COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Lithuania Accompanying the document 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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 617 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Lithuania Accompanying the document 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 {COM(2022) 617 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Solid recovery hit by economic 
fallout from Russian invasion of 
Ukraine 

Lithuania’s  economy  had  seen  several 
years  of  strong  and  balanced  growth 
performance  before  the  COVID-19  crisis. 
Rising  investment  and  growth  of  household 
disposable  income  resulted  in  decade-long 
economic  expansion  with  average  real  GDP 
growth  of  3.6%.  At  the  same  time,  labour 
productivity  rose  and  the  financial  situation 
improved  for  households  and  companies, 
keeping  the  economy  on  a  strong  and 
balanced growth path. 

economy  withstood 

Lithuania’s 
the 
pandemic  shock  with  only  limited  losses 
and  was  gradually  returning  to  the  pre-
pandemic growth path. In 2020, Lithuania’s 
real  GDP  contracted  only  slightly  due  to  its 
relatively  low  dependence  on  tourism (1)  and 
its  specialisation  in  manufacturing  products 
for  which  demand  was  more  resilient.  In 
addition,  economic  losses  were  minimised  by 
the  strong  financial  standing  of  households 
and companies and swift government support. 
The economic recovery has been primarily led 
by  the  industries  dealing  in  exportable  goods, 
growing 
with  manufacturing 
particularly strongly despite the emergence of 
supply-side bottlenecks. The launching of new 
products,  such  as  new  pharmaceuticals, 
its  export 
enabled  Lithuania  to 
market  share  during  the  pandemic.  Economic 
activity was also stimulated by sizeable rise in 
household  income  during  the  crisis  partly  due 
to  implemented  fiscal  measures (2).  Following 

increase 

activity 

the slight contraction in 2020, Lithuania’s real 
GDP  increased  by  5.0%  in  2021  (see  Annex 
18).  To  ensure  Lithuania’s 
income  keeps 
growing  towards  the  EU  average,  policies  will 
be  needed  that  boost  productivity  through, 
among others, research and innovation, digital 
skills  and  digitalisation  and  the  uptake  of 
advanced 
Lithuanian 
companies, especially small and medium-sized 
enterprises and  start-ups. Policies to facilitate 
the  transformation  towards  a  green  economy 
will also be key (see Annexes 5, 6 and 7). 

technologies 

by 

Russia’s  invasion  of  Ukraine  has  limited 
direct 
impact  on  the  economy  but 
highlights  the  need  to  press  ahead  with 
reforms  in  the  energy  sector.  Lithuania’s 
export to Russia, Belarus and Ukraine is rather 
sizeable;  however,  most  of  it  consists  of  re-
exported  goods,  generating  relatively 
low 
value  added  compared  to  export  of  local 
origin. Therefore, direct effects of the war and 
the  sanctions  on  Russia  on  economic 
developments  in  Lithuania  are  anticipated  to 
be  limited.  Real  GDP  is  still  projected  to 
continue  growing,  at  a  rate  of  1.7%  in  2022 
and 2.6% in 2023. This is also in part related 
to  the  significant  steps  taken  by  Lithuania  in 
the last decade to diversify sourcing of oil and 
to  decrease  dependence  on  Russia. 
gas 
However, 
remain 
predominantly  imported  and  still  represent 
nearly three-quarters of the Lithuanian energy 
mix,  with  73%  of  crude  oil  and  42%  of  gas 
in  2020. (3)  Thus, 
coming 
additional  measures  to  secure  the  supply  in 
the region and shift away from fossil fuels are 
necessary.  The  Lithuanian  government  has 
already  stopped  importing  gas  from  Russia. 
Ensuring electricity from alternative sources is 
more challenging. Approximately two thirds of 

from  Russia 

commodities 

these 

(1)  The Lithuanian tourism value chain (direct and spill-over 
effects) was responsible for less than 7% of total 
employment in 2019. 

(2)  European Commission Quarterly Report on the Euro 
Area (QREA), Vol. 20, No. 4 (2021), Chapter I on 
Assessing the cushioning role of tax-benefit systems on 

households’ income in the euro area during the COVID-
19 pandemic: a microsimulation analysis. 

(3)  Eurostat (2020), share of Russian imports in total 

imports. LT figures include intra-EU trade. 

2 

 
                                                 
                                                                        
 
the  electricity  used  for  domestic  consumption 
is  imported,  indicating  a  need  to  expand 
electricity  production  capacity  in  Lithuania. 
This could be achieved through greater use of 
renewable  energy  sources.  Further 
local 
measures  to  improve  energy  efficiency  would 
contribute  to  reducing  energy  consumption, 
and thus energy dependence. 

The  swift  pick-up  in  economic  activity  in 
2021  resulted  in  a  tightening  of  the 
labour  market.  The  unemployment  rate 
its  pre-
(7.1%)  has  almost  returned  to 
pandemic  level  of  6.3%.  As  a  result,  the  job 
vacancy  rate  has  been  rising  and  reached  a 
record 
in  Q3-2021.  The 
tightening of the labour market and persistent 
shortage  of  skilled  employees  is  exerting 
upward  pressure  on  wages.  Indeed,  wage 
growth,  in  annual  nominal  terms,  has  stayed 
close  to  10%  recently  and  exceeded  labour 
productivity gains. 

level  of  2.0% 

Graph 1.1: Unemployment and vacancy rates 

Source: Eurostat 

Inflation surged in Lithuania in late 2021 
and  early  2022  and  currently  is  among 
the  highest  in  the  EU.  Inflation  is  expected 
to stand at 12.5% in 2022 and 3.0% in 2023. 
The  pick-up  in  inflation  is  mostly  driven  by 
energy  prices,  in  part  reflecting  heightened 
geopolitical tensions. However, other consumer 
prices  have  also  been  rising  more  quickly. 
Recently, the prices of services, which are the 
most 
economic 
developments,  have  been  growing  at  the 
fastest  pace  since  the  global  financial  crisis 
driven  in  part  by  strong  and  sustained  rise  in 

domestic 

sensitive 

to 

wages  and  the  rebound  in  domestic  demand. 
The  Lithuanian  authorities  have 
taken 
measures  to  limit  growth  of  administered 
prices and to support lower income households 
income 
amid  decelerating  real  disposable 
growth. 

Social challenges persist, with 
some of them exacerbated by the 
fallout from the pandemic 

‘critical’ 

Income  inequality  in  Lithuania  remains 
among  the  highest  in  the  EU  and  is 
in  the  Social 
reported  as 
Scoreboard.  The  Scoreboard  also  points  to 
other  employment  and  social  challenges 
related to the implementation of the European 
Pillar  of  Social  Rights.  Although  on  a 
decreasing  trend,  the  income  of  the  richest 
20%  of  the  Lithuanian  population  was  still 
over six times higher than that of the poorest 
20%  in  2020.  Additionally,  while  the  share  of 
people  at  risk  of  poverty  or  social  exclusion 
has  been  decreasing  from  2016,  it  remains 
well above the EU average (24.5% in Lithuania 
compared  to  21.9%  in  the  EU  in  2020)  (see 
Annex  12).  In  particular,  social  and  economic 
disparities  are  pronounced  in  the  regions 
remains  a 
where 
challenge. 

convergence 

regional 

including 

Vulnerable  groups, 
young 
people,  were  most  affected  by  the 
pandemic. Youth unemployment, being below 
the  EU  average  before 
the  pandemic, 
increased  sizeably  in  2020  (from  11.9%  in 
2019  to  19.6%  in  2020),  exceeding  the  EU 
average,  before  falling  to  nearer  its  pre-
pandemic  level  in  2021.  The  proportion  of 
young people not in employment, education or 
training (NEET) also surged and is higher than 
before the crisis; however, it is still  below the 
EU  average.  The  pandemic  highlighted  the 
vulnerability  of  low  skilled  workers  in  the 
labour market: the unemployment rate among 
people not having tertiary education increased 
the  most  and  by  considerably  more  than  the 
average  in  the  EU.  Despite  the  high  vacancy 
rate,  unemployment  among  those  having 
upper secondary or higher-level education still 

3 

0.61.11.62.14.06.08.010.02018201920202021Unemployment rateVacancy rate (rh scale)Per centPer cent 
  
exceeds  the  pre-crisis  level,  pointing  to  a 
persistent  skills  mismatch.  The  weak  learning 
outcomes and labour market  relevance of the 
education  system  both  contribute  to  this  (see 
Annex 12 and 13).  

Since  the  beginning  of  Russia’s  invasion 
of  Ukraine, 
thousands  of 
tens  of 
displaced  people  from  Ukraine  have 
arrived in Lithuania. To manage the process, 
the  Lithuanian  government  set  up  dedicated 
centres to  register the people  fleeing  Ukraine, 
help  with  accommodation  and  catering. 
Procedures for employment and issuing a work 
permit  were  eased.  It  was  also  decided  to 
provide  social  benefits  to  those  people,  e.g. 
support  for  accommodation,  compensations 
for  heating  and  other  utilities,  benefit  for 
children,  one-off  benefit 
for  settlement, 
benefit to residents housing people fleeing war 
in Ukraine. Access to healthcare and education 
is provided. Stipends will be paid to Ukrainians 
studying  at  the  Lithuanian  high  schools.  EUR 
370  million  were  earmarked  in  the  revised 
national  budget  2022. 
Lithuanian 
government  also  considers  subsidising  loans 
to  Ukrainian 
to 
businesses 
Lithuania. Of particular relevance to Lithuania, 
exceptional  support  is  made  available  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 
those  fleeing 
Ukraine. 

integration  needs  for 

relocating 

The 

Increased spending during 
consecutive crises is weighing on 
public finances 

track 

Recent  consecutive  crises  have  disrupted 
Lithuania’s 
record  of  general 
government  budget  surpluses.  The  COVID-
19 pandemic triggered a considerable increase 
in  government  spending  to  support  affected 
businesses  and  households (4)  and 
fund 

healthcare,  turning  the  government  balance 
into deficit (7.3% of GDP in 2020 and 1.0% in 
2021 – see Annex 18).  At the same time, the 
government  also  allowed  businesses  to  defer 
tax payments and increased the limit of state 
guarantees to be issued. Support  continued in 
2021,  as  a  number  of  the  measures  were 
revised  and  extended.  In  2022,  additional 
measures are expected to consist of increased 
spending 
and 
healthcare, 
measures  to  mitigate  the  impact  of  soaring 
energy  prices  that  would  further  deteriorate 
public  finances.  Some  of  the  latter  measures 
raise concerns as to their non-targeted nature, 
notably  subsidies 
to  gas  and  electricity 
companies  and  compensations  for  the  heat 
energy VAT. 

defence 

on 

Graph 1.2: General government balance and 
debt 

Source: Eurostat 

Some  crisis-related  increases  in  current 
government  spending  are  of  a  lasting 
nature,  for  which  corresponding  revenue 
sources are needed.  In addition to spending 
in response to COVID-19, the government also 
further increased  salaries in  the  public  sector, 
old-age pensions and other benefits. Although 
these decisions seem warranted by high rates 
of poverty, income inequality and price growth, 
the  government  has  not  yet 
identified 
corresponding  revenue  sources.  The  planned 
revision of the tax system could help close the 
revenue  and  spending  by 
gap  between 
less 
to 
broadening 

tax  base 

taxes 

the 

(4)  Lithuania received a loan of EUR 957 million from the 
EU to fund the short-time work schemes from the 

temporary Support to mitigate Unemployment Risks in 
an Emergency (SURE) instrument (see Annex 3). 

4 

20253035404550-10-8-6-4-202201020112012201320142015201620172018201920202021General government balance (lhs)General government debt (rhs)Percentage of GDPPercentage of GDP 
                                                 
   
                                                                        
progress  has  been  made  in  standardised 
avoidable mortality. Lithuania performs well or 
is  improving  on  SDG  indicators  relating  to 
productivity.  Its  performance  on  education  is 
progressing, though further efforts are needed 
to  reach  the  EU  average  for  participation  in 
early  childhood  education  and  adult  learning 
(see  Annex  12) (5).  The  proportion  of 
internet 
households 
connections  is  significantly  above  the  EU 
average. 
domestic 
Lithuania’s 
expenditure  on  R&D 
low  but  slowly 
improving. Lithuania is also improving on SDG 
indicators  relating to macroeconomic  stability. 
In  recent  years,  the  country  has  increased  its 
investment  share  of  GDP  and  improved  the 
quality  of  its  institutions,  including  trust  in 
them (see Annex 1). 

high-speed 

gross 

with 

is 

detrimental 
exemptions. 

to  growth  and 

revising 

tax 

Environmental challenges call for 
policy action 

Lithuania’s  carbon  footprint  has  been 
increasing  in  recent  years.  An  ambitious 
plan is called for to promote the circular 
economy  and  protect  biodiversity.  Trends 
in  greenhouse  gas  (GHG)  emissions  from  the 
transport  sector  are  particularly  worrying. 
Emissions have increased by 50% since 2005, 
making transport the largest emitting sector in 
Lithuania.  The  tax  system  does  not  provide 
sufficient  incentives  to  reduce pollution in the 
transport  sector.  Moreover,  the  use  of  public 
in  the  EU, 
transport  remains  the 
requiring  additional  efforts 
to  promote 
collective  and  shared  transport.  The  circular 
economy  rate  in  Lithuania  is  nearly  three 
times lower than the EU average, calling for an 
ambitious  circular  economy  action  plan  (see 
In  addition,  the  protection  of 
Annex  7). 
remains  weak  with  a  high 
biodiversity 
proportion 
in 
of 
unfavourable status. 

protected 

habitats 

lowest 

Towards Sustainable Development 
Goals 

in 

is 

reducing 

to  keep 

the  share  of 

improving  on 

Lithuania 
several 
Sustainable  Development  Goal 
(SDG) 
to  environmental 
relating 
indicators 
sustainability, but still needs to catch up. 
In  2015-2020,  Lithuania  achieved  significant 
progress 
the 
their  home 
population  unable 
adequately  warm,  though the  rate  is  still  well 
above the EU average. Progress has also been 
observed  for  energy productivity,  but it  is still 
lower  than  the  EU  average.  Lithuania  is 
improving  on  SDG 
to 
fairness.  Lithuania  has  reduced  the  risk  of 
poverty or social exclusion, though still this risk 
remains higher than on average in the EU. The 
country  underperforms  on  almost  all  good 
health and well-being indicators, though some 

indicators 

related 

(5)  The indicator on adult learning participation over the 

previous four weeks is used in the country report, rather 
than the indicator on learning over the previous 12 
months, as Adult Education Survey (AES) data for the 
12-month indicator are only available for 2016 at the 
moment, while the new Labour Force Survey (LFS) 
indicator agreed for use in the social scoreboard and as 
2030 headline target on skills will only be available in 
2023. 

5 

 
                                                 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

facing 

The  Lithuanian  recovery  and  resilience 
plan  (RRP)  includes  an  ambitious  set  of 
reforms and investments.  The measures in 
the  RRP  aim  to  address  a  number  of 
challenges 
and 
Lithuania 
issued  as  part  of  the 
recommendations 
European  Semester.  The  objective  is  to  boost 
economic  recovery  and  growth,  and  bolster 
Lithuania’s  resilience  and  preparedness  for 
upcoming  social,  economic  and  institutional 
challenges. The RRP, with a total allocation of 
EUR 2.2 billion (4.6% of GDP in 2019) (6), puts 
a strong focus on promoting digitalisation and 
the  green  transition,  ensuring  the  quality  and 
efficiency  of  health  services,  improving  social 
protection, 
and 
innovation and increasing the efficiency of the 
public  sector  (see  Annex  2).  Of  the  total 
spending allocated under the plan, 37.8% goes 
to supporting climate objectives and 31.5% to 
boosting the digital transition. 

prioritising 

education 

The  plan  tackles  Lithuania’s  climate  and 
environmental  challenges.  The  relatively 
low  share  of  renewable  energy  (25%)  in  the 
energy  mix  will  be  addressed  by  measures 
supporting  the  uptake  of  renewable  energy 
sources, including steps to develop an offshore 
wind park. By the end of 2022, new electricity 
storage  facilities  are  expected  to  become 
operational, which will increase energy security 
and  autonomy.  The  RRP  will  also  speed  up 
building renovations, with renovation packages 
and  standards,  an 
increased  supply  of 
construction  products  and  services,  and 
the  RRP  promotes 
funding.  Furthermore, 
sustainable 
the 
replacement  of  polluting 
transport 
vehicles,  improving  public  transport  services, 
installing  charging/refueling  infrastructure  for 
and 
vehicles 
alternative 
using 
developing  an  alternative 
sector 
(sustainable  biomethane,  second  generation 

transport  by  supporting 

fuels, 

fuels 

road 

(6)  See Annex 2 for a breakdown of the implementation of 

the RRP. 

6 

liquid biofuels, hydrogen). The RRP includes the 
adoption  of  a  circular  economy  action  plan  in 
2023,  setting  a  strategy  for  waste  prevention 
and resource efficiency. The plan also supports 
the  restoration  of  degraded  peatlands  – 
gas 
increasing 
absorption capacity (see Annex 5). 

greenhouse 

Lithuania’s 

The  plan  will  address  digital  challenges 
by rolling out 5G, with legislative amendments 
enabling  faster  installation  starting  in  2022. 
Other 
technological  challenges  addressed 
include:  the  urban-rural  broadband  access 
divide;  low  levels  of  digital  skills  and  lack  of 
information  and  communications  technology 
limited  digitalisation  and 
specialists;  and 
technologies  across 
uptake  of  advanced 
Lithuanian SMEs (see Annex 6, 8 and 15). 

