COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Lithuania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Lithuania
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Lithuania, budget policy, economic policy, economic recovery, economic reform, employment policy, organisation of health care, professional qualifications, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  SWD(2024) 615 final  COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Lithuania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Lithuania {COM(2024) 615 final} - {SWD(2024) 600 final}  
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Economic recovery remains slow, 
but labour market resilience and 
lower inflation could support a 
gradual recovery 

due  to  the  tight  labour  market  and  minimum 
and public wage increases. 

Graph 1.1: Selected labour market indicators 

economic 

recovery  was 
In  2023, 
interrupted  due  to  subdued  consumer 
spending,  weak  exports  and 
tight 
financing  conditions. (1)  After  a  negative 
first  quarter,  real  GDP  rebounded  strongly, 
before  stagnating  in  the  second  half  of  the 
year, leading to an overall contraction of 0.3% 
in 2023. Exports of goods, in particular in the 
chemical,  plastic,  wood  and  furniture  sectors, 
continued  to  be  affected  by  sluggish  global 
demand, while exports in services recovered. In 
early  2024,  consumer  confidence  started  to 
to 
improve,  although  uncertainty 
Russia’s  war  of  aggression  against  Ukraine 
could  still  weigh  on  consumer  spending.  GDP 
growth  is  expected  to  be  2%  in  2024  and 
2.9%  in  2025,  mainly  driven  by  consumer 
spending, and continued investments. 

linked 

After  an  inflation  spike  in  2022,  price 
growth  slowed  significantly  in  2023  and 
is  expected  to  remain  just  below  the  2% 
target. After reaching a record high of 18.9% 
in 2022, HICP (Harmonised Index of Consumer 
Prices)  inflation  moderated  to  8.7%  in  2023, 
as  growth  in  energy  prices  turned  negative  in 
the  second  half  of  2023,  while  the  growth  in 
prices  of  food  and  manufacturing  products 
continued to decrease. Over 2024-2025, HICP 
inflation  is  forecast  to  fall  substantially  to 
1.9%  and  1.8%  in  2024  and  2025.  Wage 
growth  is  expected  to  slow  from  double-digit 
growth  in  2023,  but  should  remain  elevated 

(1)  The cut-off date for the data used to prepare the 27 

Country Reports was 15 May 2024. 

2 

Source: Eurostat, Labour Force Survey 

The  labour  market  in  Lithuania  remained 
resilient  despite  economic 
relatively 
challenges in 2023. The employment rate in 
2023 remained high (78.5%) compared to the 
EU average of 75.3%. The influx of more than 
52 000  working  age migrants  fleeing  the  war 
in Ukraine since February 2022 contributed to 
the increase in employment, as more than half 
of  them  were  employed  by  Q3-2023  (see 
Annex  14).  Total  employment  growth 
is 
expected to decelerate in 2024 before turning 
negative  in  2025  due  to  demographic  trends 
and  the  likely  only  limited  new  migration 
inflows.  The  unemployment  rate  in  2023 
increased  to  6.9%  (6.0%  in  2022)  and  is 
expected  to increase  slightly  to  7.0% in  2024 
and back to 6.9% by 2025. 

The  labour  supply  continues  to  fall  short 
skills 
demand, 
of 

growing 

and 

747678808284860510152025303540200920102011201220132014201520162017201820192020202120222023%%Activity 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) 
 
 
  
mismatch (2)  remains  an  obstacle  to 
competitiveness  and  potential  growth. 
Labour  market  tightness (3)  was  close  to  its 
highest  level  in  15  years (4)  and  is  still  rising. 
The  job  vacancy  rate  has  been  increasing 
steadily  (from  1.45%  in  2019  to  2%  in  Q4-
2023),  but  is  still  below  the  EU  average  for 
almost  all  sectors  This  points 
to  skills 
mismatches and skills shortages, which are of 
considerable  concern 
to  Lithuanian  firms 
according to the 2023 EIB Investment Survey, 
especially  in  the  construction  sector  (see 
Annex 12).  

Increased spending needs for 
public services affect public 
finances  

Lithuania’s  general  government  debt  has 
remained  relatively  low,  but  the  deficit, 
while  still  below  the  3%  threshold,  is 
increasing.  The  debt-to-GDP  ratio  is  set  to 
slightly  increase  from  38.2%  of  GDP  in  2023 
to 38.9% in 2024 and to 41.6% in 2025 (see 
Annex 20). The increase is mainly driven by a 
rising  deficit,  which  increased  from  0.6%  of 
GDP in 2022 to 0.8% in 2023 and is projected 
to  continue  to  rise  to  1.8%  in  2024  and  to 
2.2%  in  2025.  The  deficit  is  gradually  being 
pushed  up  mainly  by  increases  in  pensions, 
social benefits and public sector wages, which 
have not been matched by tax increases. 

Spending needs will continue to weigh on 
public  finances  in  the  medium  term. 
General  government  expenditure  continued  to 
increase from 36.3% of GDP in 2022 to 38.2% 
in  2023  and  is  projected  to  rise  to  40.3%  in 
2024 and to 40.7% in 2025. Defence spending 
was  increased  following  Russia’s  full-scale 
Lithuanian 
invasion 

Ukraine 

and 

of 

(2)  Skills mismatch is a discrepancy between the skills that 
are sought by employers and the skills that individuals 
have. 

(3)  The level of labour market tightness is measured by the 

ratio of job vacancies to the unemployed. 

(4)  Central Bank of Lithuania (2023). Lithuanian Economic 

Review, September 2023. 

3 

government  is  discussing  plans  to  rise  it 
further (from 2.8% of GDP in 2024 to 3.1% in 
2025,  and  to  remain  above  3.0%  in  the 
medium  to  long  term).  High  inflation  in  2022 
and  2023  prompted  Lithuania  to  adopt  a 
package  of  permanent  expenditure  measures 
to  help  protect  households’  disposable 
incomes (increases in pensions, social benefits 
and public sector wages). While much needed, 
the  measures  will  continue  to  affect  public 
finances in the coming years as most of these 
spending  categories  are  indexed  each  year. 
Furthermore,  the  value  of  the  minimum 
consumption 
significantly 
basket  was 
increased  for  2024.  Since  social  benefits  are 
mostly  indexed  to  this  basket,  as  a  result 
social spending is projected to further increase 
by  EUR  450  million  in  2025.  In  addition, 
pension indexation was reformed in 2022. This 
will lead to higher pension adequacy, but also 
higher public expenditure. 

To  reconcile  spending  pressures  with 
continued  sound  public finances  over  the 
medium  term,  new  revenue  sources  need 
to  be  found.  In  May  2023,  Parliament 
adopted a ‘temporary solidarity contribution’ in 
the form of a windfall tax rate of 60% levied 
on  banks’  net  interest  income  that  exceeds 
their four-year average net interest income by 
50%  or  more. 
In  2023,  the  banks’  net 
operating  profit  was  more  than  twice  higher 
than  in  2022  and  the  corresponding  tax  levy 
raised  EUR  250  million (5).  While  higher 
defence  spending  is  partly  covered  by  the 
revenues  from  this  temporary  windfall  tax  on 
banks’ profits for 2023 and 2024, Lithuania’s 
budget  deficit  is  projected  to  keep  increasing 
in 
the  years  beyond  2024  unless  new 
financing  sources  are  found  to  cover  defence 
spending  as  well  as  its  other  medium-term 
spending pressures. 

In 2022, the positive trend of decreasing 
poverty  and  income  inequality  seen  in 
Income 
2017-2021  was 

reversed. 

(5)  Central Bank of Lithuania, 1 March 2024, ‘Banks’ 

contribution to defence is more than a quarter of a 
billion euros’  

 
 
 
inequality  in  Lithuania  increased  in  2022 (6) 
and  remains  the  third  highest  in  the  EU,  with 
the 
income  of  the  richest  20%  of  the 
population  over  six  times  higher  than  that  of 
the poorest 20% (see Annex 14). The situation 
is  deemed  ‘critical’  in  the  Social  Scoreboard 
(see  Annex  14).  The  at-risk-of-poverty  rate 
also  increased  by  0.9  percentage  points  (pps) 
to  20.9%  in  2022  and  remains  significantly 
above the EU  average of 16.5%. According to 
the Lithuanian statistical office data, AROP for 
the total population slightly decreased in 2023 
(by  0.3  pps).  In  particular,  the  poverty  rate 
materially  decreased  among  older  people 
(65+) and people with a disability (by 3.4 pps 
and  1.1  pps 
the 
situation remains difficult for these vulnerable 
groups.  

respectively).  However, 

Lithuania faces some challenges linked to 
its  social  protection  system.  According  to 
the  Social  Scoreboard  that  supports  the 
European Pillar of Social Rights, there is a high 
risk  of  poverty  or  social  exclusion  as  well  as 
income 
inequality.  Significant  efforts  are 
needed to tackle high poverty risks among the 
unemployed  and  older  people  as  well  as 
people  with  a  disability.  These  are  due  to low 
spending  on  social  protection,  which  leads  to 
relatively  low  coverage  and  low  adequacy  of 
unemployment  and  social  benefits  as  well  as 
pensions.  While  the  labour  market  situation 
has  improved,  recent  policy  interventions  to 
address  the  disability  employment  gap  may 
take  some  time  to  show  up  in  the  data. 
Lithuania  faces  challenges  related  to  the  low 
participation of children below 3 years of age 
in 
recent 
improvements,  the  level  of  digital  skills  is 
below  the  EU  average,  and  the  low  rate  of 
adult  participation 
is 
in 
hindering the development of these skills (see 
Annex 14). 

childcare. 

learning 

Despite 

lifelong 

formal 

Regional  disparities  persist,  exacerbated 
by  negative  demographic  developments. 
GDP  per  capita  in  Vilnius  county  (the  capital 
region)  significantly  exceeds  the  EU  average, 
while  in  some  other  counties  it  was  only 

around  half  the  EU  average  in  2021.  Since 
2013,  Lithuania  has  experienced  one  of  the 
highest  rates  of  depopulation  in  the  EU,  with 
municipalities  far  from  the  main  economic 
centres  suffering  the  most.  For  smaller  and 
more  remote  municipalities,  it  is  becoming 
increasingly  difficult 
to  provide  quality 
healthcare,  education,  transport,  energy/water 
in  an 
supplies  and  other  public  services 
efficient  manner,  and  to  speed  up  economic 
development. 
lack 
cooperation to pool expertise and investments 
in  order  to  scale  up  and  improve efficiency  in 
the provision of public services. There is scope 
for  further  consolidation  and  concentration  of 
resources, 
between 
municipalities  and  stronger  coordination  at 
central  level,  combined  with  more  efforts  to 
ensure better public transport (see Annex 17). 

The  municipalities 

cooperation 

better 

Transitioning towards a higher 
value-added economy 

The recent productivity decline compared 
to the  EU  average  could  be  linked  to  the 
Lithuanian  economy’s  high  exposure  to 
external shocks. Lithuania has experienced a 
slight  decrease  in  relative  labour  productivity 
since  2021.  In  2023,  it  was  70%  of  average 
EU  productivity (7) 
(see  Annex  12).  This 
weakness  can  be  partially  attributed 
to 
Lithuania’s  reliance  on  its  export  sectors,  the 
biggest  of  which  are  mineral  products  and 
transport  services.  Both  are  prone  to  external 
shocks  such  as  supply  chain  disruptions  and 
energy  price 
(see  Annex  12). 
Historically,  low  prices  for  energy  and  other 
resources,  and  to  a  certain  extent  low  labour 
costs,  have  played  a  key  role  in  keeping 
Lithuania’s economy competitive. However, the 
continued  convergence  of  wages  with  the  EU 
this  model  of  price 
average 
supply 
competitiveness, 
chain 
while 
disruptions  and  energy 
shocks  present 
additional risks.  

threatens 

spikes 

(6)  Poverty and inequality statistics for the year t are 

calculated based on survey data reflecting household 
disposable income statistics with a one-year lag (t-1). 

(7)  In terms of GDP per hours worked in purchasing power 

standards (PPS). 

4 

 
 
 
Box 1:       Lithuania’s competitiveness in brief 

Lithuania’s  competitiveness  is  relatively  stable.  The  country  is  highly  integrated  into  the 
single  market,  performing  particularly  well  in  EU  trade  integration  compared  to  other  Member 
States (11). The same goes for the transposition of EU directives, with the country ranking among 
the best Member States with a transposition deficit of just 0.3% in 2023. Lithuania also has a 
relatively favourable business environment, with a low percentage of firms reporting regulation 
as  a  major  obstacle  to  investment  (13%  vs  EU  22.2%)  and  a  high  business  registration  rate 
(almost 1.5 times higher than the EU average) in 2023.  

However, competitiveness challenges remain: 

•  persistent skills mismatch and low R&D intensity, which limits the country’s innovation 

potential and advancement in productivity;  

• 

inadequate  access  to  diverse  financing  options,  particularly  for  SMEs,  which  hampers 
the ability of young and innovative firms to scale up; 

•  resource  inefficiency,  especially  at  industry  level,  and  slow  progress  towards  a 
circular  economy,  which  drives  Lithuania’s  dependence  on  volatile  raw  material  markets 
and hampers the country’s economic security. 

Lithuania’s industrial system continues to 
suffer from low resource productivity.  Its 
resource productivity is still considerably below 
the  EU  average  (1.5  vs  2.5  purchasing  power 
standards  per  kilogramme  in  2022).  This 
results  in  high  material  waste  and  points  to 
various  production 
inefficiencies,  possibly 
leading  to  increased  import  dependence  on 
materials.   

Graph 1.2: Exports of high tech as share of 
total exports 

Source: Eurostat 

The structure of Lithuania’s economy and 
hamper 
sluggish 
is 
competitiveness. 

innovation 

economy 

could 

Its 

in 

in 

value 

added 

change 

towards 

concentrated 
less  knowledge-intensive 
processing activities (8). The lack of significant 
higher-tech 
structural 
activities  is  also  shown  by  the  stagnation  of 
Lithuania’s 
high-tech 
manufacturing  as  a  share  of  total  value 
added (9).  Despite  the  growth  of  its  start-up 
ecosystem,  Lithuania’s  innovation  still  lags 
behind,  as  shown  by  the  consistently  low 
its 
number 
transformation to a more knowledge-intensive 
economy  and  increasing  the  complexity  of  its 
export  products 
the 
is  key 
competitive position of its economy. 

patents (10).  Continuing 

to  securing 

of 

(8)  SME Country Fact Sheet, 2022 

(https://ec.europa.eu/docsroom/documents/54973).  

(9)  European Commission R&I indicators. The compound 

annual growth 2010-2022 of value added in high-tech 
manufacturing as a share of total value added was -
0.6%. 

(10)  Lithuania had 28 applications per million inhabitants in 

2022 against the EU average of 151.  

(11)  The sum of average intra-EU imports and average 

intra-EU exports as a percentage of GDP in Lithuania 
was 51.7% in 2023 compared to the EU average of 
42.9%. Source: Eurostat.  

5 

024681012141618202013201420152016201720182019202020212022EELTLVEU% 
   
 
 
 
Box 2:       UN Sustainable Development Goals (SDGs) 

Lithuania is making progress on two SDGs related to competitiveness and productivity 
(SDGs 4 and 9). However, for one SDG (SDG 8) Lithuania is moving away from the SDG 
target and falling further behind the EU average. Under SDG 8 (Decent work and economic 
growth),  Lithuania  improved  its  employment  rate  from  2018  to  2023  and  surpassed  the  EU 
average,  but  faces  challenges  with  a  rise  in  the  NEET  rate  (young  people  not  in  education, 
employment  or  training)  and  a  slight  increase  in  long-term  unemployment.  Furthermore,  the 
country’s  material  footprint,  in  terms  of  tonnes  per  capita,  grew  from  2017  to  2022  and  is 
significantly  higher  than  the  EU  average.  On  SDG  9  (Industry,  innovation  and  infrastructure), 
Lithuania  saw  a  substantial  increase  in  patent  applications  per  capita  to  the  European  Patent 
Office  from  2018  to  2023,  although  these  are  still  only  one-third  of  the  EU  average.  The 
percentage of R&D personnel in the labour force also saw a notable improvement from 2017 to 
2022,  but  is  still  approximately  two-thirds  of  the  EU  average.  On  the  downside,  the  share  of 
buses and trains in  passenger transport halved from 2016 to 2021, which is less than half of 
the EU average. 

