2%. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Lithuania’s potential growth. 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures  are projected 
to  decline  from  2.8%  of  GDP  in  2021  to  1.2%  in  2022.  The  government  deficit  is 
impacted  by  the  measures  adopted  to  counter  the  economic  and  social  impact  of  the 
increase in energy prices, which in the Commission spring 2022 forecast are estimated 
at 1.2% of GDP in 2022 and 0.0% of GDP in 2023.12 These measures mainly consist 
of  subsidies  to  gas  and  electricity  companies,  compensation  of  the  VAT  applied  for 
heat  energy  and  broader  application  of  other  compensations  for  heat  energy.  These 
measures have been announced as mostly temporary. However, in case energy prices 
remain  elevated  also  in  2023,  some  of  these  measures  could  be  continued.  Some  of 
these measures are not targeted, notably the subsidies to gas and electricity companies 
and compensations of heat energy VAT. The government deficit is also impacted by 
the costs to offer temporary protection to displaced persons from Ukraine, which in the 

12 

The figures represent the level of annual budgetary costs of those measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 

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Commission 2022 spring forecast are projected at 0.2% in 2022 and 202313, as well as 
the increased cost of defence expenditure by 0.5% of GDP in both 2022 and 2023.  

(16)  On  18  June  2021,  the  Council  recommended  that  in  2022  Lithuania14  maintain  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience  Facility,  and  preserves  nationally-financed  investment.  The  Council  also 
recommended Lithuania to keep the growth of nationally-financed current expenditure 
under  control.  It  also  recommended  Lithuania  to  pursue,  when  economic  conditions 
allow,  a  fiscal  policy  aimed  at  achieving  prudent  medium-term  fiscal  positions  and 
ensuring  fiscal  sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance 
investment to boost growth potential. 

(17) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information incorporated in Lithuania’s 2022 Stability Programme, the fiscal stance is 
projected  to  be  supportive  at  -4.2%  of  GDP  as  recommended  by  the  Council.15 
Lithuania  plans  to  provide  continued  support  to  the  recovery  by  making  use  of  the 
Recovery and Resilience Facility to finance additional investment as recommended by 
the Council. The positive contribution to economic activity of expenditure financed by 
Recovery and Resilience Facility grants and other EU funds is projected to increase by 
0.5  percentage  points  of  GDP  compared  to  2021.  Nationally-financed  investment  is 
projected to provide an expansionary contribution to the fiscal stance of 0.3 percentage 
points  in  2022.16  Therefore,  Lithuania  plans  to  preserve  nationally  financed 
investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in 
nationally-financed  primary  current  expenditure  (net  of  new  revenue  measures)  in 
2022 is projected to provide an expansionary contribution of 3.2 percentage points to 
the  overall  fiscal  stance.  This  significant  expansionary  contribution  includes  the 
additional  impact  of  the  measures  to  address  the  economic  and  social  impact  of  the 
increase  in  energy  prices  (1.2%  of  GDP)  as  well  as  the  costs  to  offer  temporary 
protection  to  displaced  persons  from  Ukraine  (0.2%  of  GDP,  while,  among  other 
measures,  additional  support  to  lower  income  households  (additional  increase  of 
pensions,  child  benefits,  social  assistance,  minimum  level  of  non-taxable  income)  is 
also  projected  to  contribute  0.4  %  of  GDP  to  the  growth  in  net  current  expenditure. 
Therefore,  on  the  basis  of  current  Commission  estimates,  Lithuania  does  not 
sufficiently keep under control the growth of nationally-financed current  expenditure 
in 2022. 

13 

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15 

16 

The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Lithuania, OJ C 304, 29.7.2021, p. 68. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.1 percentage point of GDP. 

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(18) 

In 2023, the fiscal stance is projected in the Commission 2022 spring forecast at 1.5% 
of GDP on a no-policy change assumption.17 Lithuania is projected to continue using 
the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance  additional 
investment in support of the recovery. The positive contribution  to economic activity 
of  expenditure  financed  by  Recovery  and  Resilience  Facility  grants  and  other  EU 
funds  is  projected  to  increase  by  0.4  percentage  points  of  GDP  in  2023.  Nationally-
financed investment is projected to provide a contractionary contribution to the fiscal 
stance of 0.5 percentage points in 2023.18 At the same time, the growth in nationally-
financed  primary  current  expenditure  (net  of  new  revenue  measures)  in  2023  is 
projected  to  provide  a  contractionary  contribution  of  1.5  percentage  points  to  the 
overall  fiscal  stance.  This  includes  the  impact  from  the  phasing  out  of  the  measures 
addressing  the  increased  energy  prices  (1.2%  of  GDP)  and  additional  costs  to  offer 
temporary protection to displaced persons from Ukraine (0.1% of GDP).  