The  plan  aims  to  improve  the  resilience, 
quality, accessibility and efficiency of the 
healthcare  system  and  address  some 
social  challenges,  contributing  to  the 
implementation of the European Pillar of 
Social Rights. The RRP features reforms and 
investments  to  strengthen  emergency  care 
and  modernise  healthcare 
infrastructure, 
develop  centres  of  expertise  in  infectious 
diseases,  digitalise  the  health  system,  build 
capacity  for  advanced  medical  therapies, 
create  a  competence  platform  for  healthcare 
professionals  and  a  system  to  monitor  the 
quality  of  care  (see  Annex 14).  In  its  plan, 
Lithuania will further focus on improving social 
the  guaranteed 
protection  by 
reforming 
the 
minimum 
coverage  of  unemployment  social  insurance 
and  improving  indexation  of  pensions.  Two 
reforms, 
an 
accreditation  scheme  for  social  care  and 
additional  benefit  for disabled  and  elderly 
single persons, have already been reported as 
completed  by  Lithuania. Investment  in  long-
term  day-care  centres  and  upgrading  the 
infrastructure 
services  will 
contribute  to  meeting  the  energy  efficiency 

income  scheme,  extending 

introduction 

namely 

health 

for 

of 

 
 
                                                 
 
improving  tax  compliance.  This  will  help 
address  income  inequality,  poverty  and  social 
exclusion (see Annex 17). To improve the way 
government  spending  is  managed,  the  RRP  is 
expected  to  boost  improvements  in  human 
resource management in the public sector and 
it  also 
support  medium-term  budgeting; 
includes 
first 
comprehensive spending review in 2023.  

commitment 

to  a 

the 

requirements.  The  plan  also  aims  to  digitalise 
the  Public  Employment  Service  and  make  it 
more 
and 
entrepreneurship  support  focusing  on  the 
green and digital transitions (see Annex 12). 

client-based,  with 

training 

of 

the 

lifelong 

improving 

learning  by  consolidating 
network, 

Lithuania’s  RRP  contains  key  measures 
that  aim  to  improve  the  quality  and 
education. 
accessibility 
Lithuania  strives 
improve  education, 
to 
including  vocational  education  and  training 
the 
and  adult 
school 
education 
infrastructure  and 
competences  of 
teachers, 
implementing  competence-based 
curricula,  promoting  work-based  learning  and 
apprenticeships,  and  improving  digital  skills. 
The  RRP  also  seeks 
improve  higher 
education  by  changing  student  admission 
criteria  and  the  funding  model  for  the  higher 
education  system (see  Annex  13)  and  provide 
better  support  for  research  and  innovation 
(R&I)  by  consolidating  existing  R&I  agencies 
and  revising  R&I  legal  framework  (see  Annex 
9). 

to 

steps 

includes 

Lithuania’s  plan 
to 
improve  tax  compliance  and  broaden  the 
tax  base  to  sources  less  detrimental  to 
growth. The plan aims to create a sustainable 
revenue  base  and 
increase  additional 
redistributive  capacity  of  the  tax  and  benefit 
system 
tax 
exemptions,  re-orienting  the  system  towards 
more  growth-friendly  and  green  taxation  and 

abolishing 

inefficient 

by 

Box  

 Key deliverables under the recovery and resilience plan in 2022-2023 

 

Improvements  in the quality and accessibility of health services  

  New electricity storage facilities and circular economy action plan 

  Entry into force of amendments enabling faster implementation of the 5G roadmap 

  Entry into force of legislation on adult education, and vocational education and training 

 

Implementation  of  tax  reforms  abolishing  inefficient  tax  exemptions  and  re-orienting  the 
system towards more growth-friendly and green taxation 

  Revised  higher education  funding  and  admission  systems  as  well  as  renewed  business R&I 

support framework  

  Preparation  for  the  reform  of  the  minimum  income  scheme  and  extending  coverage  of 

unemployment social insurance. 

7 

 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

Beyond  the  challenges  addressed  by  the 
RRP,  as  outlined  above,  Lithuania  faces 
additional  challenges  not  sufficiently 
covered in the plan. Problems remain in the 
areas  of  public  finances,  social  benefits  and 
services,  healthcare,  education  and  skills,  and 
environmental  protection.  Addressing  these 
challenges  will  also  help  to  make  further 
progress  in  achieving  the  SDGs  related  to  the 
area of health, energy, education and R&D.  

Improving the quality of public 
finances through reforms in public 
procurement 

issues. 

procurement  is  the  key  to  addressing  these 
that 
It 
structural 
centralising public procurement would improve 
the  functioning  of  the  public  procurement 
system and save 10% of administrative costs 
and 10% on procurement costs (7). 

is  estimated 

public 

procurement 

In  September  2021, 
the  Lithuanian 
Parliament  endorsed  the  proposal  to 
and 
centralise 
improve  co-operation  at  the  municipality 
level (8).  This  would  enable  the  smallest 
public buying entities to achieve economies of 
scale. It would also introduce an accreditation 
system  to  raise  the  qualification  levels  of 
public procurement officials.  A challenge here 
will  be  to  set  up  a  comprehensive  training 
system.  

issues 

structural 

Public  spending  needs  to  be  more 
efficient  so  Lithuania  can  address  social 
in  a 
and  other 
sustainable manner. On the revenue side, in 
2020,  the  tax-to-GDP  ratio  was  30.8%  and 
well below the EU average of 40.2%, while the 
VAT  gap  –  the  difference  between  expected 
and  actual  VAT  revenue  –  although  declining, 
was  one  of  the  highest  in  the  EU  in  2019  at 
21.4%  (see  Annex  17).  On  the  expenditure 
side, budgetary reforms are slow or have been 
taking more time than initially planned. Further 
improvements 
procurement 
processes  and  procedures  would  facilitate 
material budget savings while empowering the 
government to achieve key policy outcomes. 

public 

to 

among 

expertise 

it  makes 

it  difficult 

The  decentralised  structure  of  the  public 
procurement  system  creates  bottlenecks. 
to  build  up 
First, 
procurement 
officials, 
possibly  contributing  to  an  over-reliance  on 
the  price  criterion  (Lithuania  ranks  lowest 
among  EU  countries  on  this  measure),  rather 
than balancing price and quality considerations 
(see  Annex  11).  Second,  it  means  that  many 
tenders are small, thus often attracting few or 
no  participants.  Focusing  on  co-operative 

co-operative 

Fostering 
public 
procurement  at  the  central  government 
level  and  the  creation  of  competence 
centres  is  currently  not  covered  by  the 
public  procurement  reform.  Implementing 
this  reform  at  ministry  and  government 
agency  level  would make it  possible  for them 
to  create  best  practices  and  set  up 
help 
competence 
coordinate  the  public  procurement  reform  at 
all levels (central government and municipality 
level).  

that  would 

centres 

(7)  https://e-

seimas.lrs.lt/portal/legalAct/lt/TAK/d3c9fb209b5011eaa
51db668f0092944?jfwid=aytc3ihqr 

(8)  https://e-

tar.lt/portal/lt/legalAct/b9a45bf02d7611ec992fe4cdfce
b5666 and https://www.lrp.lt/lt/ziniasklaidos-
centras/naujienos/36796 

8 

 
 
                                                 
 
Addressing long-standing social 
challenges 

The  adequacy  of  the  social  safety  net 
remains  relatively  weak,  as  evidenced 
under  the  European  Pillar  of  Social 
Rights. Public expenditure on social protection 
is persistently low while the rates of people at 
risk  of  poverty  or  social  exclusion  remain 
among  the  highest  in  the  EU  (see  Annex  12), 
especially for vulnerable groups such as older 
people  (65+),  single  parents  with  dependent 
children and persons with disabilities. In 2020, 
both the youth unemployment and the rate of 
young  people  neither  in  employment  nor  in 
education  or  training  (NEET)  deteriorated  but 
then  partially  recovered  in  2021  (see  Graph 
In  2020,  almost  a  quarter  of  the 
3.1). 
population  were  not  able to  heat  their  homes 
properly  and  there  are  concerns  that  rising 
energy  costs  may  further  aggravate  the 
poverty (see Annex 6).  

Graph 3.1: Participation, unemployment and 
NEET rates 

NEET: young people neither in employment nor in 
education or training 
Source: Eurostat 

The  planning,  organisation  and  delivery 
of  social  services  and  the  awarding  of 
benefits  are  fragmented  and  inefficient. 

9 

Municipalities do not involve local communities 
and  non-governmental  organisations  enough 
in annual social services planning, which leads 
to  gaps  in  knowledge  about  people’s  real 
needs.  Lack  of  collaboration  between  various 
ministries  and  other  public  bodies  (including 
the  Public  Employment  Service)  hinders  the 
provision of social and other services, such as 
health, education, and employment services, in 
an  integrated  way.  In  particular,  the  current 
system  of  social  services  is  insufficiently 
oriented  towards  the  provision  of  services  for 
the unemployed (9). In addition, the authorities 
responsible  for  providing  social  services  lack 
information  on  the  quality  and  effectiveness 
of  the  services,  which  hinders  the  process  of 
evidence-based  decisions.  Tackling  all  these 
challenges is key for Lithuania to contribute to 
achieving  the  2030  EU  headline  targets  on 
employment, skills and poverty reduction. 

Access to social housing is limited and an 
overall strategy on how to tackle chronic 
shortages  and  increase  the  quality  is 
currently  missing.  The  social  housing  stock 
in  Lithuania  is  small  –  less  than  2%  of  total 
housing  stock (10)  –  and  the  quality  of  social 
housing  is  low.  Lithuania’s  spending  on  social 
housing  was  a  meagre  EUR  10.31  per 
inhabitant (in constant 2010 prices), compared 
to an EU average of EUR 101.58 in 2019 (11). 
In  2020,  there  were  more  than  10 000 
families  (around  22 000  people)  waiting  for 
social  housing  with  the  waiting  time  ranging 
from  3  to  12  years  depending  on  the 
municipality. The steady number of families on 
a low income unable to obtain housing without 
assistance,  as  well  as  insufficient  financing 
and action by municipalities, both contribute to 
the  persisting  scarcity  of  social  housing. 
Developing  a  strategic  vision  to  identify  the 

(9)  Strata (2020). Human capital in Lithuania. Review by 

government strategic analysis centre Strata: 
https://strata.gov.lt/images/tyrimai/2020-
metai/zmogiskojo-kapitalo-politika/20200511-
zmogiskasis-kapitalas-
Lietuvoje.pdf#page=28&zoom=100,0,0  

(10)  OECD policy brief (2020). Social housing: A key part of 

past and future housing policy: 
https://www.oecd.org/social/social-housing-policy-brief-
2020.pdf 

(11)  https://ec.europa.eu/eurostat/databrowser/view/SPR_ 
EXP_FHO__custom_2036156/default/table?lang=en 

7476788082848605101520253035402009201020112012201320142015201620172018201920202021%%LTActivity rate 20-64 (rhs)Unemployment rate 15-74 (lhs)Long-term unemployment rate 15-74 (lhs)Youth unemployment rate 15-24 (lhs)NEET rate 15-29 (lhs) 
   
                                                 
necessary  legislative  changes  and  make  best 
use  of  investments  planned  under  the  2021-
2027 EU Cohesion policy funds would help the 
country address these issues. 

Strengthening primary and 
preventive care 

is 

and 

linked 

health 

system 

treatable 

The  root  cause  of  most  challenges  in 
the 
Lithuania’s 
suboptimal  performance  of  primary  care 
low  uptake  of  preventive 
and  the 
measures.  This 
to  structural 
is 
the  health  sector  and 
underfunding  of 
insufficient  resources  at  primary  care  level 
and  in  public  health  offices.  The  high  level  of 
avoidable  hospital  admissions  in  Lithuania 
sheds  light  on  weaknesses  in  primary  care. 
Lithuania’s 
preventable 
mortality  rates  remain  the  fourth  highest 
among EU Member States and life expectancy 
in  Lithuania  in  2020  was  the  third  lowest  in 
the  EU,  5.3  years  below  the  EU  average. 
Although  Lithuania  has  a  high 
rate  of 
preventable  mortality,  the  level  of  investment 
in  preventive  care  is  critically  low.  There  are 
major  disparities  in  the  quality  of  care  for 
cardiovascular  diseases,  which  remain  the 
leading  cause  of  death  in  Lithuania  with 
mortality rates far above the EU  average and 
one of the highest in the EU. Cancer prevention 
programmes  have  gradually  been  expanded 
over the past 15 years, but screening rates are 
below the EU average rates and the pandemic 
has  had  a  detrimental 
the 
availability  of  cancer  screening  services  (see 
Annex 14).  

impact  on 

The  challenges  are  exacerbated  by  a 
shortage  of  health 
care  workers, 
particularly  in  rural  areas.  The  problem  of 
shortages,  skills  mismatches  and  difficult 
working  conditions  persists  across  all  the 
health  professions,  hindering  healthcare 
remain 
provision.  Nurse 
a 
particularly  persistent 
in  2019  the 
nurses-per-doctor  ratio  was  the  lowest  since 
2000. 

shortages 
issue: 

improved  following 

Further  policy  efforts  could  be  targeted 
at  strengthening  primary  and  preventive 
care, improving the quality of healthcare 
and  workforce  planning,  aimed  at  better 
supply  of  workers  and  improved  skills. 
While  access  to  and  quality  of  care  are 
expected 
the 
to  be 
implementation  of  health 
reforms  and 
investments  included  in  Lithuania’s  RRP,  for 
further  efforts  are  needed  to  strengthen 
primary care and prevention. A further shift to 
outpatient  care,  pending 
reform  on 
hospital  network  reorganisation,  will  require 
adequate  measures 
to  offset  additional 
pressure on primary care. Prevention measures 
also  need  to  be  scaled  up  to  achieve  faster 
improvement in health outcomes. Public health 
offices  would  need  additional  resources  for 
this  scaling-up  and  more  co-operation  with 
primary care centres, hospitals and others. The 
pandemic has prompted wider use of e-health, 
which  needs  to  be  further  strengthened  to 
improve accessibility of care in the long term. 

the 

Bridging the skills gap through 
education  

the 

from 

obstacles 

expanding 

reported  as  an  obstacle 
by  80% 
in 

Skills  shortages  and  brain  drain  are 
preventing 
among 
businesses 
their 
knowledge-based  activities.  The  lack  of 
skills  was 
to 
of 
Lithuania 
investment 
companies (12).  Lithuania  ranks  117th  (out  of 
132)  globally  on  the  ease  of  finding  skilled 
employees (13)  and  108th  on  brain  retention, 
calling for more effective talent attraction and 
retention  policies  at  national 
level.  Weak 
labour market relevance of the education and 
underperformance  of  the  up-  and  reskilling 
skills 
systems, 

to  persistent 

contribute 

(12)  Compared to the EU average of 79%. EIB investment 

report 2020/2021: 
https://www.eib.org/en/publications/investment-report-
2020 

(13)  The Global Talent Competitiveness Index 2020: 

https://www.insead.edu/sites/default/files/assets/dept/gl
obalindices/docs/GTCI-2020-report.pdf 

10 

 
                                                 
 
mismatches  in  the  country:  only  52%  of 
graduates  report  that  their  job  matches  their 
field and level of education (14).  

in 

result 

secondary  and 

More  effective  use  of  public  funds  on 
education  would 
better 
education  outcomes.  In  2019,  government 
expenditure  on 
tertiary 
education were slightly  above and around the 
EU  average.  However,  school  outcomes,  as 
measured by PISA (the OECD’s Programme for 
International  Student  Assessment),  have  been 
persistently  below  the  EU  average  and  labour 
market  relevance  of  tertiary  programmes  is 
low.  The  education 
is  not 
adapted  to  the  declining  number  of  students; 
schools  in  rural  areas  with  a  low  number  of 
pupils are cost-intensive and tertiary education 
institutions  are  too  numerous  to  achieve  high 
quality of teaching and research. This points to 
the  lack  of  effective  use  of  resources  in 
Lithuania.   

infrastructure 

the 

addition, 

Addressing  inequalities  in  schools  and 
making  the  teaching  profession  more 
attractive  could  help  improve  learning 
outcomes.  The  school  network  in  rural  areas 
is  not  well  adapted  to  shrinking  student 
numbers,  which  leads  to  significantly  lower 
performance  by  students  in  these  schools. 
Though  the  school  network  reorganisation  is 
included in the RRP, it will be important for the 
financing  rules  to  support  this  reorganisation. 
In 
between 
municipalities  and  between  them  and  the 
central  level  could  be  improved,  and  greater 
equality  between  schools 
is  needed  as 
vulnerable  pupils  are 
likely  to  be  more 
concentrated  in  the  same  schools  (see  Annex 
13). Although the teacher workforce is ageing, 
less  than  15%  of  graduates  from  initial 
teacher 
the 
profession  due  to  low  salaries  and  lack  of 
appropriate  career  development.  Weak  initial 
teacher education system also has a negative 
impact  on  teaching  quality.  Consequently, 
many  pupils  turn  to  private  tutoring,  which 

cooperation 

education 

actually 

enter 

(14)  EUROGRADUATE Pilot Survey: 

https://op.europa.eu/en/publication-detail/-
/publication/300930ef-f88c-11ea-991b-
01aa75ed71a1/language-en 

11 

widens  performance  gaps  between  students 
from  different  socio-economic  backgrounds. 
(see  Annex  13).  Therefore,  beyond 
the 
implementation  of  the  measures  included  in 
the RRP, it will be important to ensure efficient 
spending  on  education,  to  make  the  teaching 
profession  more  attractive,  and  address 
inequalities in the education system. 