Out of the 17 indicators,  12 SDGs remain below the EU average.  Besides SDG 8 and 9 
highlighted  above,  these  relate  to  environmental  stability  (SDGs  2,  6,  7,  11,  12,  13),  fairness 
(SDGs 1, 3, 7, 5) and macroeconomic stability (SDGs 16 and 17).  

6 

 
 
IMPLEMENTATION OF KEY REFORMS AND 
INVESTMENTS USING EU INSTRUMENTS 

reinforcing 

Funding from the Recovery and Resilience 
Facility (RRF) and cohesion policy funding 
is  mutually 
Lithuania’s 
efforts  to  boost  its  competitiveness  and 
foster  sustainable  growth.  In  addition  to 
the EUR 3.8 billion of RRF funding described in 
Annex  3,  cohesion  policy  provides  Lithuania 
with EUR 6.3 billion for the 2021-2027 period. 
Support from these two instruments combined 
represents  around  14.06%  of  the  country’s 
annual  2023  GDP,  compared  to  the  EU 
average of 5.38% of GDP (see Annex 4). 

Under  the  recovery  and  resilience  plan 
(RRP),  Lithuania  has  launched  important 
policy  measures  that  are  expected  to 
improve the country’s competitiveness. In 
particular, the RRP envisages major reforms in 
the  areas  of  the  green  and  digital  transition, 
general and vocational education and training, 
lifelong  learning,  and  innovation  and  science. 
Lithuania 
is  also  undertaking  substantial 
investments  in  these  areas  as  well  as  in  the 
energy  renovation  of  buildings,  renewable 
energy and digitalisation of businesses.  

of 

implementation 

The 
Lithuania’s 
recovery and resilience plan is underway, 
however 
requires 
timely  completion 
increased efforts. Lithuania has submitted 2 
to  37 
requests,  corresponding 
payment 
milestones  and  targets 
in  the  plan  and 
resulting  in  an  overall  disbursement  of  EUR 
1.34  billion  on  16  May 
(see  Annex  3). 
Emerging delays in the implementation of the 
RRP measures, including most notably the tax 
reform,  could  put  in  jeopardy  the  timely  and 
effective implementation of the plan. 

Cohesion policy funding tackle Lithuania’s 
growth  and  competitiveness  challenges 
and  reduce  the  country’s  territorial  and 
social  disparities.  Under  the  2014-2020 
cohesion programming period, support focused 
efficiency, 
of 
on 

energy 

areas 

the 

protection, 

transport 
environmental 
infrastructure,  healthcare,  social  inclusion,  the 
competitiveness  of  SMEs, 
innovation  and 
education.  For  the  2021-2027  programming 
improve 
period,  support  aims  to  further 
renovations,  primary  healthcare, 
long-term 
care  services  and  personalised  services  for 
vulnerable  groups,  digitalisation  of  both  the 
increase  SMEs 
private  and  public  sector, 
productivity, as well as strengthen the system 
for  vocational  education  and  training,  lifelong 
learning  and  higher  education,  alongside 
scientific  capacities  to  increase  innovation.  It 
focuses  in  particular  on integrated  and  place-
based territorial development, which takes into 
account local  needs and challenges through a 
bottom-up approach.  

Unlocking investments for the 
green and digital transition 

to 

the 

improve 

framework 

Lithuania is improving the framework for 
the  sale  of  electricity,  creating  the  right 
preconditions 
green 
for 
transformation and energy independence. 
Under  the  RRP,  Lithuania  has  adopted  a  new 
legislative 
the 
institutional and legal mechanisms in order to 
promote  the  generation,  transmission  and 
consumption  of  electricity  from  renewable 
sources.  This  measure  will 
the 
Lithuanian  energy  market  by  establishing  a 
new  framework  for  the  sale  of  electricity  and 
setting  long-term  renewable  energy  targets 
for  all  sectors.  The  Technical  Support 
Instrument (12)  has  helped  the  Lithuanian 
authorities  accelerate  the  use  of  renewable 
energy  by 
the  administrative 
framework  for  permitting,  thereby  improving 

improving 

improve 

(12)  Streamlining administrative procedures for renewable 

energy permitting, TSI23LT01. 

7 

 
 
 
Child  Guarantee  Project.  Additionally,  with  the 
implementation  of the  revised  school  network 
rules  and  the  Millennium  Schools  programme 
envisaged  in  the  RRP,  Lithuania  aims  to 
address  inequality  in  access  and  improve  the 
quality  of  school  education.  This  includes 
closing  very  small  schools  and  very  small 
classes,  and  creating  school  networks 
in 
municipalities.  These  reforms  are  ambitious, 
but  the  ambition  should  remain  high  in  the 
implementation phase. The  reforms should be 
accompanied by the necessary measures, and 
consensus  should  be  built  around  them  to 
avoid 
territorial 
disparities worse.   

unintentionally  making 

Lithuania is making efforts to improve its 
vocational  education  and  training  (VET) 
system  and  has  provided  additional 
possibilities  to increase  lifelong learning. 
To  improve  the  labour  market  relevance  and 
quality  of  VET,  Lithuania  has  launched  the 
National  Platform for Progress in VET. It aims 
to represent the interests of business, industry, 
community  and  public 
the  educational 
authorities.  From  2024,  admissions 
to 
vocational  education  programmes  will  be 
regional  and  national  needs 
based  on 
forecasts,  to  ensure  alignment  between  VET 
and  labour  market's  needs.  Lithuania  is  also 
increase  the  number  of 
taking  steps  to 
in  SMEs.  To 
apprenticeships,  especially 
increase  the  number  of  adults  in  lifelong 
learning and make it easier for them to reskill 
and  upskill,  Lithuania  rolled  out  the  lifelong 
learning one-stop shop platform based on the 
principle of individual learning accounts. 

to 
for  energy  producers 
the  conditions 
establish  and 
their  electricity 
increase 
generation capacity. This will contribute to the  
development  of  renewable  energy  sources  in 
Lithuania. 

vehicles. 

Lithuania  is  taking  steps  to  decarbonise 
its  transport  sector  by  renewing 
its 
rolling  stock.  Under  the  RRP,  Lithuania  has 
adopted  a  new  legislative  framework  to  set 
the  energy  efficiency  and  environmental 
protection  requirements  for  purchasing  road 
to 
help 
transport 
transport. 
progressively  decarbonise 
Furthermore, 
and 
operationalisation  of  the  Sustainable  Mobility 
Fund, alongside the adoption of an action plan 
for  a  better  network  of  electric  vehicle 
charging points and an IT system to record the 
quantities  of  renewable  fuels,  will  help  make 
the transport sector in Lithuania greener.  

This  will 
road 
establishment 

the 

to 

of 

the 

and 

boost 

improve 

efficiency 

procedures 

undertook  measures 

Lithuania 
to 
increase the level of digitalisation of the 
public  sector.  Lithuania  has  amended  the 
rules 
the 
development  of  the  National  Data  Lake.  This 
data 
will 
management  by  reducing  the  decentralisation 
and  fragmentation  of  public  sector  data. 
Furthermore,  Lithuania  has  taken  important 
steps  to  deploy  high-capacity  networks  in 
international 
(Via 
Baltica and Rail Baltica). The country currently 
achieves more than 95% 5G coverage in urban 
international  airports  and  seaports. 
areas, 
Further  progress  has  also  been  made  on 
completing  the  ultra  high  speed  connectivity 
infrastructure  project.  It  will  help  achieve 
higher levels of digital connectivity across the 
country. 

land  transport  corridors 

Investing in people for economic 
growth and resilience  

Lithuania  is  reforming  its  school  system 
to address socio-economic and territorial 
disparities.    To  include  more  children  from 
socially  vulnerable  families 
in  pre-school 
education,  the  country  is  implementing  the 

8 

 
Box 3: 

Combined action for more impactful EU funds  

To boost economic growth and maximise the impact of EU funding, Lithuania’s 
RRP  includes  reforms  that  support  investments  under  other  EU  instruments, 
creating  important  synergies  and  complementarities  between  the  various 
funds.  For  example,  the  Lithuanian  RRP  includes  reforms  in  the  field  of  science  and 
innovation  to  support  innovative  activities,  concentrate  resources  in  areas  with  high 
growth  potential  and  promote  active  participation  in  R&I.  Lithuania  has  established  a 
single innovation agency, which provides a one-stop shop for business to apply for ESIF-
financed support to build innovation capacity, the uptake of advanced technologies and 
to  boost  SME  competitiveness.  Revised  legal  acts  make  the  innovation  support 
framework more coherent and reduce gaps and overlaps in existing support measures.  
A new smart specialisation strategy enables Lithuania to concentrate resources in areas 
with  the  highest  growth  potential.  Furthermore,  a  science  policy  agency  has  been 
reformed  into  Research  Council  of  Lithuania  with  one  of  the  main  aims  to  promote 
more active participation of Lithuanian applicants in international R&I programmes. The 
reforms  under  the  RRF  are  expected  to  increase  the  effectiveness  of  cohesion  policy 
funding. 

to 

improve 

training  social  workers.  According  to  the  new 
legislation,  a  consortium  of  organisations 
regularly  selected  via  a  tender  process  will 
provide  training,  methodological  assistance 
and community-building services. The aim is to 
increase  the  number,  quality  and  diversity  of 
training  for  social  workers,  and  with  it  the 
quality  of  social  services.  Lithuania  also 
implemented  a 
the 
reform 
integration  of  employment,  social  and  other 
services.  According  to  Public  Employment 
Service  data,  around  20-24%  of  registered 
unemployed  people  cannot  be  integrated  into 
the  labour  market  due  to  barriers  such  as 
family  member,  having 
caring 
psychological  problems  or  addictions,  not 
having  access  to  transport  services  or  having 
low financial literacy and being in debt. To help 
people facing these complex issues, the Public 
Employment  Service  was  mandated  to  offer 
them  the  special  status  of  ‘persons  getting 
ready for the labour market’, entitling them to 
personalised services and consultations and to 
participation 
employment 
in  municipal 
enhancement programmes. 

for  a 

Lithuania  is implementing  comprehensive 
reforms  to  address  the  inefficiencies  of 
the health system and improve access to 
health  services.  Strengthening  access  to 
health  services  is  of  paramount  importance 
given  that  Lithuanians’  life  expectancy  is  5 
years  lower  on  average  than  the  rest  of  the 
EU.  As  part  of  the  RRP,  Lithuania  is  therefore 
implementing reforms to improve access to an 
efficient healthcare system. The revision of the 
for  ambulance  services  has 
framework 
improved  emergency 
In 
response 
addition, several measures are being taken to 
support the digitalisation of the health system, 
addressing  administrative  barriers  that  were 
preventing  an  efficient  delivery  of  health 
services.  Furthermore,  the 
long-term  care 
model  is  being  gradually  implemented  to 
better integrate social and health services and 
support  patients  more.  The  ongoing  reforms 
are  to  be  followed  by  targeted  investments, 
for example in five centres of expertise in the 
cluster  of  infectious  diseases  and  in  the 
emergency  units  of  seven  regional  hospitals. 
This will improve the country’s ability to react 
to  an  emergency  and  deliver  higher  quality 
health services.  

times. 

Lithuania  has  implemented  measures  to 
provide  higher  quality  and  better 
targeted social and employment services. 
The  country  has  reformed  its  system  for 

9 

 
 
FURTHER PRIORITIES AHEAD 

primary 

increasing 

strengthening 

Lithuania  faces  additional  challenges 
related to improving the quality of public 
finances  and  public  services,  addressing 
inclusion  and  social  protection 
social 
issues, 
and 
resource 
preventive  care, 
productivity  while  decarbonising 
the 
economy and increasing its sustainability, 
closing  the  skills  gap  and  facilitating 
business  investment  into  R&I.  Tackling 
these challenges will help increase Lithuania’s 
long-term  competitiveness  and  ensure  the 
resilience of its economy and the well-being of 
its  people.  It  will  also  help  it  to  make  further 
progress towards achieving the SDGs.  

(6% 

in  2022).  Against 

average 
this 
background,  the  government  is  struggling  to 
attract  talent  to  work  for  the  civil  service:  in 
2023,  the  highest  vacancy  rate  among  all 
sectors  was  recorded  in  public  administration 
(4.4%) (13).  Healthcare  and  social  protection 
spending  also  decreased  by  0.7  pps  and  0.9 
pps respectively, to 5.2% and 13.5% of GDP in 
2022,  around  two-thirds  of  the  corresponding 
EU  averages.  Inadequate  financial  resources 
are an obstacle to timely and adequate access 
to healthcare and to ensuring adequate social 
protection  (see  subsections  ‘Promoting  social 
inclusion  and  protection’  and  ‘Strengthening 
primary and preventive care’). 

is 

important  that  the 

identified 
It 
challenges  are  addressed  both  at  the 
national  and  regional  level  to  reduce 
the 
regional 
administrative  and  investment  capacity  in  a 
balanced way across the country. 

disparities 

improve 

and 

Making government spending 
sufficient and sustainable to 
tackle demographic challenges 

and 

high-quality 

Government  spending  on  public  services 
and  social  protection  remains  one  of  the 
lowest  in  the  EU,  hampering  timely  and 
to  healthcare,  social 
equal  access 
public 
protection 
administration  services.  The  policy  areas 
that receive the lowest level of public funding 
compared to other Member States are general 
public  services  (such  as  public  administration, 
legislative  or  diplomatic  services),  social 
protection,  and  healthcare.  General  public 
services  are  the  most  underfunded,  and  the 
amounts  allocated  decreased  further  by  0.3 
percentage  points  (pps)  to  2.8%  of  GDP  in 
2022,  receiving  less  than  half  of  the  EU 

due 

needs 

expenditure 

The  pressure  to  increase  funding  for 
public  services 
is  expected  to  grow 
stronger  due  to  population  ageing.  The 
increasing 
to 
population  ageing  are  expected  to  increase 
fiscal  sustainability risks if Lithuania does not 
manage  to  find  sustainable  public  revenue 
sources (14) (see Annex 21). Pressure on public 
is  growing  and  demographic 
expenditure 
challenges,  which  already  have  a  visible 
negative  impact  on  the  quality  of  social 
services 
regions,  will  only 
exacerbate  this  trend.  By  2070,  Lithuania  is 
expected  to  have  one  of  the  highest  old-age 
dependency ratios in the EU,  driving up public 
pension  expenditure  by  3.2  pps  of  GDP  (in 
comparison  to  the  2022  level) (15).  Under 
current  policies,  the  balance  between  public 
pension  contributions  and  expenditure 
is 
estimated  to  deteriorate,  reaching  -2.1%  of 
GDP by  2070 (16).  The increase  would  have  to 
be  even  higher  to  address  the  issues  of  low 

remote 

in 

(13)  Lithuania’s State Data Agency. 

(14)  Under the current policy framework, medium-term and 
long-term fiscal sustainability risks are assessed as 
medium (see Annex 21). 

(15)  European Commission (2024). 2024 Ageing Report.  

(16)  European Commission (2024). 2024 Ageing Report.  