(19) 

In  the  2022  Stability  Programme,  the  government  deficit  is  expected  to  gradually 
decline to 1.3% in 2024 and to 1.0% by 2025. The general government deficit is thus 
planned to remain below 3% of GDP over the programme horizon.  According to the 
Programme,  the  general  government  debt-to-GDP  ratio  is  expected  to  decrease  by 
2025, specifically with a decrease to 42.6% in 2024, and a decline to 42.5% in 2025. 
Based  on  the  Commission’s  analysis,  debt  sustainability  risks  appear  low  over  the 
medium term. 

in  Lithuania: 

(20)  The  public  procurement  scoreboard  2020  identified  some  bottlenecks  in  the  public 
procurement  system 
lack  of  cooperation  between  purchasing 
organisations,  few  or  no  participants  in  tenders,  and  an  over-reliance  on  the  price 
criterion.  Broadening  the  scope  of  ongoing  efforts  to  foster  co-operative  public 
procurement  across  municipalities,  so  that  the  reform  would  also  cover  the  central 
government  level  would  help  develop  and  spread  best  practices  and  improve  the 
overall  efficiency  and  effectiveness  of  the  processes.  This  would  also  help  increase 
fiscal sustainability.  

(21) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2, to Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These help address 
all  or  a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the 
country-specific  recommendations  addressed  to  Lithuania  by  the  Council  in  the 
European  Semester 
to  any  country-specific 
recommendations  issued  up  to  the  date  of  adoption  of  a  plan.  In  particular,  the  plan 
strongly focuses on measures to promote digitalisation and the green transition, ensure 
the  quality  and  efficiency  of  health  services,  enhance  social  protection,  prioritise 
education and innovation, and increase the effectiveness of the public sector.   

in  2019  and  2020, 

in  addition 

(22)  The  implementation  of  the  recovery  and  resilience  plan  of  Lithuania  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transition.  Measures 
supporting  the  climate  objectives  in  Lithuania  account  for  37.8%  of  the  plan’s  total 
allocation,  while  measures  supporting  digital  objectives  account  for  31.5%  of  the 

17 

18 

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 

Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  neutral  contribution  of  0.0 
percentage point of GDP. 

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plan’s total allocation. The fully-fledged implementation of the recovery and resilience 
plan,  in  line  with  the  relevant  milestones  and  targets,  will  help  Lithuania  swiftly 
recover  from  the  fallout  of  the  COVID-19  crisis,  while  strengthening  its  resilience. 
The systematic involvement of social partners and other relevant stakeholders remains 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda. 

(23)  The Commission approved the Partnership Agreement of Lithuania on 22 April 2022. 
Lithuania submitted the cohesion policy programme19 on 21 March 2022. In line with 
Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 
2021, Lithuania has taken into account the relevant country-specific recommendations 
in the programming of the 2021-2027 cohesion policy funds.  This is a prerequisite for 
improving the effectiveness  and maximising the added value of the financial support 
to  be  received  from  cohesion  policy  funds,  while  promoting  the  coordination, 
complementarity and coherence between these funds and other Union instruments and 
funds.  The  successful  implementation  of  the  Recovery  and  Resilience  Facility  and 
cohesion policy programmes also depends on the removal of bottlenecks to investment 
to support the green and digital transition and balanced territorial development.  

(24)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan,  Lithuania  faces  a  number  of  additional  challenges  related  to  primary  and 
preventive care, weaknesses in the planning and delivery of social services and a lack 
of strategy on social housing. The high levels of avoidable hospital admissions and of 
treatable  and  preventable  mortality  rates  demonstrate  the  need  for  more  preventive 
actions  in  Lithuanian  healthcare.  Moreover,  shortages  and  uneven  distribution  of 
health professionals limit access to primary healthcare. Beyond the health reforms and 
investment  in  Lithuania’s  recovery  and  resilience  plan,  there  is  a  need  to  further 
strengthen  primary  care  and  prevention.  Lack  of  collaboration  between  various 
ministries  and  other  public  bodies  and  gaps  in  identifying  the  needs  hinder  the 
integrated  provision  of  social  services.  The  services  also  insufficiently  address  the 
needs of unemployed people. Lithuania’s spending on social housing, i.e. EUR 10.31 
per inhabitant (in constant 2010 prices), compared to an EU average of EUR 101.58 in 
201920, is significantly below the EU average, leading to persistent shortages and long 
waiting  lists.  The  quality  of  the  social  housing  provided  also  needs  to  be  improved. 
The recovery and resilience plan includes important measures such as a reform of the 
minimum  income  scheme  and  the  tax-benefit  system  together  with  increasing  the 
coverage  of  unemployment  social  insurance.  These  measures  are  expected  to  help 
address  some  of  the  key  social  protection  challenges  once  implemented.  However, 
beyond  the  measures  included  in  the  plan,  further  efforts  are  needed  to  improve  the 
planning, quality and effectiveness of social services and to address the shortages and 
insufficient quality of social housing.  