Reducing dependence on fossil 
fuels and reversing negative 
environmental sustainability 
trends  

Lithuania  sources  most  of  its  energy 
needs  from  abroad.  The  energy  mix  is 
mainly  comprised  of  oil  and  natural  gas  (see 
Annex  5),  with  only  around  a  quarter 
stemming from renewable energy sources.  In 
the  past  decade,  Lithuania  has  significantly 
reduced its dependence on Russian gas and oil. 
Following  Russia’s 
invasion  of  Ukraine, 
Lithuania  has  abandoned  gas  imports  from 
Russia  by  redirecting  energy  imports  through 
the  LNG  terminal  in  Klaipėda,  the  oil  terminal 
in  Būtingė  and  the  new  gas  interconnection 
with  Poland.  Although  Lithuania  already 
generates  almost  half  of  its  domestically 
produced  electricity  from  renewable  energy 
sources, net electricity imports remain high, at 
around 
thirds  of  gross  electricity 
consumption  in  Lithuania.  Mobilising  public 
and private investment to speed up the growth 
in  locally  produced  electricity  from  renewable 
sources,  including  offshore  renewables,  would 
help to reduce import dependency. Cooperation 
with other countries in the region through joint 
projects  provides  further  opportunities.  The 
region’s  energy  security  can  be  improved  by 
the  timely  implementation  of  electricity  grid 
synchronisation with the European continental 
power  grid  and  by  ensuring  that  energy 
interconnections  have  sufficient  capacity. 
These  should  remain  a  policy  priority  in  the 
coming years. 

two 

The  energy  efficiency  of  households  and 
industries  should  be  improved  to  reduce 
overall  energy  consumption.  The  housing 
sector remains energy-intensive due to a large 

 
                                                 
 
or 

of 

pumps 

non-renovated 

buildings, 
proportion 
highlighting  the  need  for  faster  renovation. 
Lithuania switched a large share of its sources 
of  district  heating  from  gas  to  biomass,  and 
while it reduces the reliance on imported gas, 
further  diversification  could  be  achieved 
through  heat 
solar-thermal 
solutions.  Lithuanian 
industry's  greenhouse 
gas  intensity  is  among  the  highest  in  the  EU 
(Annex  15),  meaning  that  it  produces  a  high 
volume of greenhouse gases per unit of value 
added. Energy-intensive industries account for 
two thirds of the total gas consumption in the 
country  (see  Annex  6),  so  increasing  energy 
efficiency in these sectors, many of which are 
in  decline  or  transformation  anyway,  holds 
significant  potential  to  reduce  overall  energy 
consumption  and  dependence.  Beyond  the 
uptake  of  existing  technologies,  effective  and 
well-coordinated 
innovation 
instruments  are  critical  for  delivering  novel 
renewable  energy  and  energy  efficient 
technologies  and  energy  storage  solutions  to 
underpin the transition.  

research  and 

Transport remains a major contributor to 
Lithuania’s  carbon  footprint.  Lithuania 
relies  heavily  on  an  ageing  stock  of  cars  for 
passenger  travel,  while  opportunities  provided 
by  rail  are  not  fully  exploited  for  freight. 
Despite  Lithuania’s  efforts  in  the  RRP  to 
reduce the reliance on an old and polluting car 
fleet,  additional  incentives  to  promote  public 
transport are needed (see Annex 5). Currently, 
Lithuania  has  some  of  the  lowest  transport 
taxes  in  the  EU  and  is  one  of  the  few  EU 
countries  without  an  annual  car  pollution  tax. 
Public  transport  accounted  for  just  9.4%  of 
passenger  travel  in  2019.  Access  to  public 
transport  is  hindered  by  the  lack  of  central 
coordination  between  fragmented  municipal 
and  intercity  public  transport  systems,  routes 
and  schedules.  Additional  efforts  are  needed 
to  promote  the  use  of  public  transport  and  a 
modal  switch  from  individual  car  use  to 
collective  and  shared  transport.  Lithuania  has 
room to further improve the uptake of rail, for 
instance by implementing Rail Baltica as a key 
EU cross-border project and a way of boosting 
multimodal  passenger 
transport.  Special 
attention  should  also  be  given  to  integrating 
rail  within  the  urban  transport  system,  for 
example  through  multimodal  travel  hubs. 
Further  sustainable  mobility  efforts  would  in 

12 

turn  reduce  the  reliance  of  Lithuania  on  oil, 
which  is  still  a  significant  part  of  the  energy 
mix  and  has  been  mainly  imported  from 
Russia. As such, sustainable mobility measures 
further  decrease  Lithuania’s  energy 
can 
dependence on the imports of fossil fuels. 

in 

Protecting  biodiversity 
Lithuania 
presents  a  major  challenge,  with  two 
thirds  of  protected  habitats  classed  as 
having  an  unfavourable  status (15).  The 
main  pressures  relate  to  forestry,  agriculture 
and invasive alien species (see Annex 5).  More 
than  90%  of  forest  habitats  protected  under 
the  Habitats  Directive  are  in  a  bad  or  poor 
status.  Frequent  illegal  logging  is  one  of  the 
contributory  factors (16).  The  Environmental 
Protection  Department  is  responsible  for  the 
monitoring  and  preventing  environmental 
accidents  in  Lithuania  but  lacks  resources  to 
perform  its  role.  The  proportion  of  surface-
water  bodies  in  a  good  ecological  condition 
decreased over the last decade, along with an 
in 
increased  use  of  chemical  fertilisers 
agriculture. Organic farming accounted for 8% 
of land use in Lithuania in 2020, which leaves 
ample room for improvement to reach the EU 
target  of  25%  by  2030.  More  sustainable 
agricultural  and  forestry  practices  could  also 
help  to  reverse  the  decline  in  the  amount  of 
carbon being captured by land and forests and 
contribute to achieving 2030 climate goals. 

Improving growth potential 
remains a priority 

Lithuania does not make the most of the 
opportunities  provided  by  investment  in 
research and innovation. Lithuania’s labour 
productivity per hour worked - output per hour 
worked  –  was  at  69.9%  of  the  EU  average  in 
2020  (see  Annex  10).  The  productivity  gap  is 
closely  related  to  the  economy’s  structure, 

(15)  The report submitted by Lithuania on the conservation 

status of habitats and species covered by the Article 17 
of the Habitats Directive for the period 2013-2018. 

(16)  SWD(2021) 465 final/2, p.18: https://eur-

lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52021SC0465R(01)&fr
om=EN  

 
                                                 
regional  policy 
targeted 
Effective,  well 
measures and efficient use of EU funds will be 
important  in  limiting  regional  disparities  (see 
Annex 15). 

Graph 3.2: Employment level in the counties of 
the largest cities and other counties 

which  remains  less  knowledge-intensive  than 
in  the  EU  as  a  whole.  R&D  expenditure  in  the 
business sector is low in Lithuania, along with 
very  limited  patenting  activity,  which  implies 
limitations  to  productivity  increases  through 
innovative  solutions.  Research  and  innovation 
capacity  is  not  spread  equally  in  the  country: 
around  40%  of  small  and  medium-sized 
enterprises  and  75%  of  research  institutions 
are  concentrated 
region. 
Ensuring  a  balanced  geographical  spread  of 
R&D 
the  economic 
centres  of  Central  and  Western  Lithuania 
remains  challenging.  A  larger  share  of  R&D 
spending comes from the public sector, but the 
output of public R&D is limited (see Annex 9). 
increasing  R&D 
target  of 
Achieving 
spending  to  2.2%  GDP  in  2030  will  require 
additional efforts, including finding sustainable 
sources of public R&D funding (see Annex 16). 

the  Capital 

investment, 

including 

the 

in 

Ensuring  the  effective  functioning  of  the 
revised  institutional  structure  to  support 
R&I  will  be  key.  To  make  the  most  of  the 
opportunities provided by the new institutional 
R&I support structure, Lithuania would benefit 
from  identifying  and  adapting  international 
best  practices  of  working  and  coordination 
methods (17).  The  efforts 
to  consolidate 
fragmented  research  capacities  have  yielded 
moderate  results  so  far.  Going  beyond  the 
measures  in  the  RRP  to  consolidate  higher 
education  institutions,  including  universities, 
would  increase  efficiency  and  help  Lithuania 
unlock its R&I potential (see Annex 9). 

Source: Statistics Lithuania and European Commission 
calculations 

Regional disparities on the labour market 
and  public  services  provision  remain 
sizeable.  Over  the  last  decade,  employment 
has been growing more in the counties of the 
largest  cities  (Vilnius,  Kaunas  and  Klaipėda) 
than  in  the  rest  of  the  country,  supported  to 
some  extent  by  internal  migration  of  the 
labour  force  from  the  rest  of  the  country (18). 
Despite  these  demographic  changes,  smaller 
counties  still  have  higher  unemployment  than 
the  counties  with  the  largest  cities,  in  part 
reflecting structural labour market problems. 

Regional convergence remains a 
challenge 

in 

differences 

Regional 
economic 
development  remain  large.  In  2019,  GDP 
per  capita  in  purchasing  power  standards  in 
Vilnius  county  was  122%  of  the  EU  average, 
and  85%  in  Kaunas  county,  while  it  was  less 
than  50%  in  some  other  NUTS3  regions, 
in  Tauragė  county. 
bottoming  at  46% 

rise 

to  disparities 

Ageing and emigration have put pressure 
on  rural  areas  and  remote  regions  of 
Lithuania. Depopulation puts pressure on the 
efficiency and quality of public services, in turn 
giving 
terms  of 
educational  and  health  outcomes.  The 
adaptation  to  depopulation  (e.g.  consolidation 
of  existing  education  infrastructure)  has  been 
slow, while a lack of infrastructure and limited 
access  to  public  transport  services  reduces 
mobility (as well as incentivising over-reliance 
on cars, as noted above). 

in 

(17)  OECD. Improving effectiveness of Lithuania’s innovation 

policy: https://www.oecd.org/sti/improving-
effectiveness-of-lithuania-s-innovation-policy-
a8fec2ee-en.htm 

(18)  https://publications.jrc.ec.europa.eu/repository/handle/ 

JRC126047 

13 

909510010511011512012513020002002200420062008201020122014201620182020Vilnius, Kaunas, Klaipėda countiesOther countiesIndex, 2010 = 100 
                                                 
  
                                                 
KEY FINDINGS 
KEY FINDINGS 

Lithuania’s  recovery  and  resilience  plan 
includes measures to address a series of 
its structural challenges through: 

  support for the uptake of renewable energy 
and  building  renovations,  improvements  to 
resource efficiency and the sustainability of 
transport, and preparation of an action plan 
for the circular economy; 

  digitalisation  of  public  administrative 
services, development of very high capacity 
networks,  including  by  facilitating  the  5G 
roll-out  and  connecting  enterprises  and 
institutions; 

  enhancement  of  the  revenue  base  by 
improving tax compliance and by abolishing 
inefficient  tax  exemptions  and  re-orienting 
the  system  towards  more  growth-friendly 
and green taxation;  

support  framework 
coherent and effective. 

to  make 

it  more 

Beyond  the  reforms  and  investments  in 
the RRP, Lithuania would benefit from: 

  fostering  co-operative  public  procurement 
at  central  government  and  municipality 
levels; 

  strengthening primary and preventive care, 
reducing fragmentation in the planning and 
delivery  of  social  services,  improving  their 
personalisation  and  integration  with  other 
services as well as improving access to and 
quality of social housing; 

  improving  the  efficiency  of  spending  on 
education,  making  the  teaching  profession 
more attractive, and addressing inequalities 
in the education system; 

  reforms  to  the  minimum  income  scheme, 
increasing  the  coverage  of  unemployment 
social  insurance,  improving  the  pension 
indexation  mechanism  and  active  labour 
market measures focused on the green and 
digital transition, reforms in the healthcare 
sector  to  improve  its  resilience,  efficiency, 
quality  and  accessibility  by  reorganising 
infrastructure, 
services,  modernising 
developing 
in 
expertise 
infectious  diseases  and  investing  in  the 
digitalisation of the health system;  

centres 

of 

and 

network, 

  improvements  in  preschool,  primary  and 
secondary  education  by  consolidating  the 
vocational 
school 
education,  training  and  adult 
learning; 
reforming  higher  education  funding  and 
student  admission  systems,  incentivising 
cooperation and consolidation in the higher 
education sector; 

in 

  setting up a single Innovation Agency and a 
revision  of  the  research  and  innovation 

14 

  improving  coordination  of  public  transport 
at central level, increasing disincentives for 
protecting 
polluting 
biodiversity, to achieve the objectives of the 
European Green Deal; 

transport, 

and 

  further 

increasing  electricity  generation 
capacity  from  renewable  sources,  while 
reducing  energy 
industry, 
transport  and  buildings,  and  ensuring 
energy 
sufficient 
interconnections; 

intensity 

capacity 

of 

in 

  foreseeing  sustainable  sources  of  public 
R&D  funding  and  consolidating  research 
potential, 
talent 
attraction and retention policies;  

improving 

national 

  promoting 

cooperation 

among 
municipalities to improve and integrate the 
delivery  of  public  services  with  a  view  to 
reducing  economic  and  social  disparities 
between the Capital Region and the Central 
and Western Lithuania. 

 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan - implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Taxation 

Annex 18: Key economic and financial indicators 

Annex 19: Debt Sustainability Analysis 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 
Table A9.1: 
Table A10.1: 

Key elements of the Lithuanian RRP 
Summary table on 2019, 2020 and 2021 CSRs 
Indicators underpinning the progress on the European Green Deal from a macroeconomic perspective 
Key indicators  for resource efficiency and productivity - Lithuania 
Key Digital Economy and Society Index Indicators 
Key research, development and innovation indicators 
Key Single Market and Industry Indicators 

17 

19 

19 

21 

22 

25 

28 

28 

31 

33 

33 

35 

37 

39 

42 

44 

44 

46 

48 

50 

52 

52 

54 

56 

57 

21 
26 
30 
34 
36 
38 
40 

 
 
 
Table A11.1: 
Table A12.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A19.2: 

Public administration indicators – Lithuania 
Social Scoreboard for Lithuania 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Selected indicators at  regional level - Lithuania 
Financial soundness indicators 
Taxation indicators 
Key economic and financial indicators 
Debt sustainability analysis for Lithuania 
Heat map of fiscal sustainability risks for Lithuania 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Lithuania in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

2014-2020 European Structural Investment Funds - total budget by fund 

Graph A3.2: 

Cohesion policy contribution to the SDGs (EUR billion) 

Graph A4.1: 

Lithuania’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition Taxation and government expenditure on environmental protection 

Graph A5.2: 

Thematic – Energy Share in energy mix (solids, oil, gas, nuclear, renewables) 

Graph A5.3: 

Thematic – Biodiversity  Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – Mobility  Share of zero-emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Economic importance and expansion of the circular economy – employment and value added in the circular economy 

sectors 

Graph A11.1: 

Performance on the single market public procurement indicator 

Graph A13.1: 

The rural-urban gap in science 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (AWG reference scenario) 

Graph A15.1: 

Territories most affected by the climate transition in Lithuania 

Graph A15.2: 

CO2 emissions from fossil fuels per head, 2018 

Graph A15.3: 

Innovation performance in Lithuania 

Graph A17.1: 

Tax-wedge indicators 

43 
44 
47 
49 
50 
53 
54 
56 
57 
58 

19 

21 

22 

23 

25 

28 

28 

29 

29 

31 

32 

33 

42 

46 

48 

48 

51 

51 

51 

55 

18 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

This  Annex  assesses  Lithuania’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set  developed  to  monitor  progress  on  SDGs  in  an 
EU context.  

related 

is 
indicators 

improving  on 
Lithuania’s  performance 
several 
to 
SDG 
environmental  sustainability  (SDG  2,  9,  11, 
12  and  13),  while  still  needs  to  catch  up  on 
others  (SDGs  7  and  15).  On  ‘affordable  and 
clean  energy’  (SDG  7),  Lithuania  has  achieved 
significant progress in regards to the proportion of 
population  unable  to  keep  their  home  adequately 
warm,  which  decreased  from  31.1%  in  2015  to 
23.1%  in  2020,  still  well  above  the  EU  average 
(8.2%  in  2020).  Similarly,  progress  has  been 

and 

observed  for  energy  productivity,  increasing  from 
EUR  4.7  per  kilograms  of  oil  equivalent  (kgoe)  in 
2015  to  EUR  5.0  per  kgoe  in  2020,  remaining 
significantly below the EU average of EUR 8.6 per 
kgoe  in  2020.  Measures  to  increase  Lithuania’s 
performance  are  included  in  component  2  of  the 
recovery 
(‘Green 
resilience 
transformation of Lithuania’). The plan focuses on 
investments  in  mobility  infrastructure  and  public 
transport  for  sustainable  mobility  and  investment 
additional  solar  and  wind  energy  capacity  which 
will  provide  additional  security  of  supply  and 
flexibility  to  accommodate  renewable  energy 
sources  in  the  grid.  The  plan  also  envisages 
investments  to  improve  the  energy  efficiency  of 
multi-apartment  buildings  and  the  adoption  of  a 
circular economy action plan in 2023. 

plan 

Lithuania  is  performing  well  on  three  SDG 
indicators relating to fairness (SDGs 1,4 and 
5), and is improving on several others (SDGs 
2, 3, 8 and 10). Lithuania has reduced the risk of 
poverty or social exclusion from 29.4% in 2015 to 
24.5% in 2020, although it remains above the EU 
average of 21.9%. Regional disparities also remain 
an  important  problem.  While  the  urban-rural  gap 
for  the  risk  of  poverty  or  social  exclusion 

Graph A1.1: Progress towards SDGs in Lithuania in the last five years 

For detailed datasets on the various SDGs see the annual EUROSTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/product?code=KS-09-22-019; Extensive country specific data on the short-term progress of Member 
States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu). 
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

19 

 
 
 
 
 
from 61% in 2016 to 69% in 2020, which is high 
compared to the EU average of 50% in 2020.  

in 

decreased from 14.8% in 2015 to 12.2% in 2020, 
it  remains  far  above  the  EU  average  of  2.2%  in 
2020. Regarding ‘good health and well-being' (SDG 
3),  Lithuania  lags  behind  the  EU  average  for 
almost  all  indicators.  While  progress  has  been 
standardised  avoidable  mortality, 
made 
decreasing from 546.5 in 2014 to 466.0 in 2019, 
it is still almost double the EU average of 252.1 in 
2017.  RRP  component  7  (‘More  opportunities  for 
everyone  to  actively  build  national  well-being') 
includes  measures  aimed  at 
the 
minimum income scheme and improving the social 
safety  net  in  Lithuania.  Measures  included  in 
component  1  (‘A  resilient  and  future-proof  health 
system’)  are  expected  to  improve  the  resilience, 
accessibility and quality of health services as well 
as increase the quality, affordability and efficiency 
of the health care system. 

reforming 

in  2021). 