10 

 
 
 
adequacy of pensions and social benefits, and 
limited  effectiveness  and  accessibility  of 
healthcare or other public services.  

and 

capacity 

country’s 

high-quality 

to  provide 
The 
accessible 
public 
services  is  limited  by  low  tax  revenues. 
Lithuania’s  tax  revenue  as  a  percentage  of 
GDP remains among the lowest in the EU. The 
divergence  from  the  EU  average  is  mainly 
driven by low labour and capital tax  revenues 
(see  Annex  19),  the  latter  having  been  the 
fourth  lowest  in  the  EU  as  a  percentage  of 
GDP in 2022. Revenue from recurrent property 
taxes  also  remains  very  low  (see  Annex  19). 
Furthermore, 
tax 
between 
arbitrage 
employment,  self-employment  and  some 
forms of incorporated business.  

tax  system  offers 

opportunities, 

e.g. 

the 

To  address  fiscal  challenges,  efforts 
could  be  made  to  strengthen  Lithuania’s 
independent  fiscal  institution  (IFI).  The 
Lithuanian  IFI,  which  is  embedded  in  the 
National  Audit  Office,  has  a  relatively  broad 
mandate. Although the IFI has legal grounding 
and  a  Memorandum  of  Understanding,  its 
information  could  be 
timely  access 
improved.  Its  embedded  nature  could  make  it 
difficult to discern its particular role. 

to 

Promoting social inclusion and 
protection 

The  decreasing  adequacy  and  limited 
coverage of social benefits are driving up 
poverty and income inequality, the latter 
being  one  of  the  highest  in  the  EU.  High 
levels of inequality and poverty are associated 
with  lower  educational  and  health  outcomes, 
which  affect  labour  productivity.  In  2022, 
increasing income inequality and poverty rates 
reversed the positive trends observed in 2017-
2021  (see  Annex  14).  The  increases  were 
mainly 
deteriorating 
effectiveness  of  social  benefits  (pensions 

driven 

the 

by 

included).  The  impact (17)  of  social  transfers 
(pensions included) on reducing poverty and on 
reducing income inequality both decreased, by 
2.7 pps to 19.8 pps and by 0.5 pps to 15.3 pps 
in  2022  respectively.  The  impact  on  reducing 
inequality  remains  significantly  below  the  EU 
average  (15.3  pps  vs  19.2  pps).  The  record 
levels  of  inflation  seen  in  2022  (18.9%) 
eroded  much  of  the  value  of  significant 
increases  in  non-taxable  amounts  of  income, 
the  minimum  wage,  pensions  and  social 
benefits (18), likely further increasing the divide 
between high-income and low-income earners 
in 2023 (see Annex 14). 

Poverty  among  older  people  (65+)  is 
especially  high,  and  the  low  adequacy  of 
pensions  is  driving  it  up  even  further.  In 
2022,  the  at-risk-of-poverty  (AROP)  rate  for 
this  group  was  one  of  the  highest  in  the  EU 
(Lithuania  39.5%  vs  EU  17.3%),  and  much 
higher  than  for  the  working-age  population 
(15.8%) 
(see  Annex  14).  Women  are 
particularly  affected  by  old-age  poverty 
(46.9%) compared to men (26.3%), mainly due 
to  family-related  care  responsibilities  during 
their  career.  According  to  data  from  the 
Lithuanian  Statistical  Office,  AROP  for  older 
people  decreased  by  3.4 pps in  2023 but  still 
remains 
The  aggregate 
replacement  rate  for  old-age  pensions (19), 
which  measures  the  size  of  pensions  as  a 
share of salary pre-retirement, decreased for a 
third consecutive year in 2022 (Lithuania 33% 
vs EU 58%), and the average pension was well 
below  the  poverty  threshold  (see  Annex  14). 
Beyond  changes  to  indexation  rules, Lithuania 
has  introduced  several  measures  in  recent 
years  that  are  expected  to  alleviate  old-age 
poverty  by  bringing  the  average  old-age 

critically  high. 

(17)  The impact is measured as a difference (in pps) in the 
AROP and Gini coefficient before and after social 
benefits (pensions included). 

(18)  Estimations performed by the Joint Research Centre 

based on the EUROMOD model I6.0+, simulation on the 
impact of inflation on the increases in non-taxable 
amounts of income, the minimum wage, pensions and 
social benefits in 2022 and 2023. 

(19)  The aggregate replacement rate is the gross median 
individual pension income of the population aged 65–
74 relative to gross median individual earnings from 
work of the population aged 50–59, excluding other 
social benefits. 

11 

 
 
pension  closer to  the  poverty  threshold in  the 
short-  to  medium  term  (see  Annex  14). 
However,  there  is  scope  for  continued  efforts 
to  improve  pension  adequacy  further  in  the 
longer term. 

situation  and 

People with a disability face high poverty 
risks,  driven  by  their  relatively  weaker 
low 
labour  market 
adequacy of social benefits. The AROP rate 
of people with a disability in 2022 was 37.7% 
(vs  EU  20.5%),  significantly  higher  than  the 
AROP  rate  of  people  without  a  disability 
(second highest gap in the EU) (see Annex 14). 
The  average  disability  pension  accounts  for 
around  65%  of  the  average  old-age  pension 
and  around  55%  of  the  AROP  threshold 
forecast  for  2023.  The  disability  employment 
gap  (the  gap  between  employment  rates 
within the general population and people with 
a  disability)  is  one  of  the  highest  in  the  EU 
according  to  the  Social  Scoreboard,  although 
the  national  data  paints  a  more  positive 
picture.  

These  findings  are  consistent  with  the 
second-stage  analysis  in  line  with  the 
features  of  the  Social  Convergence 
Framework. The analysis points to challenges 
related to the high at-risk-of-poverty or social 
exclusion rates and income inequality but does 
to  major  social  convergence 
not  point 
challenges for Lithuania overall, in light of the 
positive  developments  recorded,  especially  in 
the area of employment (20). 

Strengthening primary and 
preventive care 

Shortages  and  an  uneven  distribution  of 
professionals 
health 
exacerbate 
challenges 
in  accessing  primary  and 
preventive care. In Lithuania, the population 
ageing trend increases the demand for health 

(20)  European Commission, SWD(2024)132. The analysis 
relies on all the available quantitative and qualitative 
evidence and analysing the policy response undertaken 
and planned. 

12 

services,  while  the  average  age  of  the  health 
workforce  is  also  increasing  (see  Annex  16). 
Shortages  of  nurses  remain  a  particularly 
critical issue, and the gap is expected to widen 
further in the coming years. The concentration 
of  doctors  in  the  biggest  cities,  unattractive 
working  conditions  and  skills  mismatches  are 
challenges 
exacerbate  workforce 
shortages,  particularly  in  rural  areas,  and 
hamper  access  to  healthcare.  Lithuania  is 
taking action to improve the attractiveness of 
the  profession  and  strengthen  the  health 
workforce.  This  includes  increasing  the  wages 
of  healthcare  professionals  and  dedicated 
investments 
policy 
programmes.  

cohesion 

under 

that 

Health expenditure in Lithuania is among 
the  lowest  in  the  EU,  increasing  the  risk 
of  unmet  healthcare  needs.  Lithuania  has 
just  over  half  of  the  EU  average  of  health 
funding  per  capita  (7.8%  of  GDP  in  2021  vs 
11%  of  GDP  in  the  EU).  The  low  expenditure 
levels  result  in  high  out-of-pocket  costs  for 
households,  long  waiting times  and  shortages 
of health professionals driven by poor working 
conditions  and  non-competitive  salaries  (see 
Annex  16).  Public  spending  on  prevention 
compared with total spending on healthcare is 
also below the EU average. This is reflected in 
a  high  number  of  avoidable  hospital 
admissions  and  high  levels  of  treatable  and 
preventable  mortality.  Further  investments  in 
prevention and primary care have the potential 
to  improve  population  health  and  cultivate  a 
more productive workforce.  

of 

resilience 

Lithuania  has  put  forward  structural 
improve  the  accessibility, 
reforms  to 
the 
and 
efficiency 
healthcare  system,  including  on  mental 
health.  Life  expectancy  in  Lithuania  remains 
among  the  lowest  in  the  EU,  suggesting 
structural challenges in primary and preventive 
care. Lithuania has outlined a plan to move to 
a  more  efficient  model  based  on  stronger 
primary  care.  This  includes  reorganising  the 
network  of  hospitals  to  decrease  patients’ 
reliance  on  hospitals,  and 
the 
efficiency  and  quality  of  care.  The  results  will 
be  conditional  on  the  provision  of  adequate 
and  sufficient  funding.  At  the  same  time, 
COVID-19 caused major disruptions to disease 

improve 

 
 
prevention  programmes,  in  particular  those 
tackling cardiovascular diseases and treatable 
cancers.  There  is  scope  for  improvement  in 
cancer care, both in better screening coverage 
and  higher  survival  rates  for  many  treatable 
cancers  (cancer  mortality  is  above  the  EU 
average). Lithuania also continues to have the 
highest  suicide  rate  in  the  EU,  but  there  are 
forthcoming  strategies  that  should  promote 
better  mental  well-being  and  improve  access 
to mental healthcare.  

Tackling resource productivity, 
transport and environmental 
challenges  

the  negative 

Lithuania’s  economy,  and  particularly  its 
industry,  is  considerably  less  efficient  at 
using  materials  to  produce  wealth  than 
the  EU  average.  Standing  at  1.5  purchasing 
power  standards  per  kilogramme  (pps/kg)  in 
2022,  resource  productivity  has  remained 
consistently below the EU average (EU-27: 2.5 
pps/kg),  despite  increasing  slightly  over  time 
(see Annex 9). Improving resource productivity 
can 
raw 
reduce  dependency  on  volatile 
material  markets,  improve  efficiency  through 
lower  production  costs  and  therefore  boost 
to 
competitiveness,  while  also  helping 
the 
minimise 
impacts  on 
environment. 
that 
It  should  be  noted 
Lithuania’s  industry  is  mainly  focused  on  the 
production  of  intermediate  goods  driven  by 
foreign  demand,  and  has 
refined 
petroleum 
fertiliser  manufacturing 
and 
sectors,  as  well  as  a  large  transport  sector. 
Moreover,  Lithuania’s  circular  material  use 
rate  remains  three  times  below  the  EU 
average  (4.1%  compared  to  11.5%  in  2022) 
and has shown no clear signs of improvement 
since  2018  (see  Annex  9).  This  means  that 
around  96%  of  all  materials  are  not  reused, 
indicating  considerable  scope  to  improve  the 
recycling 
fragmented  waste-sorting  and 
system  as  well  as  promote  the  use  of 
secondary  materials 
for  value  creation. 
Furthermore,  Lithuania  scored  below  the  EU 
average  on  the  Eco-Innovation  Scoreboard 
2022  (103.8  vs  121.47).  Overall,  there  is  a 
need  to  better  exploit  the  potential  of  the 

large 

circular  model  to  drive  the  decarbonisation, 
competitiveness  and  security  of  Lithuania’s 
industry.  

Lithuania  has  significantly  increased  its 
domestic  energy  generation,  despite  still 
sourcing half of its electricity needs from 
abroad.  Thanks  to  the  proliferation  of  solar 
and  onshore  wind  energy  investments,  the 
share  of  energy  from  renewable  sources  in 
gross electricity consumption has been rapidly 
increasing  in  recent  years  (by  5.2  pps  since 
2021 and by 8.2 pps since 2017). However, it 
remains  below 
(26.5% 
compared  to  41.2%,  in  2022),  despite  the 
growing  number  of  prosumers  (see  Annex  7). 
With  the  help  of  the  recovery  and  resilience 
plan  (RRP),  Lithuania  aims  to  increase  its 
electricity  production  from  renewable  energy 
least  7  TWh  by  2030, 
sources 
representing  50%  of  total  national  electricity 
consumption.  Renewable  energy  communities 
could  play  a  larger  role  in  achieving  this 
objective of higher energy supply security. 

the  EU  average 

to  at 

Preparations  to  synchronise  Lithuania’s 
electricity  grid  with  continental  Europe’s 
network  are  progressing  well.  Lithuania, 
Latvia and Estonia have set February 2025 as 
the  date  to  synchronise  their  electricity  grids 
with  continental  Europe’s  network.  The  timely 
finalisation  of  preparatory  work  is  of  utmost 
importance  to  ensure  smooth  disconnection 
from Russia and Belarus and integration of the 
Baltic States into the internal energy market. 

The  transport  sector  remains  the  largest 
emitter  of  greenhouse  gas  emissions  in 
Lithuania,  partly  due  to  the  lack  of 
available  public  transport  solutions.  With 
95% of people travelling by car, the uptake of 
public  transport  is  the  lowest  in  the  EU. 
Lithuania  has  considerable  scope  to  improve 
the  coordination  of  its  fragmented  public 
transport system, which is unevenly developed 
and 
intermunicipal  connectivity,  trip 
planning  and  other  basic  passenger  services. 
Due to the lack of public funding for necessary 
but unprofitable routes, public transport routes 
in  the  regions  are  being  abandoned.  This 
makes  it  difficult  for  vulnerable  groups  to 
access jobs and public services, contributing to 
(see  Annex  17)  and 
regional  disparities 

lacks 

13 

 
negatively  impacting  the  competitiveness  of 
the economy. An old and polluting car fleet is 
the  key  factor  preventing  Lithuania  from 
reducing  greenhouse  gas  emissions  faster  as 
well  as  complying  with  air  pollution  reduction 
obligations.  Transport  taxes  in  Lithuania  are 
several times lower than the EU average, while 
only 0.4% of the car fleet is electric, which is 
also below the EU average (1.2%). By contrast, 
nearly 
freight 
two-thirds  of  Lithuania’s 
transport  is  by  rail  (EU  16%).  However,  only 
8%  is  electrified  (2021),  which  is  the  second 
the 
lowest 
untapped  potential  to  decarbonise  the  sector 
(see Annex 6). 

the  EU,  further  outlining 

in 

to 

its 

reduce 
through 

Lithuania is among the worst performers 
in  the  EU  on  energy  poverty,  with  ample 
opportunity 
energy 
building 
consumption 
renovations.  Three-quarters  of  the  surface 
area  of  Lithuania’s  building  stock  was  built 
before  1992  and  suffers  from  poor  energy 
efficiency.  This  drives  up  energy  consumption 
and  expenditure,  weighing  on  households’ 
ability to use their income on other goods and 
services.  Energy  poverty  remains  among  the 
the  EU  despite  considerable 
highest 
in 
progress 
in  recent  years.  The  share  of 
households  unable  to  keep  their  homes 
adequately  warm  dropped  from  26.7%  in 
2019  to  17.5%  in  2022,  but  is  still  almost 
double the EU average of 9.3% (see Annex 7). 
This welcome reduction has gone hand in hand 
with  a  7%  increase in  residential  final  energy 
which 
consumption 
contradicts  Lithuania’s  long-term  renovation 
strategy 
energy 
consumption  by  15%  over  2015-2030  and 
underlines  the  need  for  energy  efficiency 
renovations.  

2015-2022, 

primary 

reduce 

over 

to 

Despite  considerable  support  for  the 
renovation  of  multi-apartment  buildings, 
including  through  the  RRP,  renovation 
rates  remain  rather  low  due  to  financial 
and  administrative  disincentives.  The 
renovation  process  is  affected  by  complex 
decision-making  procedures  and 
limited 
incentives  for  housing  administrators  and 
construction  companies  to  take  part  in  such 
projects. Reduced VAT for heating and heating 
low-income 
price 

compensation 

for 

households,  while  helping  to  alleviate  energy 
poverty,  continue  to  act  as  disincentives  for 
renovation.  Additionally,  while  heating  and 
cooling  account  for  80%  of  the  country’s 
residential  final  energy  consumption,  only 
12.3%  of  household  consumers  had  smart 
meters in 2022 (EU average 80%) (see Annex 
7).  Installing  smart  systems  in  households 
would  allow  consumers  to  better  control  and 
adjust  their  consumption  behaviour,  helping 
improve  the  energy  efficiency  of  the  housing 
stock.  