19 

20 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy. OJ L 231, 30.6.2021, p. 159. 
https://ec.europa.eu/eurostat/databrowser/view/SPR_EXP_FHO__custom_2036156/default/table?lang=en 

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(25) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government,  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and shift fossil fuel imports away from Russia. 

(26)  Lithuania  is  highly  dependent  on  imports  for  its  energy  supply,  as  it  imports  around 
two-thirds  of  its  gross  electricity  needs  and  most  of  its  oil  and  gas.  Oil  and  gas 
represent  three-quarters  of  the  country’s  energy  mix.  Until  Russia’s  invasion  of 
Ukraine,  oil  and  gas  were  predominantly  imported  from  Russia.  In  2020,  Lithuania 
imported  42%  of  its  natural  gas  imports  from  Russia  (largely  in  line  with  the  EU 
average  of  44%)  and  73%  of  its  crude  oil  imports  from  Russia  (higher  than  the  EU 
average  of  26%).21  The  demand  for  energy  is  driven  by  a  large  transport  fleet,  with 
public  transport  and  rail  remaining  underused,  a  large  stock  of  energy-inefficient 
buildings  and  highly  energy-intensive  industries,  which  account  for  67%  of  the  total 
gas  consumption.  Additional  efforts  to  reduce  energy  intensity  in  these  sectors,  by 
promoting  industrial  transformation,  including  innovative  production  processes,  and 
further  promoting  the  use  of  renewable  energy  sources,  would  decrease  Lithuania’s 
dependence on overall energy imports. Lithuania has considerably improved its energy 
security by developing electricity and gas links with neighbouring Member States and 
with the liquefied natural gas terminal in Klaipėda. Overall, Lithuania needs to pursue 
its  efforts  to  further  enhance  regional  cooperation  with  its  neighbours  to  coordinate 
further gas imports and the efficient use of regional infrastructures. In this context, the 
gas interconnector with Poland (GIPL) that is operational as of 1 May 2022, and the 
enhancement of other gas interconnectors with neighbouring Member States, will help 
safeguard energy supply in the region. Completing the ongoing synchronisation with 
the  EU  continental  power  grid,  ensuring  sufficient  capacity  for  the  interconnections 
with  neighbouring  Member  States  and  pursuing  joint  renewable  projects  should 
nevertheless  remain  a  policy  priority.  New  infrastructure  and  network  investments 
related to gas are recommended to be future-proof where possible, in order to facilitate 
their long-term sustainability through future repurposing for sustainable fuels. Further  
increase in  ambition for reducing  greenhouse  gas emission and increasing  renewable 
energy and energy efficiency targets will be needed for Lithuania to be in line with the 
‘Fit for 55’ objectives. 

(27)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil fuels will create significant restructuring costs in several sectors, Lithuania can 
make  use  of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to 
alleviate the socio-economic impact  of the transition  in  the most  affected  regions.  In 
addition,  Lithuania  can  make  use  of  the  European  Social  Fund  Plus  to  improve 
employment opportunities and strengthen social cohesion. 

(28) 

(29) 

21 

22 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Stability Programme and its opinion22 is reflected in recommendation (1) below.  

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 

Eurostat (2020), share of Russian imports over total  imports of natural gas, crude oil and hard coal. For the EU27 average, the 
total  imports  are  based  on  extra-EU27 imports.  For  Lithuania, total imports  include intra-EU trade.  Crude  oil does  not  include 
refined oil products. 
Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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Union,  the  Council  recommended  that  the  euro  area  Member  States  take  action, 
the 
including 
recommendation  on  the  economic  policy  of  the  euro  area.  For  Lithuania,  this  is 
reflected in particular in recommendations (1) and (2) below. 

resilience  plans, 

recovery  and 

implement 

through 

their 

to 

HEREBY RECOMMENDS that Lithuania take action in 2022 and 2023 to:  

1. 

2. 

3. 

4. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term  fiscal  positions.  Foster  co-operative  public  procurement  at  central 
government and municipality levels.  

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and  targets  included  in  the  Council  Implementing  Decision  of  20  July 
2021.    Swiftly  finalise  the  negotiations  with  the  Commission  of  the  2021-2027 
cohesion  policy  programming  documents  with  a  view 
their 
implementation. 

to  starting 

Strengthen  primary  and  preventive  care.  Reduce  fragmentation  in  the  planning  and 
delivery  of  social  services  and  improve  their  personalisation  and  integration  with 
other services. Improve access to and quality of social housing.  

Reduce overall reliance on fossil fuels by accelerating the deployment of renewables, 
increasing energy efficiency and decarbonisation of industry, transport and buildings, 
and ensure sufficient capacity of energy interconnections.  

Done at Brussels, 

For the Council 
The President 

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