Lithuania  performs  well  or  is  improving  on 
SDG  indicators  related  to  productivity  (SDGs 
4,  8  and  9).  Lithuania’s  performance  on  ‘Quality 
education’ (SDG 4) is improving but further efforts 
are  needed  to  reach  the  EU  average  as  regards 
participation  in  early  childhood  education  which 
increased  from  87.3%  in 2015  to  90.9% in  2020 
(compared with 93% for the EU in 2020) and adult 
learning  from  6%  in  2016  to  8.5%  in  2021  (EU: 
In  Lithuania,  the  share  of 
10.8% 
households  with  high-speed  internet  connections 
in 2021 (78%) is materially above the EU average 
(70%).  Lithuania  has  low,  albeit  slowly  improving 
gross  domestic  expenditure  on  R&D  at  1.2%  of 
GDP  in  2020,  compared  to  the  EU  average  of 
2.3%.  Also,  Lithuania  is  lagging  far  behind  in 
patent applications to the European Patent Office, 
with  18  applications  per  million  inhabitants  in 
2020 compared to the EU average of 147. Several 
reforms and investments in component 3 (‘Digital 
transformation  for  growth’)  of  the  RRP  focus  on 
further  developing  digital 
infrastructure  and 
equipment and improving the quality of education 
and digital skills at all levels. 

Lithuania  is  improving  on  SDG  indicators 
related  to  macroeconomic  stability  (SDGs  8 
and  16).  Lithuania’s  performance  on 
the 
investment share of GDP is below the EU average, 
but  increased  from  19.6%  in  2015  to  21.1%  in 
in  2020).  Also,  Lithuania 
2020 
improved  on  the  quality  of 
institutions, 
its 
including  trust  in  institutions  (SDG  16),  where  the 
percentage  of  the  population  in  Lithuania  with 
confidence  in  the  European  Parliament  increased 

(EU:  22.3% 

20 

 
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION  
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION  

Table A2.1: Key elements of the Lithuanian RRP 

(1) See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
“Quantifying Spillovers of NGEU investment”, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
“An overview of the economics of the Recovery and Resilience 
Facility”, Quarterly Report on the Euro Area (QREA), Vol. 20, 
No. 3 pp. 7-16. 
Source: European Commission 2022 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Lithuania  submitted  its  recovery  and 
resilience  plan  (RRP)  on  14  May  2021.  The 
Commission’s positive assessment on 2 July 2021 
and the Council’s approval on 20 July 2021 paved 
the  way  for  disbursing  EUR  2.2  billion  in  grants 
under  the  RRF  over  2021-2026.  The  financing 
agreement  and  operational  arrangements  were 
signed  on  6  August  2021  and  5  May  2022, 
respectively.  The  key  elements  of  the  Lithuanian 
RRP are set out in Table A2.1. 

The  breakdown  of  funds  contributing  to  each  of 
the RRF’s six policy pillars is outlined in the graph 
A2.1 below.  

The  progress  made  by  Lithuania  in  the 
implementation  of  its  plan  is  published  on 
the  Recovery  and  Resilience  Scoreboard.  The 
Scoreboard  also  gives  a  clear  overview  on  the 
progress  made  in  the  implementation  of  the  RRF 
as a whole, in a transparent manner. 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on this 
chart amounts to 200% of the estimated cost of the Lithuanian RRP. The bottom part represents the amount of the primary pillar, 
the top part the amount of the secondary pillar.  
Source: RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html 

21 

Total allocation EUR 2.2 billion in grants (4.6% of 2019 GDP) Investments and Reforms 4 investments and 27 reforms Total number of Milestones and Targets191Estimated macroeconomic impact (1) Raise GDP by 1.0%-1.6% by 2026 (0.5% in spillover effects)Pre-financing disbursed EUR 289 million (August 2021)First instalment Lithuania has not yet submitted a first payment request0%10%20%30%40%50%60%Green transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic,social andinstitutionalresiliencePolicies for thenext generation 
 
 
 
 
   
 
 
 
 
      
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth.  

its 

In  2021-2027,  EU  cohesion  policy  funds (19) 
will  support  long-term  development  objectives  in 
Lithuania  by  investing  EUR  6.81  billion (20).  This 
the  Just 
includes  EUR  273.3  million  from 
Transition  Fund  directed  towards  alleviating  the 
socio-economic  impacts  of  the  green  transition  in 
the  most  vulnerable  regions.  The  2021-2027 
cohesion policy funds partnership agreements and 
programmes  take  into  account  the  2019-2020 
country-specific recommendations and investment 
guidance  provided  as  part  of  the  European 
and 
Semester, 
complementarities  with  other  EU  funding. 
In 
addition,  Lithuania  will  benefit  from  EUR  4  billion 
support  for  the  2023-2027  period  from  the 
common agricultural policy, which supports social, 
environmental,  and  economic  sustainability  and 
innovation 
rural  areas, 
contributing  to  the  European  Green  Deal,  and 
ensuring long-term food security. 

in  agriculture  and 

synergies 

ensuring 

Graph A3.1: 2014-2020 European Structural 
Investment Funds - total budget by fund 

in 

ones 

relevant 

Lithuania 

investments 

employment, 

allocated  EUR  9.28  billion (21)  from  the  EU 
budget  and  another  EUR  1.66  billion  from 
national  financing  (Graph  A3.1),  amounting  to 
around  3.67%  of  GDP  for  2014-2020  annually 
and  80.18%  of  public  investment (22).  By  31 
December 2021, 110% of the total was allocated 
to  specific  projects  and  74%  was  reported  as 
spent, leaving EUR 2.86 billion to be  spent by the 
end of 2023 (23). Among the 11 ESIF objectives the 
most 
are 
competitiveness  of  small  and  medium-sized 
enterprises,  environment  protection  and  resource 
efficiency,  network  infrastructure  in  transport  and 
energy,  low-carbon  economy  and  sustainable  and 
quality 
(approximately 
EUR 6.79 billion).  By  the  end  of  2020,  cohesion 
supported  8 000 
had 
policy 
businesses, contributed to the energy performance 
upgrades  for  42 000  households,  reconstructed 
339 km of roads and 94 km of railways, improved 
for  340 000 
treatment  services 
wastewater 
people  and,  health  services  for  636 000  people, 
and  renovated  schools  for    61 000  pupils.    More 
than 761 000 people in Lithuania had participated 
in  projects  funded  by  the  European  Social  Fund, 
from  which  99 000  gained  a  qualification.  About 
33 000 young people neither in employment nor in 
left  a  Youth 
education  or 
Guarantee (24)  project  with  a  positive  outcome: 
they  continued  education  or  training,  gained  a 
qualification  or  were  employed  or  self-employed. 
Cohesion  policy  funds  are  already  substantially 
contributing  to the  Sustainable  Development  Goal 
(SDG) objectives are supporting 11 of the 17 SDGs 
with up to 95% of the expenditure contributing to 
the attainment of the goals.  

(NEETs) 

training 

EUR billion at current prices, % of total 
Source: European Commission, Cohesion Open Data  

In  2014-2020,  the  European  Structural  and 
for  Lithuania 
Investment  Funds 

(ESIF) 

(21)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and European Agricultural Fund for Rural Development 
(EAFRD) and European Maritime and Fisheries Fund (EMFF). 
According to the ‘N+3 rule’, the funds committed for 2014-
2020 must be spent by 2023 at the latest (by 2025 for 
EAFRD). Data source: Cohesion Open data, cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF. 

(22)  Public investment is gross fixed capital formation plus 

capital transfers, general government. 

(23)  Including REACT-EU. ESIF data on 

https://cohesiondata.ec.europa.eu/countries/LT 

(19)  European Regional Development Fund (ERDF), European 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(20)  Current prices, source: Cohesion Open Data  

(24)  The Youth Guarantee is a commitment by the Member 

States that all young people under 30 receive a good quality 
offer of employment, continued education, apprenticeship or 
traineeship within 4 months of becoming unemployed or 
leaving education. 

22 

2.4022%2.7025%0.081%4.2439%1.4513%CFEAFRDEMFFERDFESF 
 
 
  
                                                 
                                                 
 
Graph A3.2: Cohesion policy contribution to the SDGs (EUR billion) 

Source: European Commission, DG REGIO 

REACT-EU 

instrument 

The 
under 
NextGenerationEU  provided  EUR  273.7 
million  of  additional  funding  to  2014-2020 
cohesion  policy  allocations  for  Lithuania  to 
ensure  a  balanced  recovery,  boost  convergence 
and  provide  vital  support  to  regions  dealing  with 
the impact of the coronavirus outbreak. REACT-EU 
provided  support  in  Lithuania  for  expanding  e-
business  models,  research  and  development  of 
new anti-COVID 19 products, promoting renewable 
energy  sources  and  energy  efficiency  as  well  as 
providing better access to efficient and innovative 
healthcare  and  boosting  active  labour  market 
policy measures. 

response 

coronavirus 

The 
investment 
initiative (25) provided the first EU emergency 
support  for  Lithuania  in  connection  with  the 
COVID-19 pandemic.  It  introduced  extraordinary 
flexibility  enabling  Lithuania 
re-allocate 
resources for immediate public health needs (EUR 
40  million)  and  support  to  enterprises  (EUR  15 
million).  For  instance,  Lithuania  shifted  resources 
to  purchase  protective  equipment  and  healthcare 
supplies, develop tele medicine services, contribute 
to  the  short-time  work  schemes,  and  reinforce 
healthcare staff numbers.  

to 

received 

support  under 

Lithuania 
the 
European  instrument  for  temporary  support 
to  mitigate  unemployment  risks 
in  an 
emergency  (SURE)  to  finance  short-time 

work  schemes  and  similar  measures. The 
Council granted financial assistance under SURE to 
Lithuania  in  September  2020  and  top-up  support 
in April  2021 for a maximum of EUR 957 million, 
which  was  disbursed  by  25  May  2021.  SURE  is 
estimated  to  have  supported  approximately  25% 
of  workers  and  firms  for  at  least  one  month  in 
2020,  and  20%  of  workers  and  25%  of  firms  in 
2021,  primarily  in  wholesale  and  retail  trade, 
accommodation 
and 
manufacturing.  Lithuania  is  estimated  to  have 
saved  a  total  of  EUR  5  million  on  interest 
payments  as  a  result  of  SURE’s  lower  interest 
rates.  

services, 

food 

and 

The  Commission  is  engaged  in  providing 
tailor-made  expertise  via  the  technical 
support  instrument  to  support  Lithuania  in 
designing  and 
implementing  growth-enhancing 
reforms.  Since  2017,  Lithuania  has  received 
assistance  through  55  technical  support  projects. 
Projects  delivered  in  2021  aimed  for  example  at 
building up the analytical capacity of the National 
Productivity  Board,  enhancing  regional  service 
delivery 
individuals  and  businesses  and 
strengthening  multi-level  cooperation  across  the 
administration.  The  Commission  is  also  assisting 
Lithuania  in  implementing  specific  reforms  and 
investments in the RRP, such as reforms to assist 
all  sectors  of  the  economy  in  moving  towards 
climate neutrality by 2050. In 2022, new projects 
will  start  to  support  assessment  of  the  ongoing 
civil service reform.  

to 

(25)  Re-allocating ESIF resources under Regulation (EU) 

2020/460 of the European Parliament and of the Council of 
30 March 2020, and Regulation (EU) 2020/558 of the 
European Parliament and of the Council of 23 April 2020. 

from  other  EU 
Lithuania  also 
programmes.  These 
include  the  Connecting 
Europe  Facility,  which  allocated  EU  funding  of 

benefits 

23 

0.030.120.160.380.400.410.730.781.061.371.920.00.51.01.52.02.5SDG 11 Sustainable cities and communitiesSDG 15 Life on landSDG 13 Climate actionSDG 12 Responsible consumption and productionSDG 3 Good health and well beingSDG 6 Clean water and sanitationSDG 1 No povertySDG 4 Quality educationSDG 7 Affordable and clean energySDG 8 Decent work and economic growthSDG 9 Industry, innovation, infrastructure 
                                                 
  
EUR 387.1 million to specific projects on strategic 
transport  networks,  and  Horizon  2020,  which 
allocated EU funding of EUR 95.8 million. 

24 

 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Lithuania’s progress on the 2019-
2020 CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (26) 
addressed  to  Lithuania in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Lithuania  to 
date (27),  as  well  as  the  commitments  in  the 
recovery and resilience plan (RRP) (28). At this early 
stage  of  the  RRP  implementation,  overall  79%  of 
the CSRs focusing on structural issues in 2019 and 
2020  have  recorded  at  least  “some  progress”, 
while  21%  recorded  “limited”  (see  Graph  A4.1). 
Considerable  additional  progress  in  addressing 
structural  CSRs  is  expected  in  the  years  to  come 
with the further implementation of the RRP. 

Source: European Commission 

(26)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2815%29&qi
d=1627675454457  
2020 CSRs: EUR-Lex - 32020H0826(15) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs:  EUR-Lex - 32019H0905(15) - EN - EUR-Lex 
(europa.eu) 

(27)  Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(28)  Member States were asked to effectively address all or a 

significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here takes into 
account the degree of implementation of the measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment.  Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

25 

Limited Progress21%Some Progress72%Substantial Progress7% 
 
 
 
 
 
 
 
 
                                                 
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A4.1: Summary table on 2019, 2020 and 2021 CSRs 

(Continued on the next page) 

26 

LithuaniaAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Some ProgressImprove tax compliance and Some ProgressRelevant RRP measures planned as of 2021 to 2026broaden the tax base to sources less detrimental to growth.Some ProgressRelevant RRP measures planned as of 2022Address income inequality, poverty and  social exclusion,  including by improving the design of the tax and  benefit system.Some ProgressRelevant RRP measures planned as of 2021 and 20232019 CSR 2Limited ProgressImprove quality and efficiency at all education and training levels, including adult learning. Limited ProgressRelevant RRP measures planned as of 2021 and  2022Increase the quality, Limited ProgressRelevant RRP measures planned as of 2022 and 2024affordability and Some ProgressRelevant RRP measures planned as of 2022efficiency of the healthcare system.Some ProgressRelevant RRP measures planned as of 20222019 CSR 3Some ProgressFocus investment-related economic policy on innovation, Some ProgressRelevant RRP measures planned as of 2021energy andSome ProgressRelevant RRP measures planned as of 2021resource efficiency, Some ProgressRelevant RRP measures planned as of 2022 and 2023sustainable transport and Some ProgressRelevant RRP measures planned as of 2021energy interconnections, taking into account regional disparities. Substantial ProgressRelevant RRP measures planned as of 2021Stimulate productivity growth by improving the efficiency of public investment. Some ProgressRelevant RRP measures planned as of 2022Develop a coherent policy framework to support science-business cooperation and Limited ProgressRelevant RRP measures planned as of 2021consolidate research and innovation implementing agencies.Substantial ProgressRelevant RRP measures planned as of 20212020 CSR1Some ProgressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableStrengthentheresilienceofthehealthsystem,includingbymobilisingadequatefundingandaddressingshortagesinthehealthworkforce and of critical medical products.Limited ProgressRelevant RRP measures planned as of 2023Improve the accessibility and quality of health services.Limited ProgressRelevant RRP measures planned as of 2022, 2023 and 20242020 CSR2Some ProgressMitigate the impact of the crisis on employment.Some ProgressRelevant RRP measures planned as of 2022Increasethefundingandcoverageofactivelabourmarketpolicymeasures Some ProgressRelevant RRP measures planned as of 2022and promote skills.Some ProgressRelevant RRP measures planned as of 2021, 2022 and 2024Ensurethecoverageandadequacyofthesocialsafetynetandimprovetheeffectivenessofthetaxandbenefitsystemtoprotectagainst poverty.Some ProgressRelevant RRP measures planned as of 2021 and 20222020 CSR 3Some ProgressSupportliquidityforbusinesses,especiallyforsmall-andmedium-sized enterprises and export-oriented sectors.Some ProgressRelevant RRP measures planned as of 2024Front-load mature public investment projectsSome Progressand promote private investment to foster the economic recovery.Some ProgressFocusinvestmentonthegreenanddigitaltransition,inparticularonthe coverage and take-up of very high-capacity broadband. Limited ProgressRelevant RRP measures planned as of 2022 on clean and efficient production and use of energy, Some ProgressRelevant RRP measures planned as of 2021 and 2022and sustainable transport. Some ProgressRelevant RRP measures planned as of 2021Promotetechnologicalinnovationinsmallandmedium-sizedenterprises.Some ProgressRelevant RRP measures planned as of 2021 
 
 
  
 
Table (continued) 

* See footnote 28 
Source: European Commission 

27 

2021 CSR1Some ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinanced current expenditure under control. Limited ProgressNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Substantial ProgressNot applicableAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticular investment supporting the green and digital transition. Limited ProgressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Substantial ProgressNot applicable 
 
 
 
 
 
 
 
  
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  in  2050 
and  where  economic  growth  is  decoupled 
from resource use. This annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments 
in  the  respective 
building  blocks  of  the  European  Green  Deal.  It  is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal. 

in  Lithuania 

Graph A5.1: Fiscal aspects of the green transition 
Taxation and government expenditure on 
environmental protection 

Source: Eurostat 

its 

has 

reduced 

In  previous  decades,  Lithuania  has  made 
significant progress in laying the foundations 
of  a  low-carbon  economy.  There  are  still  large 
opportunities,  however, 
to  make  Lithuania’s 
economy  more  climate  resilient  and  sustainable. 
Lithuania 
economy-wide 
greenhouse gas emissions (excluding land use) by 
58%  since  1990,  significantly  more  than  EU 
average (31%). The reduction was mainly achieved 
in  1990-1995  due  to  the  closure  of  heavy 
industries.  However, the  emissions  stayed  broadly 
stable  afterwards.  Current  emissions  per  capita 
are  slightly  lower  than  the  EU  average,  although 
Lithuania’s  economy  has  an  emission  intensity 
much higher than the EU. The country’s emissions 
from  sectors  not  covered  by  the  EU  Emissions 
Trading 
transport, 
agriculture, waste and small industry)  were below 
its EU 2020 target. However, since the baseline in 
2005,  increases  have  been  recorded  in  some 
sectors, 
and 
transport 
agriculture  (+4.7%).  In  its  national  energy  and 
climate  plan,  Lithuania  intends  to  achieve  more 

buildings, 

(+49.7%) 

notably 

System 

(i.e. 

than 

reductions 
its  current  Effort  Sharing 
Regulation  target  for  2030  of  -9%.  Following  the 
adoption  of  the  European  Climate  Law  setting  an 
EU-wide greenhouse gas reduction target of -55% 
by  2030,  the  proposed  new  Effort  Sharing 
Regulation target for Lithuania under the Fit for 55 
package is -21%. Under current land management 
practices,  Lithuania  is  projected  to  see  similar 
levels  of  net  carbon  removals  by  2030  as  today, 
but  the  impact  of  the  LULUCF  sector  (land  use, 
land-use  change  and 
reducing 
emissions  has  been  steadily  decreasing  over  the 
recent  decade.  In  its  recovery  and  resilience  plan 
(RRP),  Lithuania  allocates  37.8%  of  the  plan  to 
climate objectives and outlines crucial reforms and 
investments  to  further  the  transition  to  a  more 
sustainable, 
low-carbon  and  climate-resilient 
economy. 

forestry) 

in 

Graph A5.2: Thematic – Energy 
Share in energy mix (solids, oil, gas, nuclear, 
renewables) 

The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat  

collection  of  environmental 
Lithuania’s 
taxation is above EU average (as a share of 
total  taxes)  but  government  expenditure  on 
environmental  protection 
is  below  EU 
average.  Lithuania’s  environmental  tax  revenues 
as a share of total tax revenues are above the EU 
average;  this  holds  especially  for  energy  taxes, 
which  are  largely  driving  total  environmental 
taxes.  However,  Lithuanian  environmental  tax 
revenues are below the EU average as a share of 
GDP  (for  more  indicators  on  taxation,  see  Annex 
(excluding  fuel),  as  a 
17).  Transport 
proportion of GDP, are among of the lowest in the 
EU.  The  Lithuanian  government  spends  a  smaller 
its  expenditure  on  environmental 
share  of 

taxes 

28 

0.01.02.03.04.05.06.07.0Environmental taxes (%of GDP)Environmental taxes (%of total taxation)Government expenditureon environmentalprotection (% of totalexpenditure)LT (2020)EU27 (2020)020406080100200520102015201820192020LTSolid fossil fuels, peat and oil shaleOilGasNuclearRenewables 
 
 
   
   
 
 
protection than the EU overall. Budgetary exposure 
to climate hazards is considered low. 