In  the  past  decade,  the  net  carbon 
removals  from  Lithuania’s 
land  use 
sector  remained  static,  while  ammonia 
emissions  from  agriculture  continued  to 
hamper  efforts  to  reduce  air  pollution. 
The  agricultural  sector  remains  the  second 
in 
largest  emitter  of  greenhouse  gases 
Lithuania. The sector’s emissions have been on 
an upward trend in general since 2005, which 
is  an  obstacle  to  achieving  national  and  EU 
climate  targets.  As  a  result,  the  downward 
trend  in  overall  air  pollution  emissions  is  not 
sufficient  to  meet  emission  reduction  targets. 
Organic  farming  practices  in  Lithuania  are 
slightly  below  the  EU  average,  but  are 
increasing.  In  2021,  they  covered  a  total  of 
8.9%  of  utilised  agricultural  area  against  the 
EU average of 9.1% in 2020 and the EU-wide 
goal  of  at  least  25%  by  2030  (see  Annex  6). 
Environmental 
are 
investment 
estimated  to  be  at  least  EUR  1.6  billion  per 
year  (over  2014-2020),  while  investments 
leaving  an 
stood  at  EUR  604  million, 
investment  gap  equivalent  to  2.2%  of  GDP, 
well above the EU average of 0.8% (see Annex 
6). 

needs 

Two-thirds  of  the  habitats  protected 
under  EU  legislation  are  in  unfavourable 
conservation  status  due  to  pressures 
from  forestry,  agriculture  and  invasive 
species.  The  common  farmland  bird  index  – 
used  to  assess  the  biodiversity  status  of 
agricultural  landscapes  –  indicates  that  the 
farmland  bird  population  declined  by  almost 
half  over  2000-2020.  This  coincides  with  a 
significant 
to 
croplands. At the same time, Lithuania has yet 
to complete its Natura 2000 designations and 
put  in  place  clear  site-specific  conservation 

loss  of  grassland  areas 

14 

 
objectives  and  measures  for  all  sites.  At  the 
end of 2021, Lithuania protected 17.1% of its 
land and 22.8% of its marine area (see Annex 
6).  By  August  2023,  only  28%  of  sites  of 
importance  had  conservation 
Community 
objectives  and  measures  in  place.  As  such, 
there is  still  room  to  further  align  agricultural 
practices  with 
standards, 
thereby improving the long-term sustainability 
of the sector. 

environmental 

in 

spending,  up  from  0.31  %  of  GDP  in  2022. 
However,  this  remains  well  below  the  0.75% 
of  GDP  target  for  2024  agreed  by  political 
parties 
the  National  Agreement  on 
Education. Recovery and Resilience Facility and 
cohesion policy funds help boost research and 
innovation  (R&I)  and  digitalisation.  However, 
the  support  measures  are  dependent  on 
budgetary  cycles  and  lack  continuity  (see 
Annex 11).  

the 

recent 

efforts 

Complex  rules  limit  access  to  R&I  public 
support  measures  for  academia  and 
business.  Despite 
to 
consolidate  the  R&I  support  system  with  the 
creation  of 
Innovation  Agency  and 
establishment  of  science  policy  implementing 
agency  (Research  Council  of  Lithuania),  the 
effectiveness  of  R&I  support  measures  is  still 
hindered  by  a  lack  of  coordination  between 
government  bodies,  administrative  burden, 
inflexibility  and  lack  of  predictability  in  terms 
of  timeline,  which  makes  public  support  less 
beneficiaries.  
attractive 
is  essential 
Streamlining  processes 
for 
improving  access 
to  public  support  and 
unlocking innovation potential (see Annex 11). 

potential 

for 

to 

the 

Science-business  linkages  need  to  be 
strengthened 
deliver 
further 
innovation  and  growth.  Lithuania  has  the 
lowest rate of public-private co-publications in 
the  EU.  However, 
level  of  public 
expenditure  on  R&D  financed  by  national 
business  enterprise  slightly  surpassed  the  EU 
average in recent years (0.056 vs 0.054 % of 
GDP).  The  RRP  includes  measures  focused  on 
mission-based 
business 
science 
cooperation.  However,  they  are  still  in  a  pilot 
phase  and  have  to  be  expanded  further  to 
demonstrate  macroeconomic  relevance  (see 
Annex 11). 

and 

Stagnating  R&D  spending  by  businesses 
hampers  business  innovation  potential. 
Despite  high  entrepreneurial  dynamism  and 
niches  of  technological  excellence,  business 
enterprise  expenditure  on  R&D  as  a 
percentage  of  GDP  has  stagnated  in  recent 
years  and  is  three  times  lower  than  the  EU 
rapid 
average. 
development  and  various  initiatives,  venture 
capital availability in Lithuania continues to lag 

Furthermore, 

despite 

Boosting competitiveness through 
skills and innovation 

businesses. 

long-term 
Skills  mismatches  hinder 
investment 
Although 
by 
Lithuania  has  one  of  the  highest  tertiary 
attainment  rates  (See  Annex  15),  for  72%  of 
Lithuanian  firms  surveyed,  the  scarcity  of 
skilled  staff  is  a  major  obstacle  to  long-term 
investment (see Annex 12). At the same time, 
while  most  Lithuanian  students  obtain  a 
degree  and  their  employability  is  improving 
(74.1% of graduates were employed within 12 
months after graduation in 2023 compared to 
67.3% in 2019), among college graduates only 
47%  find  jobs  that  match  their  level  of 
education  (see  Annex  15).  Ensuring  labour 
relevance  and  quality  of  higher 
market 
education  in  Lithuania  remains  a  challenge. 
The  involvement  of  social  partners  in  the 
development  of  study  programmes  and  the 
quality  control  of  higher  education  study 
programmes  remain  weak.  The  network  of 
higher  education  institutions  has  not  been 
adapted  to  the  dwindling  number  of  students 
and  will  face  further  pressures  once  a  new 
student  admission  system  comes  into  force 
this  year.  In  its  RRP,  Lithuania  has  planned 
several 
projects. 
However, to improve the quality of the higher 
education  system,  further  efforts  are  needed 
increase  the  efficiency  of  the  higher 
to 
education  network  and 
the 
fragmented research ecosystem.  

reorganisation 

consolidate 

college 

Relatively  low  R&D  intensity  hampers 
innovation.  Public  R&D  expenditure  was 
0.53%  of  GDP  in  2022,  its  lowest  level  since 
2007.  In  2024,  Lithuania  will  allocate  0.46% 
of  GDP  from  the  national  budget  to  R&D 

15 

 
Box 4:      The mid-term review of cohesion policy funds for Lithuania 

The  mid-term  review  of  cohesion  policy  funds  is  an  opportunity  to  assess  cohesion 
policy  programmes  and  tackle  emerging  needs  and  challenges  in  EU  Member  States 
and  their  regions.  Member  States review  each  programme,  taking  into  account  among  other 
things the challenges identified in the European Semester, including in the 2024 country-specific 
recommendations.  This  review  forms  the  basis  for  a  proposal  by  the  Member  State  for  the 
definitive allocation of 15% of EU funding included in each programme. 

Lithuania  has  made  progress  in  the  implementation  of  cohesion  policy  programmes  and  the 
European Pillar of Social Rights but challenges remain, as outlined in this report (see Annexes 14 
and 17).  In  particular,  significant  disparities persist  between  the  Capital  region  and the  rest  of 
Lithuania  in  terms  of  economic  activity,  investments  and  social  indicators.  Against  this 
background,  it  remains  important  to  continue  implementing  planned  priorities,  with  particular 
attention  to:  (i)  strengthening  innovation  performance  and  productivity  growth  by  building 
innovation  capacity  and  increasing  the  uptake  of  advanced  technologies,  especially  in  central-
western Lithuania; (ii) energy efficiency, renewable energy and reducing energy consumption in 
housing,  public  buildings  and  businesses;  (iii)  addressing  regional  disparities  by  incentivising 
economic  activity  and  improving  the  provision  of  public  services,  especially  in  counties lagging 
behind in economic and social development; (iv) active labour market policy measures to improve 
access to the labour market; (v) improving the quality and inclusiveness of education, including 
by implementing the European Child Guarantee, and strengthening the up- and re-skilling of the 
adult population to address labour and skills shortages; (vi) improving the quality and access to 
social and health services, including long-term care.   

Lithuania  could  also  benefit  from  opportunities  provided  by  the  Strategic  Technologies  for 
Europe Platform (STEP) initiative (21) to help transform industry, for instance by developing and 
manufacturing  high  value-added  digital  and  deep-tech  innovation, clean  and  resource-efficient 
technologies and biotechnologies, including in the area of defence and dual-use goods sectors.  

behind  the  EU  average  (see  Annexes  11  and 
12).  Targeted  incentives  could  be  designed  to 
boost business R&I expenditure. 

Limited  access  to  finance  hinders  the 
innovation  capacity  of  firms,  especially 
small  and  medium-sized  enterprises 
(SMEs).  Tightening  monetary  conditions  in 
2023  had  a  pronounced  effect  on  Lithuanian 
firms,  which  rely  more  on  bank  loans  than  in 
the other Baltic states. The ratio of financially 
constrained  firms is  one  of  the  highest  in the 
EU, and 22% of firms reported a deterioration 
in  the  availability  of  bank  loans  (EU  average 
the  share  of  SMEs 
15%).  Additionally, 
experiencing 
increased  by 
late  payments 
roughly 8 pps from 51% to 59%, compared to 
the  EU  average  of  49%.  Furthermore,  the 
in 
underdeveloped  equity  finance  market 
Lithuania  also  continues  to  hinder  the  growth 
of  small,  young  and  innovative  firms.  The 
development of the fintech sector and the use 
of  venture  capital,  especially  via  private 
management, 
potential, 
particularly in targeting start-ups in their later 

further 

has 

life  cycle  (see  Annex  12).  At  the  same  time, 
the  Lithuanian  banking  market  is  relatively 
concentrated,  with  mostly  Nordic,  non-euro 
area  banks  present.  Further  improving  capital 
market  access  by  coordinated  policy  action, 
flexible 
lending 
investment  ceilings  and 
support  (e.g.  guarantees)  to  businesses  could 
encourage private investment. 

(21)  Regulation (EU) 2024/795 

16 

 
 
 
 
 
 
 
KEY FINDINGS 

With its wide policy scope and substantial 
financial  envelope,  Lithuania’s  recovery 
and  resilience  plan  includes  measures  to 
address a  series  of  structural challenges 
in synergy with other EU funds, including 
cohesion policy funds, by: 

•  Promoting the generation of electricity 
from  renewable  energy  sources,  a 
network  of  electric  vehicle  charging  points 
as well as green finance; 

•  Accelerating 

the 

digital 
transformation  by  developing  a  National 
Data  Lake  for  open  data,  supporting  the 
development of digital skills, and improving 
digital 
infrastructure 
broadband 
connectivity;  

and 

•  Supporting 

innovative  activities  by 
establishing  a  single  innovation  agency, 
and  adopting  a  new  smart  specialisation 
strategy 
the 
for 
development of the defence industry; 

guidelines 

and 

•  Creating  a  high-quality  education 
system  by  rolling  out  the  Millennium 
School  programme  to  bridge  the  gaps  in 
pupils’  achievement  and  reforming  student 
admission to higher education;  

•  Increasing  the  effectiveness  of  the 
social  protection  system  by  setting  up 
the  social  care  accreditation  scheme, 
reviewing  the  benefits  system  for  single 
persons  with  a  disability  and  older  single 
persons,  and 
training  and 
launching 
employment support schemes; 

•  Improving  access 

to  high-quality 
healthcare  services 
in  primary  care, 
specialised  outpatient  care  and  long-term 
care while investing in emergency response 
services.  

of 

implementation 

The 
Lithuania’s 
recovery  and  resilience  plan  is  facing 
increasing  challenges.  Renewed  efforts  are 
key for a successful implementation of all the 
measures  of 
recovery  and 
Lithuania’s 
resilience plan by August 2026.  

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

•  To support upward social convergence, 
reducing the risk of poverty and social 
exclusion, including by providing adequate 
financing  for  healthcare,  social  protection 
and general public services; 

•  Tackling skills mismatches by increasing 
the  relevance  of  higher  education  for  the 
job market; 

•  Unleashing  research  and  innovation 
(R&I)  potential  by  consolidating  research 
institutions, simplifying access to public R&I 
support  and 
incentivising  business  R&I 
investment; 

•  Making  it  easier  for  businesses  to 
access  finance,  specifically  SMEs,  by 
further improving capital market access; 

•  Strengthening 

primary 

care  and 
expanding  preventive  care  to  reduce 
unmet  needs  and  improve  overall  health 
outcomes,  and  to  make  the  healthcare 
system more resilient;  

•  Further  increasing  the  adequacy  of 
old-age  pensions,  while  maintaining  the 
sustainability of the pension system;  

•  Addressing 

regional  disparities  by 
incentivising  municipalities  to  cooperate  in 
the  provision  of  public  services,  improving 
transport  and 
coordination  of  public 

17 

 
 
increasing 
polluting means of transport;  

incentives 

to 

choose 

less 

•  Stepping 

up 

resource 

efficiency 
measures,  particularly  in  the  industrial 
sector,  and  energy  efficiency  measures  in 
residential buildings; 

•  Strengthening 

of 
the 
biodiversity  and  progressing  towards  a 
circular economy, particularly in industry. 

protection 

18 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan – implementation 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy transition and competitiveness 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary Table on 2019-2023 CSRs 
Key facts of the Lithuanian RRP 

21 

23 

23 

26 

30 

32 

35 

37 

37 

42 

47 

50 

50 

52 

54 

56 

61 

64 

64 

67 

69 

72 

76 

76 

78 

80 

81 

27 
30 

 
 
 
Support from EU instruments in Lithuania 
Resilience indices across dimensions for Lithuania and the EU-27 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
Key Energy Indicators 
Key indicators for a fair transition in Lithuania 

A3.2.  Measures in Lithuania's RRP 
A4.1. 
A5.1. 
A6.1. 
A7.1. 
A8.1. 
A10.1.  Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Lithuania 
A14.2.  Situation of Lithuania on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level in Lithuania 
A18.1.  Financial Soundness Indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1  Debt sustainability analysis – Lithuania  
A21.2  Heat map of fiscal sustainability risks – Lithuania  

LIST OF GRAPHS 

Progress towards the SDGs in Lithuania 
Lithuania's progress on the 2019-2023 CSRs (2024 European Semester) 
Total grants disbursed under the RRF 
Total loans disbursed under the RRF 
Distribution of cohesion policy funding 2021-2027 across policy objectives in Lithuania 
Distribution of RRF funding by pillar in Lithuania 
Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2022 
Changes in livestock density and organic farming 
Environmental investment gap, annual average 
Lithuania´s energy retail prices for households and industry & service 
Trends in electricity prices for non-household consumers (EU and foreign partners) 
Lithuanian's installed renewable capacity (left) and electricity generation mix (right) 
Fair transition challenges in Lithuania 
Job vacancy rate in transforming sectors and mining and quarrying 
ETS emissions by sector since 2013 
Treatment of municipal waste 

A1.1. 
A2.1. 
A3.1. 
A3.2. 
A4.1. 
A4.2. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A12.1.  Labour productivity (GDP per hour worked in purchasing power standards, % of EU-27) 
A12.2.  Real labour productivity (GDP per hour worked), 2015=100 
A12.3.  Export market share (goods and services), % GDP 
A13.1.  Government effectiveness 
A13.2.  Share of people employed by occupation and by sector 
A15.1.  Underachievement rates by field, PISA 2012, 2018 and 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2024-2070 
A19.1.  Tax revenues from different tax types, % of total revenue 
A19.2.  Tax wedge for single and second earners, % of total labour costs, 2023 

LIST OF MAPS 

A17.1.  GDP per capita (in PPS) in Lithuania, NUTS3, 2021 
A17.2.  Lithuania, NUTS3: GDP per capita growth 2012-2021 

22 

31 
34 
35 
41 
46 
48 
53 
55 
60 
61 
64 
66 
68 
70 
73 
77 
78 
80 
83 
83 

23 
26 
31 
31 
33 
33 
37 
39 
40 
42 
42 
44 
47 
48 
50 
51 
56 
57 
57 
61 
61 
67 
69 
69 
79 
79 

72 
72 

 
 
 
 
CROSS-CUTTING INDICATORS 
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  and  the 
environmental crisis, 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  the  SDGs  in  an 
EU context. 