Graph A5.3: Thematic – Biodiversity  
Terrestrial protected areas and organic farming 

Graph A5.4: Thematic – Mobility  
Share of zero-emission vehicles (% of new 
registrations) 

For terrestrial protected areas data for 2018, and data for the 
EU average (2016, 2017) is lacking. 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming). 

Zero emission vehicles (passenger cars) include battery and 
fuel cell electric vehicles (BEV, FCEV). 
Source: European Alternative Fuels Observatory.  

inland 

Lithuania  relies  heavily  on  oil  and  natural 
gas,  which  account  for  43%  and  29%  of 
gross 
respectively. 
consumption 
Renewables  and  biofuels  make  up  25%  of  the 
energy  mix,  a  considerable  increase  from  10%  in 
2005,  but  remaining  quite  stable  since  2015. 
Finally,  primary solid biofuels  account for 19% of 
the  energy  mix,  coal  for  2%,  and  non-renewable 
waste for just 1%. 

Lithuania  has  one  of  the  lowest  shares  of 
zero-emission  passenger  cars  among  new 
registrations  in  the  EU.  At  the  same  time,  only 
8%  of  the  railroad  network  is  electrified.  The  use 
of  public 
transport  accounted  for  9.4%  of 
passenger travel in 2019 – the lowest share in the 
EU.    Transport  emissions  have  increased  by  half 
since 2005. 

in 

habitats 

challenges,  with 

The  protection  of  biodiversity  in  Lithuania 
presents  major 
the 
conservation  status  of  two  thirds  of  the 
protected 
unfavourable 
conservation  status.  No  protected  grassland 
habitats  and  less  than  10%  of  protected  forest 
habitats  are  classed  as  having  a  favourable 
conservation  status.  The  share  of  terrestrial 
protected  areas  as  a  proportion  of  total  land  is 
below average, as is the uptake organic farming in 
Lithuania. 

In terms of pollution, air quality in Lithuania 
is  generally  good,  with  some  exceptions. 
According  to  the  projections,  Lithuania  will  likely 
not  meet  its  emission  reduction  commitments  for 
nitrogen  oxides,  non-methane  volatile  organic 
compounds  (NMVOC)  and  ammonia  for  2020-
2029,  or  for  NMVOCs  and  nitrogen  oxides  for 
2030  onwards.  Groundwater  quality  is  generally 
good  in  terms  of  pollution  from  nitrates.  At  the 
same  time,  a  high  volume  of  surface  waters  are 
eutrophic.  This  problem  is  common  to  other 
countries  around  the  Baltic  Sea  with  extremely 
high  levels  of  waters  in  the  region  assessed  as 
having below good eutrophication status.   

29 

020402016201720192020LTTerrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic)0.02.04.06.08.010.0201620172018201920202021% of new registrationsLTEU27 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A5.1: Indicators underpinning the progress on the European Green Deal from a macroeconomic 
perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999). (2) Distance to target is the gap between Member States’ 2030 target under 
the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 

Source: Eurostat, JRC, European Commission, EEA, EAFO 

30 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)13.18%5%-9%-113-21%-23-9200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%17%26%26%25%25%27%45%Energy efficiency: primary energy consumption (1)Mtoe8.06.06.26.46.36.25.5Energy efficiency: final energy consumption (1)Mtoe4.75.15.35.65.65.34.5201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP1.91.91.92.01.91.92.42.42.2Environmental taxes (% of total taxation)% of taxation (3)6.46.56.56.66.26.36.05.95.6Government expenditure on environmental protection% of total exp.1.751.551.471.441.521.251.661.701.61Investment in environmental protection% of GDP (4) 0.480.420.200.26--0.420.380.41Fossil fuel subsidiesEUR2020bn0.290.440.260.230.18-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100424243434342797669GHG emissions intensity of the economykg/EUR'100.680.670.670.670.650.640.320.310.30Energy intensity of the economykgoe/EUR'100.200.200.200.200.190.190.120.110.11Final energy consumption (FEC)2015=100100.0104.9110.0114.5114.3109.2103.5102.994.6FEC in residential building sector2015=100100.0105.5107.1111.2106.5105.5101.9101.3101.3FEC in services building sector2015=100100.0104.8110.3113.3109.0100.2102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)2.972.832.782.882.69-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.9389148951068998-863762-Years of life lost due to air pollution by NO2per 100.000 inh.266< 13< 1-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-16.617.0-17.017.0-25.725.7Marine protected areas% of total-24.1--24.1--10.7-Organic farming% of total utilised agricultural area7.17.58.08.18.18.08.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'100.971.011.141.361.341.330.890.870.83Share of zero emission vehicles (8)% in new registrations0.10.30.20.40.41.11.01.95.41723131718238812Share of electrified railways%6.56.48.08.08.0-55.656.0-21.420.221.020.922.0-28.928.8-YearLTEUShare of smart meters in total metering points (9) - electricity% of total20182.435.8Share of smart meters in total metering points (9) - gas% of total20180.213.1ICT used for environmental sustainability (10)%202174.265.9LITHUANIAEU'Fit for 55'DistanceDistanceProgress to policy targetsNational contribution to 2030 EU targetDigitalFiscal and financialindicators1.3 out of 4 (slight increase from historical level of 1). This is a low risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-20184.33.54.1MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver) 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social  dimension. While  measures  in this  regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the transition. Lithuania’s green transition benefits 
from  a  relatively  strong  green  economy  and 
promising  recent  policy  measures;  at  the  same 
time  energy-intensive  sectors  are  sizeable  and 
lower-income groups are likely to face challenges. 

2019 

Lithuania’s  recovery  and  resilience  plan 
outlines measures for a fair green transition. 
A  pilot  project  by  the  Public  Employment  Service 
will  support  entrepreneurship  and  job  creation  in 
the  green  sector.  Setting  up  new  long-term  day 
care  centres  and  modernising  regional  hospitals 
will facilitate energy-efficient provision of services. 
Lithuania’s national energy and climate plan of 31 
December 
the 
partially 
addresses 
employment  and  social 
impact  of  national 
measures  and  policies  and  presents  the  tools  for 
addressing energy poverty. It also sets out a 2030 
target  of  only  17%  of  the  population  unable  to 
keep  their  home  adequately  warm  (from  28%  in 
2018)  and  a  target  of  10%  for  the  share  of 
households  spending  a  large  share  of  income  on 
energy  (from  17.1%  in  2016).  Lithuania’s  draft 
just  transition  plan  includes  industrial  facilities 
responsible  for  85%  of  the  total  emissions 
covered  by  the  EU  emissions  trading  system  (see 
Annex 15), and contains measures to address the 
potential  socioeconomic  consequences  of  the 
green transition in the regions concerned. 

key 

energy-intensive 

sectors 
Although 
remain  sizeable,  the  green  economy 
is 
relatively large and provides strong potential 
for  job  creation.  Between  2015  and  2020, 
greenhouse  gas  (GHG)  emissions  increased  in 
Lithuania but, owing to fast economic growth, the 
intensity  of  the  Lithuanian  economy 
carbon 
decreased by almost 20% (in terms of gross value 
added). It is now 11% above the EU average, with 
the  average  carbon  footprint  per  worker  at  15.10 
tonnes of GHG emissions (against 13.61 in the EU) 
(see  Graph  A6.1).  Petroleum  refineries  have  been 
identified  as  a  declining  sector (29)  and  the 
industry  as  a  transforming  sector. 
fertilisers 
including 
Lithuania’s  energy-intensive 

industry, 

(29)  SWD(2021) 275 final 

31 

cement and fertilisers (30), provides jobs for 1.85% 
of  the  total  employed  workforce,  for  which  up-
skilling  and  reskilling  are  particularly  important 
(see  Annex  12).  The  environmental  goods  and 
services  sector  already  provides 
to  a 
the  employed 
large  share  of 
comparatively 
population  (3.5%,  compared  with  2.2%  in  the 
EU) (31).  Energy  efficiency  improvements  offer 
further opportunities for green jobs (32).  

jobs 

Graph A6.1: Fair green transition challenges 

Source: Eurostat, World Inequality Database 

As  for  the  social  dimension  of  the  green 
transition,  ensuring  access  to  essential 
transport and energy services is a challenge 
for  Lithuania.  A  higher-than-average  share  of 
the  population  living  in  rural  areas  is  at  risk  of 
poverty (26.4% against 18.7% for the EU) (33). The 
share  of  the  population  unable  to  keep  their 
homes adequately warm decreased from 31.1% in 
2015 to 23.1% in 2020, which is still almost three 
times  the  EU  average  (8.2%).  All  income  groups 
(see  Graph  A6.2).  Consumption 
are  affected 
patterns  vary  across  the  population:  the  average 
carbon  footprint  of  the  top  10%  of  emitters  is 
about  4.5  times  higher  than  that  of  the  bottom 
50% of the population (5.3 times in the EU). 

(30)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D) 

(31)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(32)  https://publications.jrc.ec.europa.eu/repository/handle/ 

JRC126047. 

(33)  Based on COM(2021) 568 final (Annex I) as a proxy for 

potential transport challenges in the context of the green 
transition (e.g. due to vulnerability to fuel prices). 

0.000.501.001.502.002.503.003.504.00GHG tonnes per Euroof gross added value(MS/EU)GHG tonnes perworker (MS/EU)Employment share inenergy-intensiveindustries (MS/EU)Share of population inrural areas at risk ofpoverty (MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)LithuaniaEU 2020Lithuania 2015 
 
                                                 
  
                                                 
 
Tax  systems  are  key  to  ensuring  a  fair 
transition  towards  climate  neutrality (34). 
Lithuania’s  revenues  from  total  environmental 
taxes marginally increased from 1.85% of GDP in 
2015 to 1.93% in 2020 (against 2.24% in the EU). 
The  labour  tax  wedge  for  low-income  earners (35) 
decreased from 37.4% in 2015 to 31.1% in 2021, 
compared to 31.9% in the EU in 2021 (see Annex 
accompanying 
17).  Redistributive  measures 
environmental  taxation  have  the  potential  to 
foster progressivity and have a positive impact on 
the disposable income of households in the lowest 
segments of the income distribution (36). 

Graph A6.2: Energy poverty by income decile 

Source: Eurostat EU-SILC survey (2020) 

(34)  COM(2021) 801 final. 

(35)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits database, European 
Commission/OECD). 

(36)  SWD(2021) 641 final PART 3/3, on distributional effects of 

energy taxation revision, based on the European Commission 
Joint Research Centre GEM-E3 and EUROMOD models. 

32 

0%5%10%15%20%25%30%35%40%45%50%12345678910Unable to keep home adequately warm (per income decile)Income decileLithuaniaEuropean Union 
  
                                                 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY  
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY  

technological 

requires  social  and 
innovation. 
Lithuania  catching  up  on  eco-innovation,  ranking 
19th  on  the  2021  Eco-Innovation  Index,  with  a 
total score of 88 (compared with an EU average of 
121). Lithuania performs above the EU average in 
only  one  out  of  five  indicators  in  the  Eco-
Innovation 
Index,  which  measures  exports  of 
the  eco-
from  eco-industries.  For 
products 
innovation  activities  indicator,  Lithuania  performs 
second  worst  (total  score  30  compared  with  the 
EU  average  of  100).  However,  Lithuania  scores 
capital 
second  best 
investment  per  capita  (the  2021  Cleantech  for 
Europe  Annual  Briefing).  Further  measures  can 
help  Lithuania  develop  environmental  technology, 
notably  in  relation  to  sustainable  product  design, 
resource  efficient  production  processes,  digital 
solutions  for  industry,  technologies  that  can  help 
solve  environmental  problems  and  new  circular 
business models. 

cleantech  venture 

in 

Graph A7.1: Economic importance and expansion of 
the circular economy – 
employment and value added in the circular 
economy sectors 

Source: Eurostat 

while 

minimising 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation, 
food  and  electronics,  helping  create  sustainable, 
local and well-paid jobs across Europe. 

for 

by 

The  circular  use  of  materials  in  Lithuania  is 
almost  three  times 
lower  than  the  EU 
average. The circular (secondary) use of materials 
in Lithuania has remained close to 4% since 2010. 
It  was  4.4%  in  2020  -  almost  three  times  lower 
than the EU average of 12.8%. 

Lithuanian  resource  productivity  could  be 
considerably  improved.  Resource  productivity 
expresses  how  efficiently  the  economy  uses 
material  resources  to  produce  wealth.  Improving 
resource  productivity  can  help 
to  minimise 
negative  impacts  on  the  environment  and  reduce 
dependency  on  volatile  raw  material  markets. 
Currently, Lithuania ranks 5th lowest in the EU, with 
1.3  purchasing  power  standards  (PPS)  generated 
per kg of material consumed in 2020, compared to 
the  EU  average  of  2.2  PPS  per  kg.  Material 
intensity  is  two-times  higher  compared  to  the  EU 
average. 

While  Lithuania  is  making  progress  towards 
the 2025 reuse and recycling targets, it still 
needs  to  reduce  landfilling  and  improve 
separate  collection  of  different  waste 
streams.  The  recycling  rate  for  municipal  waste 
showed  a  steady  increase  until  2018  but  has 
fallen  since  then.  With  45.1%  of  municipal  waste 
recycled  in  2020,  Lithuania  missed  its  target  of 
50%  in  2020  but  is  still  not  far  off  the  55% 
recycling  target  in  2025.  Lithuania  has  a  well-
functioning  deposit-refund  system  for  single-use 
plastic  and  glass  bottles  and  metal  cans.  At  the 
same 
in 
Lithuania has increased by 20% in the last decade 
indicating that Lithuania’s economic growth is not 
yet decoupled from its generation of waste. 

time,  municipal  waste  generation 

Further measures can help Lithuania improve 
its  position  in  environmental  technology.  A 
to  a  circular  economy 
successful 

transition 

33 

2.72%2.69%2.77%2.72%0.95%1.05%1.12%1.15%1.72%1.73%1.75%1.71%0.94%0.94%0.96%0.97%0.0%0.5%1.0%1.5%2.0%2.5%3.0%2015201620172018Persons employed in the circular economy, LT (% of total employment)Value added at factor cost, LT (% of GDP )Persons employed in the circular economy, EU27 (% of total employment)Value added at factor cost, EU27 (% of GDP ) 
 
 
   
 
 
 
 
 
 
 
 
 
 
Table A7.1: Key indicators  for resource efficiency and productivity - Lithuania 

Source: Eurostat 

34 

SUB-POLICY AREA201520162017201820192020EU27 CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)1.41.41.31.41.41.32.22020Material Intensity (kg/EUR)0.70.70.80.70.70.80.42020Circular Material Use Rate (%)4.14.64.54.33.94.412.82020Material footprint (Tones/capita)16.818.020.220.220.9-14.62019Waste Waste generation (kg/capita, total waste)-2327-2527--52342018Landfilling (% of total waste treated)-56.0-56.4--38.52018Recycling rate (% of municipal waste)33.148.048.152.549.745.147.82020Hazardous waste (% of municipal waste)-2.6-2.7--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)2.22.32.42.42.7-2.32019Private investment in circular economy (% of GDP)0.10.10.20.2--0.12018Key indicators - LithuaniaLatest year EU 27 
 
   
 
ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points (37).  This 
Annex describes Lithuania’s DESI performance.  

integration  of  digital 

provision  of  digital  services  for  the  public,  its 
performance is slightly lower, although still above 
the EU average. 

Lithuania  has  dedicated  31.5%  of  its  Recovery 
and Resilience Plan to measures supporting the 
digital  transition.  Over  half  of  these  funds  are 
dedicated 
services  and 
infrastructure.  

to  digital 

public 

The  lack  of  information  and  communication 
technology  (ICT)  specialists  remains  a  key 
challenge  for  Lithuania.  In  the  DESI  dimension 
on  human  capital,  the  country  also  scores  below 
the  EU  average  for  the  proportion  of  people  with 
basic and above basic digital skills (23% compared 
to  26%  for  the  EU).    It  does  have  a  higher-than-
average  percentage  of  female  ICT  specialists,  but 
the scarcity of ICT specialists overall remains a key 
challenge. 

still 
broader 

improve  on 
The 
could 
country 
connectivity,  where 
network 
coverage  could  enable  wider  use  of  digital 
technologies.  Very  high 
capacity  network 
coverage has increased slightly. In rural areas, fast 
broadband  (NGA)  coverage  recently 
increased 
considerably to 51.8%, but still remains well below 
the EU average of 67.5%. In addition, assignment 
of  5G  spectrum  is  low  (5%  compared  to  the  EU 
average of 56%) (38). 