While  Lithuania  performs  well  on  several  of 
the  SDG  indicators  related  to  environmental 
sustainability  (SDGs 14,  15),  it  needs  to 
catch  up  with  the  EU  average  on  others 
(SDGs 2,  6,  7,  9,  11,  12,  13).  On  SDG 13 
(Climate Action), the share of renewable energy in 

Graph A1.1: Progress towards the SDGs in Lithuania 

remaining  above 

gross  final  energy  consumption  increased  from 
26%  in  2017  to  29.6%  in  2022,  above  the  EU 
average  of  23% 
in  2022.  Meanwhile,  net 
greenhouse  gas  emissions  fell  to  4.6%  in  2022, 
remaining  significantly  below  the  EU  average  of 
7.3%. However, the average CO2 emissions per km 
from  new  passenger  cars,  although  lower  at 
135.9 g  in  2022,  was  materially  above  the  EU 
average  of  109.8 g  in  2022.  On  SDG 15  (Life  on 
land),  Lithuania  is  moving  away  from  the  goals, 
while 
In 
in  rivers 
particular,  the  share  of  phosphate 
increased from 0.064 mg PO4 per litre in 2016 to 
0.205  in  2021  (EU  average:  0.074  in  2021).  On 
SDG 7  (Affordable  and  clean  energy),  Lithuania 
has  achieved  significant  progress  in  its  share  of 
renewable  energy  in  total  energy  consumption. 
This  increased  from  26%  in  2017  to  29.6%  in 
2022  and  is  well  above  the  EU  average  (23%  in 
2022).  Similarly,  progress  was  made  on  other 
energy  indicators,  including  energy  productivity 
(from  4.6%  in  2017  to  5.9%  in  2022),  yet  still 
significantly below the EU average (9.3%) in 2022. 

the  EU  average. 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators - Eurostat (europa.eu). A high status does not mean that a country is close to reaching a specific SDG, but signals that it 
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 25 April 2024. Data refer mainly to the period 2017-2022 or 2018-2023. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

23 

 
 
 
 
 
 
 
in 

together 

investments 

The  Lithuanian  recovery  and  resilience  plan 
mobility 
includes 
infrastructure  and  public  transport  for 
sustainable  mobility, 
with 
in  solar  and  wind  energy 
investments 
capacity  to  provide  additional  security  of 
to  accommodate 
supply  and  flexibility 
renewable  energy  sources 
in  the  grid. 
Lithuania is below the EU average on SDG 6 (Clean 
water  and  sanitation)  and  SDG 11  (Sustainable 
cities  and  communities).  On  SDG 6  (Clean  water 
and  sanitation),  Lithuania’s  share  of  population 
without  a  bath,  shower  or  indoor  flushing  toilet 
decreased  from  10.6%  in  2015  to  6.4%  in  2020 
but  remained  significantly  above  the  EU  average 
of  1.5%.  On  SDG 11  (Sustainable  cities  and 
communities),  the  rate  of  the  population  under 
severe housing deprivation fell from 8.9% in 2015 
to  5.4%  in  2020  but  remained  above  the  EU 
(Responsible 
average  of  4.3%.  On  SDG 12 
consumption  and  production),  Lithuania  is  moving 
away  from  the  goals  and  is  worse  than  the  EU 
average. 
its  material  footprint 
increased  from  20.3  tonnes  in  2017  to  22.6 
tonnes in 2022 (EU average: 14.9 tonnes in 2022). 
Its  waste  generation  needs  further  improvement, 
as  the  circular  material  use  rate  decreased  from 
4.5% in 2017 to 4.1% in 2022 (EU average: 11.5% 
in 2022).  

In  particular, 

SDG 10 

progress 

Lithuania  is  performing  well  on  two  SDG 
indicators  related  to  fairness  (SDGs   5,  10), 
but still needs to catch up on several others 
(SDGs 1, 3, 7, 8), and it is moving away from 
the target for SDG 4. Lithuania reduced the risk 
of poverty or social exclusion (SDG 1) from 29.8% 
in 2017 to 24.6% in 2022 but is still above the EU 
average  of  21.6%.  While  regional  disparities 
remain an important issue, Lithuania has achieved 
significant 
(Reduced 
on 
inequalities).  The  urban-rural  gap  for  the  risk  of 
poverty  or  social  exclusion,  computed  as  the 
difference in the share of the population, narrowed 
from 18 p.p. in 2017 to 10.7 p.p. in 2022, although 
it  remains  well  above  the  EU  average  (0.4  p.p.  in 
2022).  While  Lithuania  is  improving  on  two  SDGs 
related  to  fairness,  it  is  moving  away  from  the 
targets  for  SDG 3  (Good  health  and  well-being) 
and  remains  below  the  EU  average;  also  moving 
away  from  targets  for  SDG  4  (Quality  education) 
but for it remains above the EU average. For SDG 
3, 
life 
expectancy  –  this  was  57.6  years  in  2021  (EU 
average:  63.6  years).  At  the  same  time,  progress 

in  particular  healthy 

this  concerns 

24 

has  been made  on  all  causes  of  death  indicators, 
especially road traffic deaths, where the indicator 
fell  from  6.8%  in  2016  to  4.2%  in  2021  (EU 
average:  4.6%).  The  Lithuanian  RRP 
includes 
measures to reform the minimum income scheme 
and  improve  the  social  safety  net,  as  well  as 
measures  to  improve  the  resilience,  accessibility 
and  quality  of  health  services  and  increase  the 
quality,  affordability  and  efficiency  of 
the 
healthcare  system.  For  quality  education,  moving 
away  from  the  targets  is  driven  by  increase  in 
early leavers from education – from 4.6% in 2018 
to  6.4%  in  Lithuania,  while  in  the  EU,  a  decrease 
was recoded – from 10.5% in 2018 to 9.5%. 

Lithuania  is  improving  on  SDGs 9  related  to 
productivity,  while  it  is  moving  away  from 
the  targets  for  SDG 4  and  8.  Regarding 
Lithuania’s  performance  on  SDG 4 
(Quality 
education) further efforts are needed to reach the 
EU  average  on:  (i)  participation  in  early  childhood 
education, which increased from 88.1% in 2016 to 
92.1%  in  2021 (EU  average:  92.5%  in  2021)  and 
(ii) adult learning, up from 6.6% in 2018 to 10.7% 
in  2023  (EU  average:  12.7%  in  2023).  The  share 
of  households  with  a  high-speed 
internet 
(78%)  was 
connection 
significantly  above  the  EU  average 
(73.4%). 
Lithuania  has  slowly  improved  gross  domestic 
expenditure on R&D, which rose from 0.9% of GDP 
in 2017 to 1.02% of GDP in 2022, but it remains 
below  the  EU  average  of  2.24%.  The  country  is 
also  still  lagging  some  way  behind  on  patent 
applications  to  the  European  Patent  Office,  with 
45 applications per million inhabitants in 2023 (EU 
average: 153). Several reforms and investments in 
the  RRP  focus  on  further  developing  digital 
infrastructure  and  equipment  and  improving  the 
quality of education and digital skills at all levels. 

in  2022 

(SDG 9) 

Lithuania is improving on two SDG indicators 
related  to  macroeconomic  stability  (SDGs 16 
and  17)  but  is  moving  away  from  SDG  8. 
Lithuania  continues  to  perform  below  the  EU 
average  on  the  investment  share  of  GDP  (SDG 8 
on  Decent  work  and  economic  growth)  but 
increased its share from 20.1% in 2017 to 21.4% 
in  2022  (EU:  22.7%  in  2023).  The  employment 
rate is improving and is performing better than the 
EU average (78.5%, vs 75.3% for the EU in 2023). 
On the negative side, the long-term unemployment 
rate  and  the  indicator  on  young  people  not  in 
education, 
has 
deteriorated  (from  2%  in  2017  to  2.3%  in  2023 
and  from  9.3%  in  2018  to  13.5%  in  2023 

employment 

training 

or 

 
respectively). Lithuania needs to catch up with the 
EU  average  on  SDG 16  (Peace,  justice  and  strong 
institutions).  The  Corruption  Perceptions 
Index 
improved from 59% in 2018 to 61% in 2023, and 
general  government  total  expenditure  on  law 
courts  per  capita  increased  from  EUR 39  in  2016 
to EUR 48.5 in 2022. This is, however, still far from 
the EU average of EUR 113.7 in 2022.  

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

25 

 
 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Lithuania's progress on the 2019-2023 
CSRs (2024 European Semester) 

Source: European Commission 

The Commission has assessed the 2019-2023 
country-specific  recommendations  (CSRs) (22) 
addressed  to  Lithuania  as  part  of  the  European 
Semester. These recommendations concern a wide 
range of policy areas that are related to 14 of the 
17 Sustainable Development Goals (see Annexes 1 
and 3). The assessment considers the policy action 
the 
taken  by  Lithuania 
commitments  in  its  recovery  and  resilience  plan 
(RRP) (24).  At  this  stage  of  RRP  implementation, 
88%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2023  have  recorded  at  least  ‘some 
progress’,  while  12%  recorded  ‘limited  progress’ 
(see  Graph  A2.1).  As  the  RRP  is  implemented 
further,  considerable  progress 
in  addressing 
structural CSRs is expected in the years to come. 

to  date (23)  and 

(22)  2023 CSRs : EUR-Lex - 32023H0901(15) - EN - EUR-Lex 

(europa.eu) 

      2022 CSRs: EUR-Lex - 32022H0901(15) - EN - EUR-Lex 

(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(15) - EN - EUR-Lex 

(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(15) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(15) - EN - EUR-Lex 
(europa.eu) 

(23)  Including policy action reported in Recovery and Resilience 

Facility (RRF) reporting (twice a year reporting on progress in 
implementing milestones and targets and resulting from the 
payment requests assessment). 

(24)  Member States were asked to effectively address in their 
RRPs all or a significant subset of the relevant country-
specific recommendations issued by the Council. The CSR 
assessment presented here considers the degree of 
implementation of the measures included in the RRP and of 
those carried out outside of the RRP at the time of 
assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered 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. 

26 

No Progress0%Limited Progress12%Some Progress65%Substantial Progress11%Full Implementation12% 
 
 
 
  
 
 
 
 
 
Table A2.1:  Summary Table on 2019-2023 CSRs 

(Continued on the next page) 

27 

LithuaniaAssessment in May 2024RRP coverage of CSRs until 2026Relevant SDGs2019 CSR 1Some progressImprove tax compliance and Some progressRelevant RRP measures being implemented as of 2021, 2022, 2023 and 2024SDG 8, 16broaden the tax base to sources less detrimental to growth.Some progressRelevant RRP measures being implemented as of 2022SDG 8, 10, 12Address income inequality, poverty and  social exclusion,  including by improving the design of the tax and  benefit system.Some progressRelevant RRP measures being implemented as of 2021, 2022, 2023 and 2024SDG 1, 2, 8, 10, 122019 CSR 2Some progressImprove quality and efficiency at all education and training levels, including adult learning. Some progressRelevant RRP measures being implemented as of 2021 and 2022SDG 4Increase the quality, Some progressRelevant RRP measures being planned as of 2022SDG 3affordability and Some progressRelevant RRP measures being planned as of 2022SDG 3efficiency of the healthcare system.Some progressRelevant RRP measures being planned as of 2022SDG 32019 CSR 3Some ProgressFocus investment-related economic policy on innovation, Some ProgressRelevant RRP measures being implemented as of  2021, 2022, 2023 and 2026SDG 9, 10, 11energy andSome ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 10, 11, 13resource efficiency, Some ProgressRelevant RRP measures being planned as of 2022 and 2023SDG 6, 10, 11, 12, 15sustainable transport and Some ProgressRelevant RRP measures being implemented as of 2021SDG 10, 11energy interconnections, taking into account regional disparities. Substantial ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 10, 11, 13Stimulate productivity growth by improving the efficiency of public investment. Some ProgressRelevant RRP measures being implemented as of 2022SDG 8, 16Develop a coherent policy framework to support science-business cooperation and Some ProgressRelevant RRP measures being implemented as of 2021SDG 9consolidate research and innovation implementing agencies.Full ImplementationRelevant RRP measures being implemented as of 2021SDG 92020 CSR 1Some progressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableSDG 8, 16Strengthentheresilienceofthehealthsystem,includingbymobilisingadequatefundingandaddressingshortagesinthehealthworkforce and of critical medical products.Some progressRelevant RRP measures being planned as of 2022, 2023 and 2024SDG 3Improve the accessibility and quality of health services.Some progressRelevant RRP measures being planned as of 2022, 2023 and 2024SDG 32020 CSR 2Some progressMitigate the impact of the crisis on employment.Full implementationRelevant RRP measures being implemented as of 2022SDG 8Increase the funding and coverage of active labour market policy measures Some progressRelevant RRP measures being implemented as of 2022SDG 8and promote skills.Some progressRelevant RRP measures being implemented as of 2021, 2022 and 2024SDG 4Ensurethecoverageandadequacyofthesocialsafetynetandimprovetheeffectivenessofthetaxandbenefitsystemtoprotectagainst poverty.Some progressRelevant RRP measures being implemented as of 2021 and 2022SDG 1, 2, 8, 10, 122020 CSR 3Some progressSupport liquidity for businesses, especially for small- and medium-sized enterprises and export-oriented sectorsSome progressSDG 8, 9Front-load mature public investment projectsSome progressRelevant RRP measures being implemented as of 2021, 2022, 2024, 2025 and 2026SDG 8, 16and promote private investment to foster the economic recovery.Some progressRelevant RRP measures being implemented as of 2021, 2022 and 2025SDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonthe coverage and take-up of very high-capacity broadband, Some progressRelevant RRP measures being implemented as of  2021, 2022, 2023, 2024, 2025 and 2026SDG 9on clean and efficient production and use of energy, Some progressRelevant RRP measures being implemented as of 2022SDG 7, 9, 13and sustainable transport. Some progressRelevant RRP measures being implemented as of 2021SDG 11Promotetechnologicalinnovationinsmallandmedium-sizedenterprises.Some progressRelevant RRP measures being implemented as of 2021SDG 8, 9 
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