Lithuania’s  performance  on 
integrating 
digital  technology  is  mixed;  the  uptake  of 
advanced technologies in SMEs remains a key 
challenge. The share of small and medium-sized 
enterprises  with  at  least  basic  digital  skills  is 
slightly above the EU average. However, the use of 
advanced  technologies  like  artificial  intelligence, 
big data and cloud is less widespread.  

In digital public services, Lithuania performs 
well.  It  is  most  notable  in  the  take-up  of  digital 
public  services  for  businesses,  where  it  performs 
the 
comfortably  above  the  EU  average. 

In 

(37)  2030 Digital Compass: the European Way for the Digital 

Decade Communication, COM (2021) 118 final 

(38)  Source: Communications Committee (COCOM) based on 

iDATE 

35 

 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A8.1: Key Digital Economy and Society Index Indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities. 
Source: Digital Economy and Society Index 

36 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA49%54%79%% individuals202120212021ICT specialists3.1%3.3%3.8%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists24%24%24%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage61%67%78%70%100%% households201920202021202120215G coverage (*)NA0%33%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA57%55%86%% SMEs202120212021Big data14%11%11%14%31%% enterprises20182020202020202020CloudNANA28%34%69%% enterprises202120212021Artificial IntelligenceNANA4%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA8275100Score (0 to 100)202120212021Digital public services for businessesNANA9382100Score (0 to 100)202120212021Lithuania 
 
  
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  annex  provides  a  general  overview  on 
the performance of Lithuania’s research and 
innovation  system.  According  to  the  2021 
edition of the European Innovation  Scoreboard (39) 
Lithuania is a moderate innovator with one of the 
highest improvements in performance since 2014. 
R&D  intensity  in  Lithuania  was  1.16%  of  GDP  in 
2020,  just  half  of  the  EU  average  and  far  below 
its 1.9 % of GDP target.  

The  fragmented  research  system,  the  need 
for higher quality science and weak science-
business  links  continue  to  hinder  Lithuania’s 
R&I  performance. 
  Though  public  R&D 
investment  in  Lithuania  is  slightly  below  the  EU 
average,  the  fragmentation  of  the  investment 
results in an inability to achieve critical mass and 
raise  the  quality  of  the  science  base.  This  is 
evidenced by the share of the top 10% most cited 
scientific  publications  worldwide,  where  Lithuania 
ranks among the lowest performers in the EU. This 
weak  scientific performance  and  its  disconnection 
from the productive sector results in weak science-
business  linkages  as  illustrated  by  the  low  share 
of public-private co-publications. The recovery and 
resilience plan will introduce measures to address 
fragmentation  of  the  research  system  while 
funding,  as  well  as 
raising  public  R&D 
strengthening  the  creation  of 
joint  business-
science R&D missions.   

remains  weak 
Innovation  performance 
despite  progress  in  private  R&D  investment.  
Over  the  last  decade,  business  R&D  investment 
increased  significantly,  from  0.29%  of  GDP  in 
2015  to  0.55%  in  2020.  Yet  this  investment  has 
not  translated  into  an  increase  in  technological 
production  or  an  increase  in  employment  in  fast 
growing innovative firms.  

(39)  Break in series between 2013 and the previous years. 

Compound annual growth refers to the period 2013-2019. 

37 

 
 
 
 
 
 
 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A9.1: Key research, development and innovation indicators 

(1) Break in series between 2013 and the previous years. Compound annual growth refers to the period 2013-2019. 
Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit        
Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

38 

CompoundEUannual growthaverage2010-20R&D Intensity (GERD as % of GDP)0.781.040.940.991.1642.32Public expenditure on R&D as % of GDP0.550.760.540.560.60.90.78Business enterprise expenditure on R&D (BERD) as % of GDP0.230.290.390.430.559.11.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 2.94.64.8::6.49.9PCT patent applications per billion GDP (in PPS)0.20.70.6::11.43.5Public-private scientific co-publications as % of total publications5.65.15.96.55.4-0.49.05New graduates in science & engineering per thousand pop. aged 25-3423.318.416.815.9:-5,7[1]16.3Total public sector support for BERD as % of GDP0.0680.0830.0850.126:7.20.196R&D tax incentives: foregone revenues as % of GDP0.0130.0210.0220.026:7.80.1Share of environment-related patents in total patent applications filed under PCT (%)36.1193::-26.712.8Venture Capital (market statistics) as % of GDP0.00030.0260.0080.0080.00940.80.054Employment in fast-growing enterprises in 50% most innovative sectors4.52.12.94.1:-0.95.52020Lithuania2010201520182019Finance for innovation and Economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation  
 
 
 
 
  
 
ANNEX 10: INDUSTRY AND SINGLE MARKET  
ANNEX 10: INDUSTRY AND SINGLE MARKET  

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence over the long run. A major source 
of  productivity  for  the  EU  economy  is  a  well-
functioning single market, where fair and effective 
competition  and  a  business  friendly  environment 
are  ensured, 
in  which  small  and  medium 
enterprises  (SMEs)  can  operate  without  difficulty. 
Businesses  and  industry  rely  heavily  on  robust 
supply chains and are facing bottlenecks that bear 
a  negative  impact  on  firms’  productivity  levels, 
employment,  turnover  and  entry/exit  rates.  This 
may impact the Member States’ capacity to deliver 
on Europe’s green and digital transformation. 

Lithuania’s  labour  productivity  lags  behind 
the  EU  average  and  differs  across  regions. 
Despite  the  increase  in  the  recent  years,  the 
productivity per hour worked was 69.9% of the EU 
average  in  2020  (see  Annex  18).  The  productivity 
gap  is  linked  to  the  skills  mismatch  in  Lithuania 
(labour  shortage  affected  21%  of  firms  in  2021, 
well above the EU average of 14%) (40) and to the 
structure  of  economy,  dependent  on  low-added 
value  sectors.  In  the  short  term,  there  has  been 
some pressure on labour costs but with no obvious 
impact on cost-competitiveness. 

the 

friendly 

general, 

Lithuanian 

business 
In 
environment is favourable. In the World Bank’s 
Doing  Business  report  2020,  Lithuania  is  ranked 
11th (out of 190 countries) in 2020, which reflects 
the 
regulatory  and  administrative 
environment  towards  SMEs.  The  new  insolvency 
regime  overhauled  in  2020  is  expected  to  be 
further  strengthen  with  the  digital  tools  proposed 
in the recovery and resilience plan. The proportion 
of  public  procurement  contracts  going  to  SMEs  is 
high (41).  Despite  one  of  the  highest  business 
in  Lithuania, 
registration 
compared  with  105.6  for  the  EU),  Lithuania  has 
the 
(63.6%, 
compared  with  the  EU  average  of  80%) (42).  The 
is  hampered  by 
country’s  growth  potential 
untapped  business 
innovation  potential,  slow 
technological  upgrading  by  SMEs  and  limited 
access to banking finance. According to the survey 
on access to business finance, 40% of Lithuanian 
SMEs that applied for a bank loan were rejected or 

lowest  one-year  survival 

index  rates 

(131.2 

rate 

refused  loans  due  to  high  costs  (29%  and  11% 
respectively) in 2021, while 15% of SMEs did not 
apply for fear of rejection, the highest figure in the 
EU (43). The underlying barriers relate to the lack of 
collateral and equity capital, low financial literacy, 
the  lack  of knowledge  about  alternative  financing 
sources  and 
low-quality  financial  accounting, 
which  increases  the  risk  for  financial  institutions. 
Companies  have  insufficient  access  to  equity  and 
venture  capital,  owning  to  undeveloped  financial 
markets. There is also evidence  that tax  rules are 
limiting the growth of companies: microenterprises 
tend to avoid going beyond the revenue threshold 
under which they enjoy preferential tax treatment. 

The  global  economic  and  geopolitical 
situation affects the economy, causing trade 
and supply chain difficulties. Lithuania is more 
dependent  on  critical  raw  material  imports  than 
the EU average. Also, the total  value produced by 
imported 
the  economy  depends  more  on 
intermediate  goods  and  services  and  less  on 
domestic  sources  compared  to  the  EU  average. 
The  contraction  in  2020  was  moderate  mainly 
because of the resilient exports, as manufacturing 
companies  benefited 
foreign 
demand  and  demand  for  newly  developed  high-
value added pharmaceutical products. While public 
investment  was  driven  by  the  uptake  of  the  EU 
funds, the change in private investment relative to 
GDP was 2.5 times higher in Lithuania than in the 
EU  in  2020 (44).  This  is  partly  explained  by  the 
favourable business environment and the efficient 
foreign direct investment policy framework.  

from  stronger 

Although the economy is well integrated into 
the  single  market,  some  barriers  remain. 
Regulation is more restrictive in Lithuania than the 
EU  average  for  architects,  civil  engineers,  patent 
agents  and  tourist  guides.  Among  the professions 
analysed, restrictiveness is the highest for lawyers 
(‘advokatas’)  and  architects (45).  According  to  the 
Single  Market  Enforcement  Task  Force  Report 
2020-2021,  Lithuania  has  reached  a  preliminary 
agreement to abolish the excessive requirement to 
provide  translations  of  identity  documents  for  all 
regulated professions. 

(40)  ECFIN Consumer and business survey, 2021 

(41)  Single Market Scoreboard 2021, Public procurement,

(43)  SAFE, 2021 

Indicator 7,8 

(44)  Ameco 2020, Investment Dynamics_Net private investment 

(42)  Eurostat 2020, Business demography 

(45)  SWD(2021)185 final 

39 

 
 
                                                 
 
                                                 
 
Table A10.1: Key Single Market and Industry Indicators 

(Continued on the next page) 

40 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]56.1362.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]24.5619.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]19.317.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]11990107.3108.297.422.2%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]229989144%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]211115181540%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]2.7%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.20.20.20.210.21-5%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]49.3048.9048.5048.202%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]6.68.47.96.9-4.3%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]1.50.50.60.6150%0.4%Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.741.731.561.551.599%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])3   1200%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]47.645%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageOn averageAbove averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageOn averageOn averageOn averageSINGLE MARKETCompliance - cooperation EC and MSInvestment dynamicsHEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependencies 
 
 
  
 
Table (continued) 

(*) latest available  
Source: See above in the table the respective source for each indicator in the column “description”. 

41 

Investment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]4856%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]40.878.1107.3139.6-70.8%70.1 (2020)Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]131.2123.4116111.70.175105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]52.852.255n.a.n.a.-4%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.690.560.550.6210.9%0.56 (2020)EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.30.130.130.14112.2%0.18 (2020)% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]39.82122.124.424.164.8%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]89735230196.7%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]9486837821%70.8%Public procurement BUSINESS ENVIRONMENT - SMEsBusiness demographyAccess to finance 
 
 
 
 
 
  
 
ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building 
resilience  for  the  sustainable  development  of  the 
EU economy.  

on 

Overall,  the  effectiveness  of  the  public 
administration  in  Lithuania  is  around  the 
EU27 (46)  average.  The  administration  performs 
well 
policymaking, 
evidence-based 
transparency  and  e-government,  with  some 
challenges still remaining with public procurement 
(graph  A11.1).  These  relate  to  persistent  issues 
with  cooperative  procurement,  a  high  share  of 
single  bidders  and  no  calls  for  bids,  and  over-
reliance on price as an award criterion. 

Graph A11.1: Performance on the single market 
public procurement indicator 

The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator.  
Source: Single market scoreboard 2020 data. 

human 

resources 

The  Lithuanian  recovery  and  resilience  plan 
aims  to  tackle  some  key  challenges  relating 
to  public  administration  effectiveness,  in 
particular 
and 
digitalisation.  Specifically,  it  contains  plans  for 
improving  the  way  public authorities interact  with 
businesses  and  individuals  through  better  public 
digital 
openness. 
Furthermore,  it  aims  to  make  its  public  sector 
more  efficient  by  reforming  and  investing  in 
human  resource  management  for  public  services 

governance 

data 

and 

(46)  Worldwide Governance Indicators, 2020. 

improving  competencies  for  civil  service 

and 
managers.  

Lithuania  is  a  relatively  good  performer  on 
e-government  indicators,  scoring  83.4  in  2021 
and  above  the  EU  average  of  70.9.  The  share  of 
individuals  who  interact  with  public  authorities 
online  is  70%,  roughly  equal  to  the  EU's  average 
of  70.8%.  This  share  has been  steadily improving 
over the past four years.  

Lithuania performs above the EU average on 
evidence-based  policymaking.  While  it  scores 
impact  assessments  and 
well  on  regulatory 
stakeholder 
it 
underperforms  on  ex  post  evaluation  indicators 
(0.25 compared to the EU average of 0.29). 

consultation 

indicators, 

civil, 

the  duration  of 

The  justice  system  performs  efficiently.  In 
2020, 
commercial, 
administrative  and  other  cases  at  first  instance 
was comparatively low at 68 days. The number of 
pending  cases  also  remains  comparatively  low. 
The  overall  quality  of  the  justice  system  is  good. 
Lithuania’s  procedural  rules  allow  the  use  of 
digital  technology  in  courts  in  civil,  commercial, 
administrative and criminal cases in a wide range 
of situations, relating to the participation of parties 
the 
using 
admissibility of evidence. Courts are well equipped 
with  electronic  communication  tools.  As  regards 
judicial  independence,  no  systemic  deficiencies 
have been reported (47). 

technology,  and 

communication 

Lithuania’s  overall  performance  in  selected 
human  resource  management  indicators  is 
above  the  EU  average.  At  77.2%,  the  share  of 
public  servants  with  tertiary  education  in  2021  is 
far above the EU average of 55.3%, while its adult 
learning rate is on par with the EU average. Gender 
parity in senior civil service positions is among the 
best in the EU-27 countries. 

(47)  For more detailed analysis of the performance of the justice 
system in Lithuania, see the 2022 EU Justice Scoreboard 
(forthcoming) and the country chapter for Lithuania of the 
Commission’s 2022 Rule of Law Report (forthcoming) 

42 

 
 
 
                                                 
 
                                                 
 
Table A11.1: Public administration indicators – Lithuania 

(1) High values stand for good performance barring indicators # 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions.  

Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12). 

43 

LT20172018201920202021EU27162.063.067.069.070.070.82nananana83.470.93nananana89.281.1458.255.755.755.7na56.8578.477.079.379.977.255.3613.216.116.714.217.618.671.05.60.82.44.421.8822.122.122.120.619.921.390.770.770.770.77na0.72102.32.82.82.8na1.511-1.02.33.3-2.0na-0.7122.15nana1.85na1.7E-government Public Financial Management Evidence-based policy makingIndicator (1)Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorShare of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) 2021 open data maturity indexScope Index of Fiscal InstitutionsShare of public administration employees with tertiary education, levels 5-8  (3)Index on the degree of stakeholder engagement in the development of new regulations and on ex ante and ex-post evaluation of primary and secondary lawsEducational attainment level, adult learning, gender parity and ageingOpen government and independent fiscal institutionsParticipation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3) 
 
 
 
   
 
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Lithuania’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

Though  the  labour  market  is  recovering, 
strengthening  the  effectiveness  of  active 
labour  market  policies  remains  key  to 
supporting  people  to  find  a  job,  particularly 
vulnerable  groups.  The  unemployment  rate 
(7.1%  in  2021)  remains  higher  than  before  the 
COVID-19  crisis  (6.3%  in  2019),  despite  being 
lower  than  in  2020  (8.5%).  The  unemployment 
rate  for  low-skilled  workers  remains  among  the 
highest  in  the  EU  despite  decreasing  from  22.8% 
in  2020  to  16.6%  in  2021.  To  address  these 
issues,  Lithuania’s  recovery  and  resilience  plan 
(RRP)  features  reform  of  the  Public  Employment 
Service,  investment  in  entrepreneurship  support 
and  up-  and  reskilling  for  high-value-added 
competences  related  to  the  green  and  digital 
transitions.  The  rate  of  young  people  neither  in 
employment  nor  in  education  or  training  (NEETs) 
increased  considerably  to  13%  in  2020,  but 
declined  to  12.7%  in  2021  (and  is  below  the  EU 
average of 13.2%).  After spiking during the crisis, 
youth  unemployment  dropped  to  14.3%  in  2021, 
below the EU average of 16.6% but above the pre-
crisis levels (11.9% in 2019). To address this, the 
focus  on 
EU 
cohesion  policy 
individualised  active 
policy 
measures for vulnerable groups, including the low-
skilled,  long-term  unemployed,  NEETs,  persons 
with  disabilities  and  other  groups  facing  the 
biggest  barriers  to  enter  into  the  labour  market. 
Social dialogue remains among the weakest in the 
EU,  with  only  7.9%  of  the  workforce  covered  by 
collective  agreements  and  only  7.4%  by  trade 
unions  in  2019  (OECD),  with  downward  trends 
observed.  

funds  will 
labour  market 

Table A12.1: Social Scoreboard for Lithuania 

Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: Eurostat 

There  is  scope  for  improving  the  labour 
market  relevance  of  education  and  training. 
Of  the  companies  surveyed,  80%  reported  a  lack 
of  staff  with  appropriate  skills  as  an  obstacle  to 
investment (compared to the EU average of 79%; 
EIB  2021).  Insufficient  vocational  guidance  for 
young  people  exacerbates  skills  mismatches.  The 
adult learning participation rate over the past four 
weeks  was  below  the  EU  average  in  2021  (8.5% 
compared  to  10.8%  respectively).  The  level  of 
basic  or  higher  digital  skills  lags  behind  the  EU 
average  as  well.  The  fragmented  governance  of 
the adult learning system limits the availability of 
programmes  and  often  leads  to  low  quality  and 
low  labour  market  relevance.  Strengthening  the 

44 

5.349.012.71.46.177.47.12.6143.424.523.129.422.72.716.21.7Critical situationTo watchWeak but improvingGood but to monitorOn averageSocial Scoreboard for LITHUANIAEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Individuals' level of digital skills (% of population 16-74) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20)  (2020)Dynamic labour markets and fair working conditionsEmployment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Social protection and inclusionAt risk of poverty or social exclusion (in %) (2020)At risk of poverty or social exclusion for children (in %) (2020)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) (2020)Disability employment gap (ratio) (2020)Housing cost overburden (% of population) (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Better than averageBest performers 
 
 
 
 
   
 
 
 
and 

45.5% 

(51.4%  of  the  poverty  threshold  or  39.8%  of  the 
income  of  a  low-wage  earner  (EU  averages  are 
58.9% 
respectively). 
Despite relatively low  unmet  needs  for  medical 
care, there are challenges in access to healthcare 
outside  major  cities  and  out-of-pocket  payments 
remain very high. Access to social housing remains 
limited,  as  funding  for  social  housing  is  low  in 
Lithuania  (0.1%  of  GDP,  compared  to  an  EU 
average  of  0.4%  in  2019).  There  is  also  further 
scope for improvement in the monitoring, planning 
and  delivery  of  social  services.  Tackling  these 
to 
challenges 
contribute towards the 2030 EU headline target on 
poverty  reduction.  To  foster  social 
inclusion, 
Lithuania’s  RRP  envisages  a  reform  of  the  tax-
benefit  system  and  minimum  income  scheme,  as 
well  as  measures  improving  the  adequacy  of 
pensions  and  other  social  benefits,  accompanied 
by European Social  Fund Plus (ESF+) measures to 
address poverty and social exclusion of vulnerable 
groups. 

to  enabling  Lithuania 

is  key 

quality,  efficiency  and  inclusiveness  of  education 
and  training,  and  expanding  adult  learning  are 
crucial  for  the  digital  and  green  transition  and  in 
helping the EU to meet its 2030 headline target on 
adult  learning.  To  foster  adult  learning,  the  RRP 
envisages  a  one-stop-shop  model  for  lifelong 
learning  based  on  individual  learning  accounts, 
encompassing  quality  assurance  and  a  national 
human  resources  monitoring  system.  The  RRP’s 
reforms  on  vocational  guidance,  vocational  and 
higher  education  aim  at  balancing  the  supply  of 
skills  and  increasing  their  quality  to  meet  labour 
market needs. The share of children under three in 
formal childcare decreased significantly in 2020 to 
16.2%, from 26.6% in 2019, which may negatively 
impact education outcomes in the longer term (see 
Annex 13). 

While  the  share  of  people  at  risk  of  poverty  or 
social  exclusion  decreased,  it  remains  well  above 
the  EU  average,  especially  among  vulnerable 
groups.  The  at-risk-of-poverty  or  social  exclusion 
rate  is  particularly  high  for  single  parents  with 
dependent children (46.9% compared  with the EU 
average  of  42.3%  in  2020),  older  people  (40.2% 
against  the  EU  average  of  20.3%  in  2020),  and 
persons  with  disabilities  (38.7%  against  the  EU 
average  of  28.6% 
limited 
improvements  observed  over  time.  A  recent 
analysis (48)  shows  that  the  increases  in  basic 
social  allowance  (bazinė  socialinė  išmoka)  and  in 
the  single  person  benefit  to  the  elderly  and 
persons  with  disabilities  (vienišo  asmens  išmoka) 
in  January  2022  are  expected  to  reduce  the 
poverty  risk  for  families  with  children  (7%)  and 
single  individuals  older  than  65  (12%).  Income 
inequality,  although  on  a  decreasing 
trend, 
remains  among  the  highest  in  the  EU,  with  the 
income  of  the  richest  20%  of  the  population 
exceeding that of the poorest 20% by 6.14 times.  

in  2020),  with 

with 

weak, 

The  adequacy  of  the  social  safety  net, 
although  improved  in  recent  years,  remains 
government’s 
relatively 
expenditure on social protection being among 
the lowest in the EU. Government’s expenditure 
on social protection was very low (16.1% of GDP in 
2019,  compared  with  the  EU  average  of  26.9%), 
and the impact of social transfers in reducing the 
risk  of  poverty  was  decreasing  (29.4%  in  2020, 
over  2  percentage  points  less  than  in  2019).  The 
adequacy  of  minimum  income  benefits  is  low 

(48)  European Commission, Joint Research Centre, based on the 

EUROMOD model. 

45 

 
                                                 
 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Lithuania’s  education and  training  system  in 
light of the EU-level targets of the European 
Education  Area  strategic  framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training  Monitor.  Lithuania’s  education  and 
training system struggles with ensuring quality  of 
territory  and 
education  across 
effectiveness of spending.  

the  whole 

share of funding on school maintenance increased 
by 17.5%.  

Graph A13.1: The rural-urban gap in science 

The rate of children from age 3 to 6 in early 
childhood education is increasing but remains 
below  the  average.  In  2020,  the  proportion  of 
children  under  3  in  formal  childcare  dropped  by 
10.4  percentage  points  (from  26.6%  in  2019).  
Demand  for  childcare  services  is  not  being  fully 
met.  Measures 
improve 
participation and access.  

planned 

are 

to 

One  in  five  pupils  fails  to  reach  a  minimum 
proficiency level in basic skills. Socio-economic 
background  plays  a  significant  role  as  40%  of 
pupils  in  the  bottom  socio-economic  quartile  are 
underachievers  in  reading  (EU  36.4%),  compared 
with 11.2% in the top quartile (EU 9.5%). Pupils in 
rural  areas  perform  worse  than  those  in  urban 
areas.  Evidence  shows  that  rural  pupils  would 
actually  outperform  pupils  in  urban  areas  if  they 
and  their  schools  had  the  same  socio-economic 
profile  (Graph  A13.1).  Extra-curricular  activities 
that  might  mitigate  disparities  in  achievement 
related 
to  socio-economic  status  are  more 
available  in  cities  (2.51  in  the  index (49)  than  in 
rural areas (1.87). 

Results based on linear regression models on PISA 2015. 
Statistically significant coefficients are marked in a darker 
tone.  
Source: Echazarra and Radinger (2019) 

labour  market 

Improving 
relevance  of 
tertiary  programmes  is  important  to  reduce 
skills shortages. Despite Lithuania having one of 
the  highest  share  of  people  aged  25-34  with  a 
tertiary  qualification  in  the  EU,  tertiary  graduates 
tend to experience skills mismatches in the labour 
market.  Universities  tend  to  focus  on  maximising 
student  numbers  to  obtain  more  resources  rather 
than  increasing  the  scope  and  impact  of  their 
research activities. 

The  reforms  and  investments  under  the 
recovery and resilience plan will help address 
some of these long-standing challenges.   The 
plan  aims  to  consolidate  the  education  network, 
improve 
the 
competences of teachers, implement competence-
based  curricula,  modernise  vocational  education 
and  training,  promote  work-based  learning  and 
apprenticeships,  and  change  the  funding  formula 
at tertiary level. 

infrastructure 

school 

and 

learning 

Strengthening  teachers’  competences  and 
the attractiveness of the teaching profession 
remains  a  priority.  Legislation  to  determine  the 
workload of teachers is not uniformly applied and 
school  leaders  enjoy  great  autonomy  in  setting 
teacher  salaries.  According  to  the  2018  teaching 
international  survey,  43.0%  of 
and 
teachers  (compared  with  38.9%  at  EU  level) 
the  professional  development 
consider 
offered 
relevant.  While  maintenance 
spending  on  small  schools  in  rural  areas  is 
excessive,  little  is  spent  on  teacher  education. 
Between 2017 and 2019, the share of funding for 
teacher  training  decreased  by  13%  whereas  the 

that 
is  not 

(49)  Higher values in the index indicate greater number of 

creative extracurricular activities at school. (OECD, PISA 
2018).  

46 

-150-100-50050100EEFILTESDEUKBEDKBGPLATFRELIESIROLVPTCZITHUSKScore-point differenceAfter accounting for students' and schools' socio-economic statusBefore accounting for socio-economic statusStudents in ruralschoolsscore higher in scienceStudents in cityschoolsscore higher in science 
 
                                                 
  
 
Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

The 2018 EU average on PISA reading performance does not include ES; u = low reliability, : = not available; Data is not yet 
available for the remaining EU-level targets under the European Education Area strategic framework, covering underachievement 
in digital skills, exposure of vocational educational training graduates to work based learning and participation of adults in 
learning. 
Source: Eurostat (UOE, LFS); OECD (PISA) 

47 

96%87.3%91.9%89.6%201992.8%2019Reading< 15%25.1% 20.4%24.4%201822.5%2018Mathematics< 15%25.4% 22.2%25.6%201822.9%2018Science< 15%24.7% 21.1%22.2%201822.3%2018< 9 %5.5%11.0%5.3%9.7%Men6.9%12.5%6.3%11.4%Women4.0%9.4%4.2% 7.9%Cities2.2%u9.6%2.2%u8.7%Rural areas8.3%12.2%8.2%10.0%Native5.5%10.0%5.3%8.5%EU-born:u20.7%:u21.4%Non EU-born:u23.4%:u21.6%45%54.8%36.5%57.5%41.2%Men45.0%31.2%48.4%35.7%Women64.9%41.8%67.9%46.8%Cities68.2%46.2%70.6%51.4%Rural areas39.6%26.9%43.6%29.6%Native54.8%37.7%57.5%42.1%EU-born:u32.7%41.5%40.7%Non EU-born55.3%u27.0%59.9% 34.7%46.7% 38.3%54.4%201938.9%201920152021IndicatorTargetLithuaniaEU27LithuaniaEU27Participation in early childhood education (age 3+)Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)TotalBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34)TotalBy genderBy degree of urbanisationBy country of birthShare of school teachers (ISCED 1-3) who are 50 years or over 
 
  
 
professionals  and  varying  quality  of  specialist 
care.  The  high  reliance  on  the  inpatient  care  with 
high 
levels  of  avoidable  hospital  admissions 
remains  a  longstanding  issue,  yet  efforts  to 
streamline and optimise hospital care did not lead 
to major shifts in hospital infrastructure. 

Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 (AWG 
reference scenario) 

ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Lithuania.  

Life  expectancy  in  Lithuania  was  the  third 
lowest in the EU and 5.3 years below the EU 
average  in  2020.    It  fell  in  2020  by  almost  17 
months  due  to  COVID-19.  As  of  17  April  2022, 
Lithuania  reported  3.26  cumulative  COVID-19 
deaths  per  1  000  inhabitants  and  496  confirmed 
cumulative COVID-19 cases per 1 000 inhabitants. 
Lithuania  reports  one  of  the  highest  levels  of 
treatable  mortality 
in  the  EU.  Cardiovascular 
diseases  remain  the  leading  cause  of  mortality 
with  mortality  rates  well  exceeding  the  EU 
average.  Cancer  mortality  is  also  above  the  EU 
average.   

Graph A14.1: Life expectancy at birth, years 

Source: European Commission/EPC (2021)  

Through  its  recovery  and  resilience  plan, 
Lithuania  plans  to  invest  EUR  257  million 
(11.6 % of the total RRP) to strengthen emergency 
care and tackle infectious diseases, develop digital 
health  infrastructure,  build  capacity  for  advanced 
medical  therapies,  create  a  competence  platform 
for  healthcare  professionals  and  a  system  to 
monitor quality of care. 

Source: Eurostat database 

Health  spending  relative  to  GDP  and  per 
capita  in  Lithuania  was  well  below  the  EU 
average  in  2019.  Only  two  thirds  of  health 
spending was publicly financed with the remaining 
third coming from out-of-pocket payments.  Public 
expenditure  on  health  is  projected  to  increase  by 
0.6  percentage  points  (pps)  of  GDP  by  2070 
(compared to 0.9 pps for the EU) (50).  

High  treatable  mortality  rates  in  Lithuania 
are  linked  to  long-standing  challenges,  such 
as  lags  in  primary  care  and  preventive  measures, 
shortages  and  uneven  distribution  of  health 

(50)  “The 2021 Ageing Report: Economic and Budgetary 

Projections for the EU Member States (2019-2070)”, 
European Commission (ECFIN) and Ageing Working Group 
(EPC). 

48 

80.580.980.981.81.380.474.674.975.876.076.575.1201520162017201820192020EULithuania6.64.20.90.602468EULithuania% of GDP20192070increase 
 
   
                                                 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A14.1: Key health indicators 

Notes: Doctors' density data refer to practising doctors in all countries except FI, EL, PT (licensed to practice) and SK 
(professionally active). Nurses' density data refer to practising nurses in all countries (imputation from year 2014 for FI) except IE, 
FR, PT, SK (professionally active) and EL (nurses working in hospitals only).  
More information: https://ec.europa.eu/health/state-health-eu/country-health-profiles_en 
Source: Eurostat Database; except: * Eurostat Database and OECD, ** ECDC. 

49 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)205.6184.9185.6181.092.1 (2017)Cancer mortality per 100 000 population280.7273.6272.7271.5252.5 (2017)Current expenditure on health, % GDP 6.66.56.57.09.9 (2019)Public share of health expenditure, % of current health expenditure66.666.167.266.479.5 (2018)Spending on prevention, % of current health expenditure 2.02.22.32.72.8 (2018)Acute care beds per 100 000 population559.2543.7530.5519.6387.4 (2019)Doctors per 1 000 population *4.54.64.64.63.8 (2018)Nurses per 1 000 population *7.77.77.87.78.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **14.314.414.013.811.914.5 (2020) 
 
 
 
   
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development 
Regional 
disparities  remain  significant  in  Lithuania  with  a 
noticeable  difference  between  the  capital  on  the 
one hand, and the rest of the country on the other 
hand. 

regions. 

across 

all 

Despite the progress made by the Lithuanian 
economy  as  a  whole,  significant  social  and 
economic  disparities  persist  across  counties 
(NUTS3  regions).  In  2019,  GDP  per  capita  in 
Vilnius  county  was  118%  of  the  EU  average,  and 
in Kaunas county 84%, while it was less than 50% 
in some of the other NUTS3 regions, bottoming at 
46% in Tauragė county.  

The differences in the economic growth rates 
of  Lithuanian  counties  also  remain  sizeable. 
The  highest  GDP  per  capita  growth  rates  were 
recorded in Tauragės, Šiauliai and Kaunas counties 
(5.3-5.4% per year between 2010 and 2019). GDP 
per capita growth in Vilnius county was also high, 
at  4.9%  per  year  during  the  same  period.  Utenos 

county,  one  of  the  least  developed,  is  the  region 
with  the  slowest  GDP  per  capita  growth,  at  1.1% 
per year. 

Labour  productivity,  while  generally  on  the 
rise,  remains  low  in  Lithuania.  It  is  highest  in 
Kaunas  county  and  Klaipėda  county  at  around 
86%  of  the  EU  average,  followed  by  the  Capital 
region, at 83% of the EU average. At the other end 
of  the  spectrum,  labour  productivity  in  Tauragė 
county is just 51% of the EU average. 

Large  regional  differences  still  exist  on 
social  indicators.  The  unemployment  rate  was 
7.1% in 2021, while in 2020 it increased to 8.5%, 
from  6.3%  in  2019.  In  cities  the  unemployment 
rate in 2020 on average was as low as 6.6%, but 
much  higher  in  towns  and  suburbs  (8.8%)  and  in 
rural areas (10.7%).  

The  percentage  of  people  at  risk  of  poverty 
and  social  exclusion  in  cities  is  lower,  at 
17.7%  than  the  EU  average  of  22.3%  in 
2020,  but  it  is  much  higher  in  towns  and 
suburbs and in rural areas where it reaches, 
28%  and  30%  respectively.  The 
level  of 
educational  attainment  has  steadily  increased  in 
the 
Lithuania  over 

time.  However,  while 

Table A15.1: Selected indicators at  regional level - Lithuania 

Lithuania country-level GDP per head and GDP reference year: 2019 
Source: Eurostat 

50 

NUTS 3 RegionGDP per head (PPS)GDP (mln of PPS)Productivity (GVA (PPS) per person employed)Real productivity growthGDP growthGDP per head growthTransport performance by carEU27=100, 20192019EU27=100, 2018Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019% Pop. within a 1h30 travel / within 120 km radius, 2018European Union10013,963,897.261001.001.571.39Lietuva8472,730.72773.043.574.8673.6Vilniaus apskritis11828,747.21831.124.594.9587.7Alytaus apskritis492,037.35543.162.073.9953.7Kauno apskritis8414,317.99864.434.115.4278.2Klaipėdos apskritis797,553.77862.802.203.3673.9Marijampolės apskritis482,015.07543.992.654.4857.9Panevėžio apskritis603,913.18734.492.914.7876.8Šiaulių apskritis624,935.99735.413.455.4352.8Tauragės apskritis461,320.37513.633.295.2868.4Telšių apskritis592,364.11611.491.773.5359.0Utenos apskritis471,832.96572.30-0.991.0658.7 
 
 
 
  
 
percentage  of  the  population  aged  25-64  with  a 
in 
tertiary  education 
Lithuanian  cities,  it  drops  to  32.8%  in  towns  and 
suburbs and to 32.0% in rural areas. 

is  as  high  as  58.5% 

Graph A15.1: Territories most affected by the 
climate transition in Lithuania 

Graph A15.3: Innovation performance in Lithuania 

Source: European Commission 

Graph A15.2: CO2 emissions from fossil fuels per 
head, 2018 

Source: European Commission  

The  Greenhouse  gas  (GHG)  emissions  per 
capita  are  below  the  EU  average.  However, 
GHG  intensity  per  value  added  produced  is 
among the highest in the EU due to the large 
energy  intensity  of  Lithuanian  economy.  The 
counties  of  Kaunas  (with  fertiliser  plant),  Šiauliai 
(with  a  cement  plant)  and  Telšiai  (with  an  oil 
refinery)  produce  the  vast  majority  of  industrial 
emissions in the country. These are the territories 
that  will  need  to  make  largest  efforts  to  achieve 
climate  neutrality,  while  reducing  negative  social 
and economic impacts. 

Source: European Commission  

There are significant disparities between the 
two  NUTS2  regions  according  to  innovation 
performance  –  the  Capital  region  is  a  strong 
innovator, while the Central and Western region is 
lagging  as  an  emerging  innovator.  The  Capital 
region  scores  significantly  better  that  the  Central 
and  Western  region 
in  business  sector  R&D 
expenditures,  tertiary  education,  and  employment 
in  knowledge-intensive  activities (51).  In  terms  of 
connectivity,  65%  of  all  households  subscribe  to 
fixed  internet  access  and  31%  have  at  least  100 
Mbps fixed broadband, both below the EU average. 
The  fast  broadband  (Next  Generation  Access) 
coverage rate for all households is 71%, although 
a  digital  divide  is  still  notable  in  rural  as  the 
coverage drops to 29.6% (52). 