28 

2021 CSR 1Not relevant anymoreIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinanced current expenditure under control. Not relevant anymoreNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Not relevant anymoreNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticular investment supporting the green and digital transition. Not relevant anymoreNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreNot applicableSDG 8, 162022 CSR 1Substantial ProgressIn 2023, ensure that the growth of nationally financed primary current expenditure is in line with an overall neutral policy stance, taking into account continued temporary and targeted support to households and firms most vulnerable to energy price hikes and to people fleeing Ukraine. Stand ready to adjust current spending to the evolving situationSubstantial ProgressNot applicableSDG 8, 16Expand public investment for the green and digital transitions, and for energy security taking into account the REPowerEU initiative, including by making use of the Recovery and Resilience Facility and other Union fundsFull ImplementationNot applicableSDG 8, 16For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent medium-term fiscal positions.Full ImplementationNot applicableSDG 8, 16Fostercooperativepublicprocurementatcentralgovernmentandmunicipality levels.Some ProgressRelevant RRP measures are being implemented as of 2023 and 2025.SDG 92022 CSR 2Proceed with the implementation of its recovery and resilience plan, in line with the milestones and targets included in the Council Implementing Decision of 20 July 2021.SwiftlyfinalisethenegotiationswiththeCommissionofthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtostartingtheir implementation2022 CSR 3Some ProgressStrengthen primary and preventive care.Some ProgressRelevant RRP measures being  planned as of 2023, 2024, 2025 and 2026SDG 3Reducefragmentationintheplanninganddeliveryofsocialservicesand improve their personalisation and integration with other services.Substantial ProgressRelevant RRP measures being implemented as of  2021, 2022, 2023, 2024, 2025 and 2026 SDG 1, 2, 10Improve access to and quality of social housing.Some ProgressSDG 1, 2, 102022 CSR 4Some ProgressReduce overall reliance on fossil fuelsSome ProgressRelevant RRP measures being implemented as of  2022, 2024, 2025 and 2026 SDG 7, 9, 13by accelerating the deployment of renewablesSome ProgressRelevant RRP measures being implemented as of  2022, 2023 and 2026 SDG 7, 9, 13andincreasingenergyefficiencyanddecarbonisationofindustry,[transport] and buildings,Limited ProgressRelevant RRP measures being planned as of  2024, 2025 and 2026SDG 7and [increasing energy efficiency and decarbonisation] of transportSome ProgressRelevant RRP measures being implemented as of 2021SDG 11and ensure sufficient capacity of energy interconnections.Substantial ProgressRelevant RRP measures being implemented as of  2022, 2023 and 2026SDG 7, 9, 132023 CSR 1Some ProgressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatsuchsupportmeasuresaretargetedatprotectingvulnerablehouseholdsandfirms,arefiscallyaffordableandpreserveincentivesforenergysavings.Full ImplementationNot applicableSDG 8, 16While maintaining a sound fiscal position in 2024,Full ImplementationNot applicableSDG 8, 16preservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofgrantsundertheFacilityandofotherUnionfunds, in particular to foster the green and digital transitions.Some ProgressNot applicableSDG 8, 16Fortheperiodbeyond2024,continuetopursueinvestmentandreformsconducivetohighersustainablegrowthandpreserveaprudent medium-term fiscal position.Full ImplementationNot applicableSDG 8, 16Strengthen the adequacy of healthcare andLimited ProgressSDG 3social protection,Some ProgressRelevant RRP measures being implemented as of 2022, 2023, 2024, and 2025SDG 1,2, 10and improve general public services.Limited ProgressSDG 16RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
  
 
Table (continued) 

Note: 
* See footnote (24). 
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as 'being implemented' 
are only those included in the RRF payment requests submitted and positively assessed by the European Commission. 
Source: European Commission 

29 

2023 CSR 2ContinuethesteadyimplementationofitsrecoveryandresilienceplanandswiftlyfinalisetheREPowerEUchapterwithaviewtorapidlystartingtheimplementationthereof.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarity and synergy with the recovery and resilience plan.2023 CSR 3Some ProgressStrengthenprimarycareandexpandpreventivecareinorderto,inter alia, make the healthcare system more resilient.Some ProgressRelevant RRP measures being planned as of 2022, 2023 and 2024SDG 3Improve the planning and delivery of social services.Substantial ProgressRelevant RRP measures being implemented as of 2022 and 2023SDG 1, 2, 10Improve access to, and the quality of, social housing.Some ProgressNot applicableSDG 1, 2, 102023 CSR 4Some ProgressFurther reduce reliance on fossil fuels and imported energySome ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13byacceleratingthedeploymentofrenewables,inparticularbyensuring sufficient grid capacity and access,Some ProgressRelevant RRP measures being implemented as of  2022, 2023 and 2026 SDG 7, 9, 13ensuringthetransformationanddecarbonisationofindustrialproduction,Limited ProgressRelevant RRP measures being planned as of 2023SDG 7andincreasingtheuptakeofpublicandsustainabletransport,aswell asLimited ProgressRelevant RRP measures being implemented as of 2021SDG 11bymakingbuildingsmoreenergy-efficientwithaviewto,interalia,reducing energy poverty.Limited ProgressRelevant RRP measures being planned as of  2024, 2025 and 2026SDG 1, 2, 7, 10 Ensuresufficientcapacityofelectricityinterconnectionsinordertoincreasesecurityofsupply,continuingthetimelysynchronisationwith the Union electricity grid.Substantial ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsand competences needed for the green transition.Limited ProgressRelevant RRP measures being implemented as of 2026SDG 4RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

This  Annex  provides  a 
snapshot  of 
Lithuania’s  implementation  of  its  recovery 
and  resilience  plan  (RRP),  past  the  mid-way 
point  of 
the  Recovery  and  Resilience 
Facility’s  (RRF)  lifetime.  The  RRF  has  proven 
central  to  the  EU’s  recovery  from  the  COVID-19 
pandemic,  helping  speed  up  the  twin  green  and 
digital  transition,  while  adapting  to  geopolitical 
and  economic  developments,  and  strengthening 
resilience  against  future  shocks.  The  RRF  is  also 
helping 
Sustainable 
Development  Goals  and  address  the  country-
specific recommendations (see Annex 2).  

implement 

the 

UN 

The  RRP  paves  the  way  for  disbursing  up  to 
EUR 2,298  million  in  grants  and  EUR  1,552 
million in loans under the RRF over the 2021-
2026 
of 
Lithuania’s  GDP (25).  As  of  mid-May  2024,  EUR 
1,341  million  have  been  disbursed  to  Lithuania 
under  the  RRF,  comprising  EUR  886  million  in 
grants and EUR 470 million in loans. 

representing 

period, 

5.4% 

Lithuania  still  has  EUR  2,494  million 
available  in  grants  and  loans  from  the  RRF. 
This will be disbursed after the assessment of the 
future fulfilment of the remaining 180 milestones 
the  Council 
included 
and 
Implementing  Decision (27)  (CID),  ahead  of  the 
2026 deadline established for the RRF.  

targets (26) 

in 

Table A3.1:  Key facts of the Lithuanian RRP 

Source: RRF Scoreboard 

Lithuania’s  RRP 
includes  a  REPowerEU 
chapter  to  phase  out  its  dependency  on 
Russian  fossil  fuels,  diversify  its  energy 
supplies  and  produce  more  clean  energy  in 
the  coming  years.  To  kick-start  the  REPowerEU 
chapter’s  implementation,  EUR  149.4  million  was 
disbursed as pre-financing on 28 December 2023. 
reforms  and 
This  helped 
issuance  of 
like  facilitating  the 
investments, 
permits for renewable energy development, which 
is currently underway. 

relevant 

launch 

Lithuania’s progress in implementing its plan 
is  recorded  in  the  Recovery  and  Resilience 
Scoreboard (28).  The 
scoreboard  gives  an 
overview  of  the  progress  made  in  implementing 
the  RRF  as  a  whole.  Graphs  A3.1  and  A3.2  show 
the  current  state  of  play  as  reflected  in  the 
scoreboard.  

(25)  GDP information is based on 2023 data. Source: 

https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/index.html?lang=en.   

(26)  A milestone or target is satisfactorily fulfilled once a Member 
State has provided evidence to the Commission that it has 
reached the milestone or target and the Commission has 
assessed it positively in an implementing decision. 

(27)  https://data.consilium.europa.eu/doc/document/ST-10477-

2021-ADD-1/en/pdf  

The  plan  has  a  strong  focus  on  the  green 
transition,  devoting  37.3%  of  the  available 
funds  to  measures  that  support  climate 
objectives  and  23.3%  of  its  total  allocation 
to support the digital transition. It also retains 
a  strong  social  dimension  with  social  protection 
measures,  especially  related  to  healthcare  and 
education. 

timely 

With  two  payment  requests  completed, 
Lithuania’s  implementation  of  its  RRP  is 
completion 
underway.  However, 
requires  increased  efforts.  The  Commission 
gave  a  positive  assessment  of  Lithuania’s  first 
payment  request,  taking  into  account  the  opinion 
of the Economic and Financial Committee. This led 
to  EUR  542  million  being  disbursed  in  financial 
support  on  10  May  2023 (29).  The  disbursement 
reflected the positive assessment of 31 out of 33 

(28)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html  

(29)  When requested payments are disbursed, the pre-financing 
is cleared proportionally. The net amounts are quoted here.  

30 

Initial plan CID adoption date28 July 2021Scope Revised plan with REPowerEU chapterLast major revision9 November 2023Total allocation EUR 2,298 million in grants and EUR 1,552 million in loans (5.4% of 2023 GDP)Investments and reforms 10 investments and 31 reformsTotal number of milestones and targets218Fulfilled milestones and targets36 (16.5% of total) 
 
 
 
  
 
 
 
far,  and  some  that  will  be  implemented  before 
to  keep  making  Lithuania’s  economy 
2026 
greener, more digital, inclusive, and resilient.   

Table A3.2:  Measures in Lithuania's RRP 

satisfactorily 

milestones and targets covering renewable energy 
and digitalisation of public services, among others. 
The  remaining  2  milestones  concerning  taxation 
fulfilled.  The 
had  not  been 
Commission  therefore  activated  the 
‘payment 
suspension’  procedure,  as  envisaged  in  Article 
24(6) of the Regulation. After re-assessment on 6 
May  2024,  one  out  of  the  two  milestones  was 
considered  as  fulfilled, 
leading  to  a  partial 
payment of EUR 14.9 million. 

Graph A3.1: Total grants disbursed under the RRF 

Source: FENIX 

Note: This graph displays the amount of grants, including 
pre-financing, disbursed so far under the RRF. Grants are non-
repayable financial contributions. The total amount of grants 
given to each Member State is determined by an allocation 
key and the total estimated cost of the respective RRP. 
Source: RRF Scoreboard 

Graph A3.2: Total loans disbursed under the RRF 

Source: RRF Scoreboard 

The most recent payment request, which the 
Commission  assessed  positively  on  21 
February  2024,  led  to  the  disbursement  of 
EUR  360  million  on  27  March  2024.  The 
disbursement reflected the positive assessment of 
5  milestones  covering  social  care,  the  green 
transition,  public  procurement,  and  modernisation 
of its industry.  

As  of  15  May  2024,  Lithuania  is  working 
towards its third payment request. Table A3.2 
highlights  some  relevant  measures  achieved  so 

31 

EUR 871.14million (37.9%)Total allocation: EUR 2298millionEUR 470.3million (30.3%)Total allocation: EUR 1552millionReforms and investments implemented• Action plan to integrate electric charging infrastructure framework• Assignation of radio frequencies for 5G deployment• Funding for the development of vocational education and trainingUpcoming reforms and investments• Legislation for a new long-term care model• Inter-urban mobility system reform• Solutions for digital public services to persons with disabilities 
   
 
   
 
   
 
 
 
  
 
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

to  Lithuania  for 

EU funding instruments provide considerable 
resources for recovery and growth to the EU 
Member States. In addition to the EUR 3.8 billion 
of Recovery and Resilience (RRF) funding described 
in  Annex  3,  EU  cohesion  policy  funds (30)  provide 
the  2021-
EUR 6.3  billion 
2027 period (31). 
two 
these 
instruments  combined  represents  around  14.06% 
of  the  country’s  2023  GDP,  compared  to  the  EU 
average  of  5.38%  of  GDP (32).  Cohesion  policy 
supports  regional  development,  economic,  social 
and  territorial  convergence  and  competitiveness 
through  long-term  investment  in  line  with  EU 
priorities and with national and regional strategies. 

Support 

from 

in 

entrepreneurship, 

During  the  2014-2020  programming  period, 
cohesion  policy  funds  boosted  Lithuania’s 
competitiveness, with  tangible achievements 
notably 
energy 
efficiency,  healthcare  and  employment.  Over 
the whole period, which financed investments until 
December  2023,  cohesion  policy  funds (33)  made 
EUR 7.0 billion available to Lithuania (34), of which 
EUR 4.5  billion  has  been  disbursed  since  March 
2020,  when  the  COVID-19  pandemic began (35). 
The  achievements  of  cohesion  policy  funds  over 
the programming period included financial support 
to  almost  9  000  enterprises,  creation  of  over  1 
100  new  jobs,  improving  energy  efficiency  in 
52 000  households  so 
far,  and  upgrading 
infrastructure  for  the  provision  of  health  services 
in  325  public  healthcare  institutions.  During  the 
same period, in the context of the European Social 
Fund  (ESF),  over  60 000  young  people  (15-29) 
neither in employment, nor in education or training 

(30)  In 2021-2027, cohesion policy funds include the Cohesion 
Fund, the European Regional Development Fund, the 
European Social Fund Plus and the Just Transition Fund. 

(31)  European territorial cooperation (ETC) programmes are 
excluded from the figure. In 2021-2027, the total 
investment, including national financing, amounts to EUR 7.8 
billion. 

(32)  RRF funding includes both grants and loans, where 

applicable. The EU average is calculated for cohesion policy 
funds excluding ETC programmes. GDP figures are based on 
Eurostat data for 2022. 

(33)  In 2014-2020, cohesion policy funds included the Cohesion 

Fund, the European Regional Development Fund, the 
European Social Fund and the Youth Employment Initiative. 
REACT-EU allocations are included but ETC programmes are 
excluded. 

(34)  In 2014-2020, the total investment, including national 

financing, amounted to EUR 8.2 billion. 

(35) Cut-off date: 14 May 2024. 

participated in the measures funded by the Youth 
Employment  Initiative,  of  which  almost  29 000 
people were in the 25-29 age group. Over 60% of 
participants  took  up  employment,  became  self-
employed or continued their training. 

In  the  current  programming  period,  cohesion 
policy  will  provide  a  further  boost  to 
Lithuania’s  competitiveness,  to  the  green 
transition  and  to  social  cohesion,  improving 
the 
living  and  working  conditions  of 
Lithuania’s people. In 2021-2027, the European 
Regional  Development  Fund  and  the  Cohesion 
Fund  will  support  action  on  the  green  transition, 
directing  a  substantial  part  of  cohesion  policy 
investments  (EUR 277  million)  to  the  roll-out  of 
renewable energy sources for electricity production 
in households and to heat and cooling production. 
This  will  make  a  significant  contribution  to 
increasing the share of renewables in final energy 
consumption  and  to  helping  people  meet  the 
challenges 
The 
investments  will  enable  the  installation  of  an 
additional  800  MW  of  renewable  energy  capacity 
and  reduce  CO2  emissions  by  about  550 000 
tonnes  every  year.  To  encourage  Lithuania's 
economy  to shift to the production of high value-
added  products,  the  funding  will  support  over 
1 200 businesses in developing new product ideas, 
creating  prototypes  and  bringing  products  to 
market.  In  addition,  it  will  create  almost  240 
research jobs in recipient entities to carry out R&D 
activities,  early  trials  of  new  products  and  to 
prepare products for the market.  

transition. 

green 

the 

of 

In  terms  of social inclusion,  the  investments 
in  new  or  modernised  social  housing  will 
improve  living  conditions  for  over  2 000 
people  with  disabilities  and  for 
large 
families.  The  Just  Transition  Fund  (JTF)  will  help 
Lithuania reduce emissions from greenhouse gas-
intensive industries and tackle the related negative 
social  and  economic  effects  in  the  counties  of 
Kaunas,  Šiauliai  and  Telšiai.  The  JTF  will  provide 
430  employees  with  skills  for  the  industrial 
transition and create almost 400 new sustainable 
jobs.  For  the  2021-2027  period,  Lithuania  has 
earmarked  over  EUR 441  million 
the 
European  Social  Fund  (ESF+)  to  social  inclusion 
(excluding  funding  under  the  programme  to 
support the most deprived). To integrate people at 
risk of poverty or social exclusion in a sustainable 
manner,  the  ESF+  will  support  projects  including 
the  development  of  social  integration  services, 
to 
integrated  services  for  families,  projects 

from 

32 

 
 
 
 
 
Graph A4.2: Distribution of RRF funding by pillar in 
Lithuania 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle while the secondary contribution is shown in 
the inner circle. Each contribution represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated to 
Lithuania. 
Source: European Commission 

the  administrative 

The Technical Support Instrument (TSI) helps 
Lithuania  invest  in  its  public  administration 
and create a better enabling environment for 
EU  and  national  investment.  The  TSI  has 
funded  projects 
in  Lithuania  to  design  and 
implement growth-enhancing reforms since 2017. 
The support provided to Lithuania in 2023 included 
help to accelerate the use of renewable energy by 
improving 
for 
permitting,  to  strengthen  Lithuania’s  development 
cooperation ecosystem by preparing an action plan 
and  a  strategy  for  integrating  the  lifecycle  of 
the  capacity  of 
to  boost 
partnerships  and 
Lithuanian 
health 
conduct 
to 
technology  assessments.  The  TSI  is  also  helping 
Lithuania  boost  its  overall  capacity  to  implement 
specific  reforms  and  investments  included  in  its 
RRP,  such  as  advancing  building  renovation  with 
the  use  of  organic  materials.  Lithuania  also 
receives 
several  other  EU 
from 
instruments, including those listed in Table A4.1. 

framework 

authorities 

funding 

implement  the  Child  Guarantee  and  to  transition 
from  institutional  care  to  family  and  community-
based  services.  With  this  work,  cohesion  policy 
substantially  contributes  to  achieving  the  UN 
Sustainable  Development  Goals 
in 
Lithuania, in particular SDG 9 (Industry, innovation, 
infrastructure),  SDG  7  (Affordable  and  clean 
energy) and SDG 1 (No poverty). 

(SDGs) 

Through combined action, cohesion policy and 
the recovery and resilience plan (RRP) have a 
mutually  reinforcing  impact  in  Lithuania.  For 
instance,  in  terms  of  promoting  innovation,  the 
RRP covered the adoption of the legal acts needed 
to  set  up  the  Innovation  Agency  and  fund  its 
infrastructure,  enabling  the  Agency  to  function  as 
a  one-stop-shop  for  business  to  apply  for  ESIF-
financed  support  to  build  innovation  capacity,  the 
uptake  of  advanced  technologies  and  to  boost 
SME  competitiveness.  In  healthcare,  the  RRP  is 
investing  in  the  development  of  a  sustainable 
long-term  care  model  by  adopting  legislation, 
creating  specialised  long-term  care  day  centres 
and  mobile  teams  and  training  long-term  care 
professionals.  This  is  combined  with  cohesion 
policy  funding  to  finance  projects  to  develop 
specialist  competences  and  qualifications 
to 
provide  long-term  care  services  in  inpatient  and 
outpatient  chains,  to  create  a  methodological 
centre  and  municipal-level  personal  healthcare 
institutions,  provide 
long-term  care 
services  and  to  purchase  vehicles  and  innovative 
equipment  for  home  visits  to  patients.  The 
contribution of cohesion policy and RRP funding by 
policy  objective  is  illustrated  by  Graphs  A4.1  and 
A4.2. 

targeted 

Graph A4.1: Distribution of cohesion policy funding 
2021-2027 across policy objectives in Lithuania 

Source: European Commission 

33 

PO1 Smarter EuropePO2 Greener EuropePO3 Connected EuropePO4 Social EuropePO5 Europe closer to citizensPO8 JTF specific objectiveGreen transitionDigital transformationSmart, sustainable and inclusivegrowthSocial & territorial cohesionHealth & resilienceNext generation 
   
 
   
Table A4.1:  Support from EU instruments in Lithuania 

(1) RRF implementation period is 2021-2026. 
(2) The public sector loan facility’s programming period is 2021-2025 and the amount reflects the national share in its grant 
component reserved until the end of the period.   
(3) Common agricultural policy programming periods are 2014-2022 and 2023-2027.   
(4) EMFF – European Maritime and Fisheries Fund, EMFAF – European Maritime, Fisheries and Aquaculture Fund. 
(5) Data on the Connecting Europe Facility covers transport and energy and has a cut-off date of 15 May 2024. 
(6) Data on Horizon Europe (2021-2027) has a cut-off date of 13 May 2024. 
(7) 2021-2027 data on the LIFE programme has a cut-off date of 15 May 2024. 
(8) The amount of the EU guarantee signed under the EFSI Infrastructure and Innovation Window was derived based on the 
signed amount of the operations and the average internal multiplier, as reported by the EIB (cut-off date is 31 December 2023). 
(9) The amount of the EU guarantee and of the volume of operations signed under InvestEU includes the EU compartment as well 
as the Member State compartments (cut-off date is 31 December 2023).   
(10) SURE - European instrument for temporary support to mitigate unemployment risks in an emergency. 
Source: European Commission 

34 

Amount 2021-2027 (EUR million)Cohesion policy6 274.3RRF grants (1)2 297.6Public sector loan facility (grant component) (2)20.7Common agricultural policy (3)3 998.0EMFF/EMFAF (4)61.2Connecting Europe Facility (5) 659.5Horizon 2020 / Horizon Europe (6) 108.0LIFE programme (7) 38.6Volume of operations (EUR million)European Fund for Strategic Investment 2015-2020 (8) 288.3InvestEU 2021-2027 (9) 50.0PeriodTotal amount available (EUR million)Disbursed amount (EUR million)SURE (10)2020-20221 099.11 099.1RRF 2021-20261 552 470.3EU grantsAmount 2014-2020 (EUR million)7 033.5--6 100.0 102.0 26.8EU loans63.4 929.8 94.5 29.7EU guaranteesEU Guarantee (EUR million) 
 
   
 
ANNEX 5: RESILIENCE 

Table A5.1:  Resilience indices across dimensions for Lithuania and the EU-27 

(1)  The synthetic indices aggregate the relative resilience situation of countries across all considered indicators. For an indicator, 
each country’s relative situation in the latest available year is compared with the collection of values of that indicator for all 
Member States and all years in the reference period. 
Source: Resilience Dashboards - version spring 2024, data up to 2022 

resilience 

This  Annex  uses  the  Commission’s  resilience 
dashboards  (RDB) (36)  to  show  Lithuania’s 
relative 
and 
vulnerabilities (37)  that  may  be  of  relevance 
for  societal,  economic,  digital  and  green 
transformations, and for dealing with future 
shocks and geopolitical challenges. (38) 

capacities 

According  to  the  RDB’s  set  of  resilience 
indicators,  Lithuania  has  medium  overall 
vulnerabilities  and  capacities  that  have 
remained stable with respect to last year. Its 
vulnerabilities are in line with the EU average, but 
its  capacities  remain  below  the  EU  average.  RDB 
indicators  for  Lithuania  vary  a  lot,  with  only 
around  20%  of 
indicators  showing  medium 
capacities and vulnerabilities.  

(36)  Https://ec.europa.eu/info/strategy/strategic-

planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en. Resilience is defined as the 
ability not only to withstand and cope with challenges but 
also to undergo transitions, in a sustainable, fair, and 
democratic manner. 2020 Strategic Foresight Report: 
Charting the course towards a more resilient Europe 
(COM(2020) 493). 

(37)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals, 
while capacities refer to enablers or abilities to cope with 
crises and structural changes and to manage transitions. 

(38)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

and 

social 

Lithuania’s 
economic 
vulnerabilities  and  capacities  deteriorated, 
to medium and medium-low. The main reasons 
for this deterioration are a lower household saving 
rate,  the  increased  income  inequality  (s80/s20) 
and a diminution of the impact of social transfers 
on  poverty  reduction.  Lithuania  also  continues  to 
have  a  low  level  of  healthy  life  years  in  absolute 
value  at  birth  and  one  of  the  highest  rates  of 
standardised  preventable  and  treatable  mortality 
in  the  EU,  putting  pressure  on  the  healthcare 
sector.  On  the  positive  side,  it  has  managed  to 
reduce its vulnerabilities arising from employment 
in manufacturing with a high risk of automation.  

With  respect  to  2023,  Lithuania’s  green 
resilience  remained  stable.  Some  indicators 
have  even  seen  an  improvement,  such  as  a 
reduction  in  the  harmonised  risk  indicator  1  for 
pesticides,  as  well  as  better  resource  productivity, 
an  increase  in  the  number  of  environmental 
patents per capita, and a higher e-waste recycling 
rate.  

the 

digital 

dimension, 

Lithuania’s 
In 
vulnerabilities,  at  medium,  have  remained 
unchanged  and  capacities  improved  to reach 
the  EU  average.  The  country  has  improved  its 
level of collaborative economy (39)  with respect to 
2021. 

(39)  The collaborative economy is defined as the percentage of 

individuals who made online purchases (rented 
accommodation) during the last 3 months as private 
individuals. 

35 

LTLTEU-272023 RDB2024 RDB2024 RDBHighMedium-highMediumMedium-lowLowHighMedium-highMediumMedium-lowLowDimensionDistribution of indicators by vulnerabilities and capacitiesOverall resilienceVulnerabilities0.560.530.50Capacities0.520.600.67VulnerabilitiesSocial and economicVulnerabilities0.640.550.47Capacities0.460.360.670.570.610.65GreenVulnerabilities0.610.700.44Capacities0.430.500.70CapacitiesGeopoliticalVulnerabilities0.420.510.41Capacities0.730.680.65DigitalVulnerabilities0.470.470.52Capacities0%20%40%60%80%100%Vulnerabilities(60 indicators)Capacities(64 indicators) 
 
 
 
 
   
 
 
geopolitical 

Lithuania’s 
capacities  and 
vulnerabilities  have  remained  stable  at  EU 
level.  On  the  vulnerabilities  it  has  increased  its 
net  lending/borrowing  but  has  improved  its  metal 
footprint per capita. Some of Lithuania’s capacities 
have also slightly improved, especially its intra-EU 
trade, as well as its trade openness in general, and 
specifically in the energy sector. 

36 

 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

Lithuania  has  made  progress  in  the  green 
transition, with more action needed in several 
areas,  for  example  to enhance  its  carbon  sinks  in 
the  land-use  sector  and  to  improve  the  circular 
economy.  This  Annex  provides  a  snapshot  of 
climate, energy, and environmental aspects of the 
transition in Lithuania (40). 

Lithuania’s  draft  updated  national  energy 
and  climate  plan  (NECP)  provides  precise 
information  on  the  investment  needs  to 
achieve its 2030 climate and energy targets, 
by  sector  and  by  policy  area.  It  distinguishes 
between public budgets and private investment by 
sector  for  both  current  and  planned  policies.  The 
plan outlines funding needs and the main funding 
sources but does not clearly detail EU support. The 
plan  does  not  sufficiently  describe  the  role  of 
public  funding  in  mobilising  private  financing.  It 
does not mention the timeframe of the measures 
or  the  share  of  EU  funding  (and  the  contribution 
from 
in 
particular) (41). 

the  Recovery  and  Resilience  Fund 

Including the planned measures  that  are  yet 
to  be  adopted,  Lithuania  is  projected  to 
almost  reach 
its  2030  effort  sharing 
target (42).  Lithuania’s  2022  greenhouse  gas 
emissions  from  its  effort  sharing  sectors  are 
expected  to  come  in  at  8.8%  above  2005  levels. 
Current policies are projected to reduce Lithuania’s 
effort  sharing  emissions  by  14.5%  from  2005 
levels  by  2030.  Additional  policies  planned  in 
Lithuania’s  draft  updated  NECP  are  projected  to 
reduce  these  emissions  by  20.9%  from  2005 
levels,  falling  short  of  its  effort  sharing  target  to 

(40)  This Annex is complemented by Annex 7 on energy transition 

and competitiveness, Annex 8 on the fair transition to 
climate neutrality, Annex 9 on resource efficiency, circularity, 
and productivity, and relevant topics in other annexes to this 
country report. 

(41)  See the Commission’s (2023) assessment of the draft 

national energy and climate plan of Lithuania. 

(42)  The national greenhouse gas emission reduction target is 
laid down in Regulation (EU) 2023/857 (the Effort Sharing 
Regulation). The aim is to align action in the sectors 
concerned with the objective to reach the EU-level economy-
wide target of greenhouse gas reductions of at least 55% 
compared to 1990 levels. The target also applies to the 
sectors outside the current EU Emissions Trading System, 
notably buildings (heating and cooling), road transport, 
agriculture, waste, and small industry (known as the effort 
sharing sectors). 

achieve  a  21%  reduction,  by  just  0.1  percentage 
points (43).  The  draft  updated  NECP  reiterates 
Lithuania’s  commitment 
to  achieve  climate 
neutrality by 2050. 

Graph A6.1: Greenhouse gas emissions from the 
effort sharing sectors in Mt CO2eq, 2005-2022 

Source: European Environment Agency 

There  is  scope  for  increasing  Lithuania’s 
target  for  energy  efficiency  in  its  final 
updated  NECP.  Its  energy  efficiency  contribution 
of  5.2  Mtoe  in  primary  energy  consumption  and 
4.2 Mtoe in final energy consumption for 2030 set 
in the draft updated NECP match the contribution 
required  under the  Energy  Efficiency  Directive (44). 
However, the projected contributions including the 
proposed  measures  do  not  appear  to  reach  those 
targets. Lithuania’s  renewable  energy  contribution 
set  in  its  draft  updated  NECP,  55%  by  2030,  is 
significantly  above  the  required  contribution  of 
49%. 

Sustainable  transport  has  yet  to  take  off  in 
Lithuania,  which  has  a  high  potential  in 

(43)  The effort sharing emissions for 2022 are based on 
approximated inventory data. The final data will be 
established in 2027 after a comprehensive review. 
Projections on the impact of current policies (‘with existing 
measures’, WEM) and additional policies (‘with additional 
measures’, WAM) as per Lithuania’s draft updated NECP. 

(44)  The EU target set out in the revised Renewable Energy 

Directive is to have 42.5% of gross final energy consumption 
coming from renewable energy sources by 2030, with the 
aspiration to reach 45%. The formula in Annex I to Directive 
(EU) 2023/1791 sets the indicative national contribution for 
Lithuania at 5.2 Mtoe for primary energy consumption and 
4.2 Mtoe for final energy consumption. Commission 
Recommendation of 18/12/2023 Lithuania 

37 

-2024681012141620052022MtCO2eWasteSmall industryAgricultureBuildings (under ESR)Domestic transport (excl. aviation) 
 
 
 
     
 
 
 
electric rail transport (45). At 0.4% in 2022, the 
share  of  battery  electric  vehicles  in  its  passenger 
car fleet is comparatively low (EU average: 1.2%). 
1 070  publicly  accessible charging  points in  2023 
provide  one  charging  point  for  every  11  electric 
vehicles (EU average is 1:10). Nearly all passenger 
transport  (95%)  in  Lithuania  is  by  passenger  car. 
However,  only  37%  of  freight  is  transported  by 
road and the remainder, 62%, is by rail, far above 
the EU average (16%) (46). By contrast, only 8% of 
the rail network is electrified, a very low share. 

to 

increase  carbon 
Lithuania’s  actions 
removals  through  land  use,  land-use  change 
and  forestry  (LULUCF)  are  not  projected  to 
be  sufficient  to  reach  its  2030  target.  Over 
the last ten years, Lithuania’s land-use sector has 
maintained a consistent level of carbon removals. 
To  increase  its  ability  to  absorb  carbon,  Lithuania 
has measures in its recovery and resilience plan to 
restore  degraded  peatlands.  To  meet  its  2030 
LULUCF  target,  additional  carbon  removals  of 
661 kt CO2eq are 
latest 
projections  for  2030  indicate  that  Lithuania  will 
not meet the target (48). 

needed (47). 