The  COVID-19  pandemic  has 
strongly 
affected  health  conditions  in  Lithuania,  with 
excess  mortality  at  12.5%.  The  excess  mortality 
ranged  from  12%  in  the  Central  and  Western 
region to 16.5% in the Capital region. 

(51)  Regional Innovation Scoreboard 2021 

(52)  Digital Economy and Society Index (DESI) 2021 Lithuania 

51 

 
 
 
 
 
 
 
                                                 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

This  Annex  provides  an  overview  of  key 
developments in Lithuania’s financial sector. 
Banks  in  Lithuania  have  ample  capital  buffers  to 
support  a  strong  economic  recovery  and  they  are 
well  equipped  to  withstand  losses.  Despite  the 
higher  credit  risk,  banks  ensured  a  sustainable 
capital  adequacy  ratio  (22.6%)  as  the  majority 
recommendation  of  not 
followed 
distributing dividends. With private sector deposits 
growing  at  a  rapid  pace  and  lending  lagging 
behind,  the  loan-to-deposit  ratio  reached  an  all-
time low of 58.1% in 2021. Although an increase 
in the credit risk of some debtors has not led to a 
significant  growth  in  non-performing  loans  thus 
far,  the  share  of  loans  overdue  up  to  90  days  is 
increasing.  

the  ECB’s 

With  450%  in  2021,  liquidity  coverage  hit 
the  highest  level  across  the  EU.  Households 
and  corporate  deposits  surged  by  nearly  15%  of 
GDP in large part due to the ample liquidity in the 
global  financial  system.  As  a  result,  however, this 
liquidity  generated  costs  rather  than 
excess 
income, and had a negative impact on profitability. 
The  cost-to-income  ratio  for  banks  operating  in 
Lithuania, which historically was one of the lowest 
in the EU, increased from 48.6% to 61% in 2021. 

loan  portfolio 

Banks’ 
to  non-financial 
corporations followed an upward path again. 
In  2020,  most  companies  still  postponed  long-
term  investments  and  the  ones  affected  by 
COVID-19  measures  received  financial  support 
from  the  government,  which  stifled  demand  for 
banking loans. In 2021, by contrast, the corporate 
loans portfolio value has been steadily increasing. 
Especially loans granted to companies engaged in 
real  estate  development  activities  have  been 
buoyant.  Mortgage  credit  performed  equally 
strongly  with  an  annual  growth  of  over  10%,  one 
of the fastest in the EU. 

In the real estate market, housing prices are 
estimated  to  be  in  line  with  fundamentals. 
Moreover, lending standards are not loosening and 
continue  to  be  underpinned  by  loan-to-value  and 
debt service-to-income requirements for mortgage 
lending.  However,  the  authorities  should  stand 
ready 
policies 
proactively to preserve stability in the event of an 
overheated housing market. 

employ  macroprudential 

to 

With  a  continuously  improving  business  and 
regulatory 
Lithuania 
environment, 
experienced an  impressive  growth of  fintech 
companies.  By  the  end  of  2021,  the  number  of 
Fintech companies increased by 15% compared to 
2020  and  reached  265.  The  steady  growth  of 
Fintech sector has been achieved by implementing 
the 2021 FinTech action plan. The authorities plan 
to  further  support  Fintech  sector‘s  growth  and 
increase  its  maturity  via  2022  –  2027  Fintech 
Sector‘s  Development  Guidelines  which  will  be 
published in 2022. The authorities also continue to 
strengthen  the  AML/CFT  framework  to  minimise 
risks  linked  to  the  rapidly  growing  innovative 
fintech  solutions  and  digitalisation  of  the  entire 
financial  sector.  The  Centre  of  Excellence  in  Anti-
Money 
together 
representatives  of  both  the  public  and  private 
sectors, started its activities in May 2021. 

Laundering, 

bringing 

In  2019,  Lithuania  launched  a  project  with  the 
European  Commission  and  the  EBRD  in  the  field  of 
sustainable  finance.  At  the  end  of  2021,  the 
recommendations  on  the  Lithuanian  Strategy  and 
Action  Plan  on  sustainable  finance  were  made. 
According to the recommendations the establishment 
of Lithuania’s Green Finance Institute  is planned for 
2022.  These  actions  should  help  encourage  private 
investors  to  participate 
in  funding  sustainable 
projects along with public investors.  

leading  role 

Lithuania  has  played  a 
in 
improving  Baltic  capital  market  integration, 
in  view  of  offering  banks  and  businesses 
better  access  to  financing  and  instruments 
and  attracting  investors.  Although  important 
progress  has  been  made  so  far,  cross-border 
barriers  such  as  differing  insolvency  proceedings 
and 
further 
the  debt-equity  bias  hamper 
development of a truly pan-Baltic capital market. 

52 

 
 
 
 
 
Table A16.1: Financial soundness indicators 

(1) Last data: Q3 2021. 
Source: ECB, Eurostat, Refinitiv. 

53 

20172018201920202021Total assets of the banking sector (% of GDP)67.566.165.980.081.8Share (total assets) of the five largest bank (%)90.190.990.491.8-Share (total assets) of domestic credit institutions (%)18.48.99.59.713.0Financial soundness indicators:1- non-performing loans (% of total loans)3.22.61.72.21.5- capital adequacy ratio (%)19.118.619.921.922.6- return on equity (%)9.112.314.510.010.4NFC credit growth (year-on-year % change)5.45.1-0.7-14.011.2HH credit growth (year-on-year % change)7.68.67.16.110.4Cost-to-income ratio (%)148.944.947.048.661.0Loan-to-deposit ratio (%)178.879.577.263.358.1Central bank liquidity as % of liabilities1.20.70.20.54.2Private sector debt (% of GDP)56.256.155.354.7-Long-term interest rate spread versus Bund (basis points)-0.8-8.756.373.353.3Market funding ratio (%)18.021.722.336.7-Green bond issuance (bn EUR)0.30.4--- 
 
   
 
for  various  earnings  levels,  including  for  second 
earners  (see  Graph  A17.1).  The  ability  of  the  tax 
and  benefits  system  to  reduce  income  inequality 
(as  measured  by  the  Gini  coefficient)  increased 
from below the EU average to above it in 2020. 

tax 

improve 

Lithuania  faces  significant  challenges  with  tax 
compliance,  but  is  taking  action  to  digitalise  tax 
administration  and 
collection. 
Outstanding tax arrears have declined slightly by 1 
percentage point to 4.8% of total net revenue. This 
is significantly below the EU27 average of 31.8%, 
though  that  average  is  inflated  by  very  large 
values  in  a  few  Member  States.  The  VAT  gap  (an 
indicator of the effectiveness of VAT enforcement 
and  compliance)  is  very  large  in  Lithuania  at 
21.4%,  more  than  double  the  EU-wide  gap  of 
10.5%,  although  it  did  decrease  significantly  in 
2019. The Lithuanian recovery and resilience plan 
contains  measures  to  enhance  tax  administration 
by  improving  data  analytics,  developing  IT  tools, 
developing  staff  competences  and  limiting  cash 
transactions  to  reduce  the  size  of  the  shadow 
economy.  Government 
revenue  administration 
activities  are  distributed  over  a  number  of 
institutions,  which  leads  to  inefficiencies  in  the 
system.  Finally,  average  forward-looking  effective 
corporate  income  tax  rates  were  significantly 
below the EU average in 2020. 

ANNEX 17: TAXATION 
ANNEX 17: TAXATION 

This  Annex  provides  an 
indicator-based 
overview of Lithuania’s tax system. It includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax that Lithuania derives most revenue from, the 
tax  burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance  and  on  the  risks  of  aggressive  tax 
planning activity. 

information  on 

of 

Lithuania’s  tax  revenues  are  low  in  relation 
to GDP. Total tax revenue amounted to 30.8% of 
GDP  in  2020,  well  below  the  40.1%  EU  average. 
Lower  revenue  from  labour  and  capital  taxes 
explains  much 
difference,  while 
consumption  taxes  generated  a  relatively  high 
revenue  (11.4%  of  GDP  in  Lithuania  in  2020 
compared  to  the  EU  average  of  10.8%).  Revenue 
from environmental  taxes is somewhat below the 
EU average while revenue from recurrent property 
taxes  is  very  low  (0.3%  of  GDP  compared  to  the 
EU average of 1.2%). 

the 

Reforms  have  improved  work  incentives  and 
made  the  tax  system  more  progressive.  A 
series  of  tax  reforms  making  income  tax  more 
progressive  have  reduced  the  total  tax  burden  on 
low-wage earners. In particular, the tax wedge for 
workers  earning  50%  of  the  average  wage 
reduced  from  36.9%  in  2010  to  31.1%  in  2021, 
now  below  the  EU  average.  (The  tax  wedge  is  a 
measure of the difference between the wage cost 
for employers and the net wage of employees.) In 
2020,  the  tax  wedge  was  below  the  EU  average 

Table A17.1: Taxation indicators 

(1) Forward-looking effective tax rate (OECD)  
(*) EU-27 simple average as there is no aggregated EU-27 value 
Source: European Commission and OECD 

54 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)28.330.030.330.837.940.139.940.1Labour taxes (as % of GDP)14.115.415.415.920.020.720.721.5Consumption taxes (as % of GDP)11.211.311.311.410.811.111.110.8Capital taxes (as % of GDP)2.93.43.53.57.18.28.17.9Total property taxes (as % of GDP)0.70.30.30.31.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.40.30.30.31.11.21.21.2Environmental taxes as % of GDP1.82.01.91.92.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)36.933.531.829.931.133.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)40.640.737.737.137.641.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)13.713.713.719.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)6.25.35.811.68.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)5.84.831.931.8VAT Gap (% of VTTL)24.421.411.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)2.32.11.810.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)2.511.725.947.846.236.7Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity RiskLithuaniaEU-27 
 
 
 
   
 
Graph A17.1: Tax-wedge indicators 

The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: sum 
of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer). 

(1) The second earner average tax wedge measures how much extra personal income tax (PIT) plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en  
(*) EU-27 simple average as there is no aggregated EU-27 value. 

Source: European Commission 

55 

31.134.437.640.234.4At 50% of Average Wage (Singleperson)At 67% of Average Wage (Singleperson)At 100% of Average Wage (Singleperson)At 167% of Average Wage (Singleperson)For second earner at 67% of AverageWage (Two earner couple, 1st earner100% of AW) (1)Tax wedge 2021 (%)LTEU-27 (*) 
   
 
 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A18.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares 
(2) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 

Source: Eurostat and ECB as of 2022-05-02, where available; European Commission for forecast figures (Spring forecast 2022) 

56 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)8.2-0.43.34.6-0.15.01.72.6Potential growth (y-o-y)6.21.72.34.44.24.62.83.3Private consumption (y-o-y)11.0-2.23.93.1-2.17.33.93.1Public consumption (y-o-y)2.9-0.70.2-0.3-0.40.50.1-0.1Gross fixed capital formation (y-o-y)17.2-6.86.86.6-1.87.02.74.5Exports of goods and services (y-o-y)10.67.35.49.90.415.9-2.13.1Imports of goods and services (y-o-y) 15.72.15.76.1-4.418.7-0.93.6Contribution to GDP growth:Domestic demand (y-o-y)11.8-3.53.83.2-1.75.92.92.9Inventories (y-o-y)0.1-0.1-0.3-1.7-1.9-0.6-0.10.0Net exports (y-o-y)-3.72.8-0.23.03.5-0.3-1.1-0.4Contribution to potential GDP growth:Total Labour (hours) (y-o-y)-0.1-0.70.20.50.20.9-0.7-0.1Capital accumulation (y-o-y)2.71.11.31.81.51.61.51.6Total factor productivity (y-o-y)3.61.30.82.12.42.11.91.9Output gap4.6-4.31.23.6-0.7-0.3-1.4-2.1Unemployment rate7.313.28.86.38.57.17.27.2GDP deflator (y-o-y)6.23.31.92.71.56.57.43.0Harmonised index of consumer prices (HICP, y-o-y)3.34.71.32.21.14.612.53.0Nominal compensation per employee (y-o-y)15.22.66.610.67.311.48.76.2Labour productivity (real, hours worked, y-o-y)6.12.52.13.95.92.21.52.3Unit labour costs (ULC, whole economy, y-o-y)6.80.64.56.35.77.37.13.7Real unit labour costs (y-o-y)0.6-2.72.53.64.20.7-0.30.7Real effective exchange rate (ULC, y-o-y)4.6-1.63.53.1....Real effective exchange rate (HICP, y-o-y)0.11.11.8-0.73.32.1..Net savings rate of households (net saving as percentage of net disposable income)-0.90.1-3.0-0.29.0...Private credit flow, consolidated (% of GDP)16.6-1.32.62.60.3...Private sector debt, consolidated (% of GDP)56.972.155.855.354.7...of which household debt, consolidated (% of GDP)17.428.022.323.024.3...of which non-financial corporate debt, consolidated (% of GDP)39.444.033.532.330.4...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)0.711.94.91.61.3...Corporations, net lending (+) or net borrowing (-) (% of GDP)-8.06.16.06.310.63.76.03.5Corporations, gross operating surplus (% of GDP)33.435.635.232.131.730.231.229.1Households, net lending (+) or net borrowing (-) (% of GDP)-0.30.1-3.1-1.65.70.9-1.6-1.9Deflated house price index (y-o-y)18.1-9.94.34.66.4...Residential investment (% of GDP)2.52.52.73.03.23.0..Current account balance (% of GDP), balance of payments-10.3-3.20.43.57.31.4-2.3-2.6Trade balance (% of GDP), balance of payments-9.4-3.51.25.39.34.2..Terms of trade of goods and services (y-o-y)1.8-0.30.61.01.6-5.6-3.50.1Capital account balance (% of GDP)1.33.32.21.71.71.5..Net international investment position (% of GDP)-47.0-56.5-41.9-24.0-15.8-7.2..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)-15.4-25.6-11.85.115.221.9..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)51.271.669.360.665.467.8..Export performance vs. advanced countries (% change over 5 years)56.037.58.314.439.9...Export market share, goods and services (y-o-y)5.14.41.66.59.45.4-6.5-1.1Net FDI flows (% of GDP)-3.9-1.1-0.9-2.3-1.1-2.1..General government balance (% of GDP)-0.7-6.2-0.40.5-7.3-1.0-4.6-2.3Structural budget balance (% of GDP)..-0.9-1.0-7.0-0.9-4.0-1.5General government gross debt (% of GDP)17.431.139.035.946.644.342.743.1forecast 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks  for  Lithuania  over  the  short,  medium 
and  long  term.  It  follows  the  same  multi-
dimensional  approach  as 
the  2021  Fiscal 
Sustainability Report,  updated  on the basis of the 
Commission 2022 spring forecast. 

permanently  weaker  than  in  the  baseline.  The 
‘adverse interest-growth rate’ scenario assumes a 
less  favourable  snowball  effect  than 
in  the 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2 000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
indicators  and  their  main 
sustainability 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 

Table A19.1: Debt sustainability analysis for Lithuania 

Source: European Commission. 

57 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)35.946.644.342.743.141.840.639.539.839.940.340.941.742.7Change in debt2.210.7-2.3-1.60.3-1.3-1.2-1.20.30.10.30.60.81.0of whichPrimary deficit-1.36.60.64.22.01.31.10.91.51.61.81.92.02.1Snowball effect-1.40.2-4.5-3.4-2.0-2.6-2.2-2.0-1.2-1.5-1.4-1.3-1.2-1.1Stock-flow adjustment5.03.91.7-2.40.30.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)6.115.46.15.66.05.04.74.55.15.45.65.96.26.4S1S2Overall index (pps. of GDP)-0.62.5of whichInitial budgetary position-0.11.4Debt requirement-1.3Ageing costs0.81.2of whichPensions0.40.0Health care0.20.5Long-term care0.20.6Others0.10.0                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators15202530354045505560652019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p9015253545556520192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
  
 
change 

in  ageing-related 

projected 
public 
expenditure  such  as  pensions,  health  care  and 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
fiscal 
classification 
(Table A19.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

illustrated  by  alternative  scenarios  and  stochastic 
simulations, confirms this risk assessment (Tables 
A19.1 and A19.2). Moreover, the sustainability gap 
indicator S1 signals that no additional fiscal effort 
is needed to reach a debt ratio of 60% of GDP in 
15  years’  time  (Table 2).  Overall,  the  low  risk 
reflects  the  modest  debt  ratio,  despite  the 
budgetary pressure stemming from ageing costs. 

Long-term  risks  to  fiscal  sustainability  are 
medium.  Over  the  long  term,  the  sustainability 
gap  indicator  S2  (at  2.5  pps.  of  GDP)  points  to 
medium risks, compared to low risks for the DSA, 
leading to the overall medium risk assessment The 
S2 indicator suggests that stabilising debt over the 
long  term  would  require  addressing  budgetary 
from 
pressures, 
population  ageing,  notably  from  long-term  care 
and health care expenditure (Table 2). 

stemming 

including 

those 

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table A19.2).  

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  low.  Both  elements  of  the  Commission’s 
medium-term  analysis  lead  to  this  conclusion. 
First,  the  debt  sustainability  analysis  (DSA)  shows 
that,  in  the  period  to  2032,  government  debt 
would remain close to the current level of around 
43%  of  GDP  (Table 1).  The  limited  sensitivity  of 
the  debt  path  to  possible  shocks  to  fiscal, 
financial  variables,  as 
macroeconomic  and 

Table A19.2: Heat map of fiscal sustainability risks for Lithuania 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty.  
Source: European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

58 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWLOWLOWLOWLOWDebt level (2032), % GDP4344444643Debt peak year20212021202120322021Fiscal consolidation space56%59%60%56%56%Probability of debt ratio exceeding in 2026 its 2021 level37%Difference between 90th and 10th percentiles (pps. GDP)29MEDIUMMEDIUMDeterministic scenariosStochastic projectionsLOWLOWLOWLOWShort termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)Overall