The 

Climate  change  is  affecting  several  sectors 
and  ecosystems  in  Lithuania,  particularly  in 
the  coastal  region.  The  highest  climate-related 
risks relate to (coastal) flooding and windstorms in 
the western part of the country. The most climate-
sensitive  sectors  are  agriculture,  public  health, 
energy,  industry,  transport  and  communication 
infrastructure.  The  rising  number  of  heatwaves  is 
projected 
to  affect  heat-related  mortality, 
morbidity,  and  the  transport  system.  Heatwaves 
are  also 
likely  to  exacerbate  problems  with 
electricity  and  water  supply,  especially  in  urban 
areas  such  as  Vilnius.  During  winter,  frequent 

temperature fluctuations around 0 °C will intensify 
frost heave and corrosion (49). 

The 
in 
level  of  biodiversity  protection 
Lithuania  is  insufficient.  By  the  end  of  2021, 
Lithuania  had  protected  17.1%  of  its  land  and 
22.8%  of  its  marine  areas (50).  Lithuania  lags 
behind  in  setting  conservation  objectives  and 
measures  for  its  Natura  2000  sites.  By  August 
2023,  only  155  sites  of  Community  importance 
out  of  549  had  conservation  objectives  and 
measures  in  place.  Accelerating  the  process  of 
setting  conservation  objectives  and  measures 
would facilitate the management of Natura 2000 
sites.  Two-thirds  of  EU-protected  habitats  are  in 
an  unfavourable  conservation  status  due  to 
pressure  from  forestry,  agriculture,  and  invasive 
alien species. According to the latest report on the 
conservation  status  of  habitats  and  species 
covered  by  Article  17  of  the  Habitats  Directive  in 
2013-2018,  only  22%  of  protected  habitats  and 
37%  of  species  were  in  a  good  conservation 
status (51).  Declining  farmland  biodiversity 
is 
illustrated  by  a  sharp  decline in  the  common 
farmland  bird  index dropping from  77  in  2011  to 
51 in 2020, the lowest value reported (52). 

Air  quality  in  Lithuania  is  an  emerging  area 
of  concern.  Air  pollutant  emissions  exceed  the 
maximum 
levels  allowed  under  the  National 
Emission  Reduction  Commitment  Directive  for 
several  pollutants  (ammonia,  NOx  and  NMVOC  in 
2021).  The  latest  available  annual  estimates 
(2021)  by  the  European  Environmental  Agency 
indicate that Lithuania suffers about 799 years of 
life  lost  for  every  100 000  inhabitants  due  to 
exposure 
(PM2.5), 
significantly  above  the  EU  average  (584),  and  73 
years  due  to  NO2.  The  smog-precursor  emission 
intensity  to  GDP  fell  by  only  8%  between  2008 
and 2021 to reach 2.97 tonnes/EUR 10, above the 
EU average. 

particulate  matter 

to 

(45)  Unless otherwise indicated, data in this section refer to 
2021. See European Commission, 2023, EU transport in 
figures, transport.ec.europa.eu. 

(46)  Pipelines carry 0.6% of freight. Inland waterways do not play 

any role in transport in Lithuania. 

(47)  National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839. 

(48)  Projections submitted in Lithuania’s draft updated national 

(49)  Also see the Commission’s 2023 assessment and 

recommendation on Lithuania’s progress on climate 
adaptation. 

(50)  Less than 24% reported in 2019. 

(51)  Against the EU averages of 15% and 28%. 

energy and climate plan, 2023. 

(52)  Base year 2000=100. 

38 

 
 
 
Graph A6.2: Changes in livestock density and 
organic farming 

Livestock unit (LSU)/ha of UAA: it measures the stock of 
animals (cattle, sheep, goats, equidae, pigs, poultry and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

Intensive  agriculture  has  a  major  impact  on 
ecosystems,  biodiversity  and  air  quality.  The 
value  of  the  agricultural  sector’s  annual  output 
remained  approximately 
stable  at  EUR 3.3 
billion (53) 
in  2023.  The  adoption  of  organic 
farming  practices  is  improving.  The  share  of  land 
under  organic  farming  reached  8.9%  of  utilised 
agricultural  area  in  2021  against  the  EU  average 
of 9.1% (54) and the EU-wide goal of at least 25% 
by  2030.  Furthermore, 
tillage 
practices,  which  increase  soil  organic  carbon, 
covered  10%  of  the  tillable  area  in  2016  in 
Lithuania.  The  agricultural  sector  was  responsible 
for  generating  95.3%  of  all  ammonia  emissions, 
against the EU average of 90.7% in 2021. 

conservation 

As  in  most  EU  Member  States  livestock 
numbers in Lithuania declined between 2010 
and 2020. In Lithuania, the livestock density index 
fell  from  0.32%  to  0.25%.  At  the  same  time,  the 
share  of  extensive  livestock  farming (55)  over  the 
total  utilised  agricultural  area  fell  from  38.3%  in 
2013 to 29.1% in 2016 (56), above the EU average 
less  than  0.1%  of 
of  23.8%. 
agricultural  area  is  irrigated  and  the  agricultural 
sector  abstracts  21.6%  of  the  total  volume  of 
water abstracted. 

In  Lithuania, 

(53)  Production value at basic price (2015=100). 

(54)  In 2020. 2021 data is not available. 

Moving  to  sustainable  agricultural  practices 
and  reducing  the  use  of  excess  nutrients 
would  help  reduce  pollution  and  protect 
biodiversity.  The  latest  figures  (2019)  for  the 
gross  nitrogen  balance  on  agricultural  land  in 
Lithuania  indicate  an  average  surplus  of  40.8  kg 
of  nitrogen  per  hectare  per  year.  1.7%  of 
groundwater  monitoring  stations  indicate  levels 
above  the  maximum  50  mg  nitrates/l.  The  gross 
phosphorous  balance  was  -1.3  kg/ha  in  2017. 
Waterbodies  in  Lithuania  are  less  affected  by 
pesticide  pollution  than  the  EU  average.  In  2021, 
levels 
no  monitoring  sites  reported  pesticide 
exceeding  the  thresholds  set  by  the  Water 
Framework  Directive.  Over  the  last  decade,  the 
peak  was  registered  in  2015,  when  58.3%  of 
threshold. 
monitoring  sites  were  above 
Although Lithuania has started to implement some 
soil-friendly  farming  practices,  Lithuanian  arable 
land  is  still  affected  by  leaching  of  organic 
carbon (57) and the incentives for farmers to better 
protect  grassland  habitat  are 
insufficient  as 
illustrated  by  reduced  grassland  and  pasture 
areas (58). 

the 

Food  waste  production  remains  relatively 
high, and the composting and digestion rates 
could be improved. The country produced 139 kg 
of  food  waste  per  person  in  2021,  above  the  EU 
average  of  131  kg  per  person.  Most  waste  was 
generated  during  household  use.  The  composting 
and digestion rate of municipal waste fell to 86 kg 
per  person  in  2021,  representing  19.7%  of  total 
municipal waste (for more details see annex 9).  

Lithuania would benefit from investing more 
in  biodiversity  and 
in  accelerating  the 
transition  to  a  circular  economy.  Over  the 
2014-2020  period,  the  environmental  investment 
gap  was  estimated  at  EUR  956  million  per  year, 
equivalent  to  2.2%  of  GDP,  well  above  the  EU 
average  of  0.8%.  The  gap  is  estimated  to  be 
widening  over  the  2021-2027  period  at  EUR  1.3 
billion  per  year.  There  remains  an  opportunity  to 
increase  funding,  in  particular  for  biodiversity  (a 
gap  of  EUR  566  million  per  year)  and  circular 
economy  and  waste  management  (EUR  122 
million  per  year).  Lithuania  would  also  benefit 
in  pollution  prevention  and 
from 

investing 

(55)  Share of utilised agricultural area with livestock density 

(57)  SWD(2019) 125 final/2, p. 14. 

below 1 livestock unit per hectare. 

(56)  The latest available data. 

(58)  OECD Environmental Performance Review: Lithuania 2021, 

pp. 29 and 54. 

39 

012024681020162020% LSU per hectare% of total utilised agricultural areaLivestock density index Lithuania (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Lithuania (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area) 
       
 
 
sustainable water management, as the investment 
gap has widened there.  

Graph A6.3: Environmental investment gap, annual 
average 

The numbers are computed by the European Commission 
based on the latest internal reports, Eurostat, EIB and national 
data sources. 
Source: European Commission 

40 

14976726513742571225660200400600800Pollution prevention &controlWater managementCircular economy andwasteBiodiversity andecosystemsmillion EUR2014-20202021-2027 
       
 
Table A6.1:  Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources:  (1)  Member  States’  emission  data  for  2019  and  2020  are  in  global  warming  potential  (GWP)  values  from  the  4th 
Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ 2005 base year emissions 
under  Regulation  (EU)  2018/842,  emissions  data  for  2021  and  2022,  and  2030  projections  are  in  GWP  values  from  the  5th 
Assessment Report (AR5) of the IPCC. 2021 data are based on the final inventory reports, 2022 data are based on approximated 
inventory reports and European Environmental Agency’s calculation of effort sharing emissions. The final data for 2021 and 2022 
will  be  established  after  a  comprehensive  review  in  2027.  The  2030  target  is  in  percentage  change  of  the  2005  base  year 
emissions. Distance to target is the gap between the 2030 target and projected effort sharing emissions with existing measures 
(WEM) and with additional measures (WAM), in percentage change from the 2005 base year emissions. The measures included 
for  the  2030  emission  projections  reflect  the  state  of  play  as  reported  in  Member  States'  draft  updated  national  energy  and 
climate plans or, if unavailable, as reported by 15 March 2023 as per Regulation 2018/1999. (2) Net removals are expressed in 
negative figures, net emissions in positive figures. Reported data are from the 2024 greenhouse gas inventory submission. 2030 
value  of  net  greenhouse  gas  removals  as  in  Regulation  (EU)  2023/839  –  Annex  IIa.  (3)  The  2030  national  objectives  for 
renewable  energy  and  energy  efficiency  are  indicative  national  contributions,  in  line  with  Regulation  (EU)  2018/1999  (the 
Governance  Regulation),  the  EU-level  2030  renewable  energy  target  set  out  in  Directive  EU/2018/2001  amended  by  Directive 
EU/2023/2413 (the revised Renewable Energy Directive) – 42.5% of gross final energy consumption with the aspiration to reach 
45% –, and the formula in Annex I to Directive (EU) 2023/1791 (the Energy Efficiency Directive). (4) Passenger battery electric 
vehicles (BEV) and fuel cell electric vehicles (FCEV). (5) The climate protection gap refers to the share of non-insured economic 
losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires, windstorms, and the insurance 
penetration rate. Scale: 0 (no protection gap) –4 (very high gap) (European Insurance and Occupational Pensions Authority, 2022). 
(6) Total water consumption in renewable freshwater resources available for a territory and period. (7) Material extractions for 
consumption and investment. (8) Years of potential life lost through premature death due to exposure to particulate matter with a 
diameter  of  less  than  2.5  micrometres.  (9)  Share  of  habitats  in  good  conservation  status  according  to  the  records  submitted 
under  Art.  17  of  the  Habitats  Directive  (Directive  92/43/EEC)  for  2013-2018.  (10)  Multi-species  index  measuring  changes  in 
population abundances of farmland bird species. (11) Source: annex 12 of the Commission’s proposal for a soil monitoring law, 
SWD (2023) 417 final. (12) Estimates of organic carbon content in arable land. 

41 

Target200520192020202120222030WEMWAMProgress to climate and energy policy targetsGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq, %, pp13,062.18%6%10%9%-21%-60Net greenhouse gas removals from LULUCF (2)Kt CO2eq-4 179-5 903-6 073-5 501-6 356 -4,633n/an/aShare of energy from renewable sources (1) (3)%17%25%27%28%30%49%--Energy efficiency: primary energy consumption (3)Mtoe8.16.36.26.66.35.2Energy efficiency: final energy consumption (3)Mtoe4.75.65.35.75.44.2Projected20182019202020212022202120222030Green transition: mobility         Greenhouse gas emissions: road transportMt CO2e---6.16.0769.0786.63.7Share of zero-emission vehicles in new registrations (4)% 0.10.11.13.65.2912.1n/aNumber of publicly accessible AC/DC charging points --126127418299178446956n/aShare of electrified railways%8.0%8.0%8.0%8.0%-56.1%-n/aGreen transition: buildings         Greenhouse gas emissions: buildingsMt CO2e---1.61.6537.0486.71.3Final energy consumption in buildings2015=100111.8%107.2%103.9%117.7%112.8%104.0%97.2% Climate adaptation         Climate protection gap (5)score 1-4--1.31.21.31.51.5n/a20182019202020212022202020212022State of the environmentWater | Water exploitation index (WEI+) (1) (6)% of renewable freshwater0.60.7---3.6--Circular economy | Material footprint (7)tonnes per person20.220.621.923.723.214.214.814.9Pollution | Years of life lost due to air pollution by PM2.5 (8)per 100.000 inhabitants840777571779-545584-Biodiversity | Habitats in good conservation status (9)%22.214.7                       Common farmland bird index (10)2000=100596251--78--Green transition: agri-food sectorOrganic farming% of total utilised agricultural area8.138.1488.91-9.1--Nitrates in groundwatermg NO3/litre3.273.623.33--20.42--Food waste per capitaKg per capita137139-130131-Share of soil in poor health (11)%3141Soil organic matter in agricultural land (12)Mt per ha133----7,904--DistanceEU-27 
 
      
 
ANNEX 7: ENERGY TRANSITION AND COMPETITIVENESS 

This  Annex (59)  sets  out  Lithuania’s  progress 
and  challenges  in  accelerating  the  net-zero 
energy  transition  while  bolstering  the  EU’s 
competitiveness 
energy 
sector (60). It considers measures and targets put 
forward in the draft updated National Energy and 
Climate Plan (NECP) (61). 

clean 

the 

in 

in  2023.  Fast 

Lithuania's  energy  landscape  saw  important 
renewable  energy 
shifts 
deployment,  especially 
in  wind  and  solar, 
showcased  Lithuania's  progress  towards  energy 
transition,  and  reinforce  the  country’s  energy 
security and independence, on top of other crucial 
infrastructure  projects.  Challenges 
in  energy 
efficiency and grids persist, despite investments. 

Like  prevailing  trends  observed  across  the 
EU,  energy  prices  in  Lithuania  have  declined 
after  the  2022-2023  winter  peak,  but  are 
still significantly higher than pre-crisis. After 
peaks  in  the  second  half  of  2022  for  industry 
electricity and gas prices, and in the first semester 
of 2023 for households, prices decreased by 49% 
for electricity in industry between the second half 
of  2022  and  the  first  of  2023,  and  by  36%  for 
gas.  Household  prices  averages  decreased  about 
20%  in  the  first  semester  of  2023.  Except  for 
household gas prices, all energy prices averages in 
Lithuania for the second half of 2023 reached sub 
EU averages levels.  

Most  of  the  direct  energy  support  measures 
for households implemented since the outset 
of the energy crisis were discontinued in July 
2023.  The  most  vulnerable  customers  remain 
shielded from the steep energy prices. As regards 
electricity,  almost  30% of the smallest household 
consumers  in  Lithuania  (with  annual  consumption 
regulated  electricity 
below  1 000kWh)  enjoy 
tariffs,  with  the  final  stage  of 
liberalisation 
postponed  till  2026.  In  2023  this  tariff,  however, 
was  slightly  above  the  average  variable  price 

(59)  It is complemented by Annex 6 as the European Green Deal 

focuses on the clean energy transition and by Annex 8 on the 
action taken to protect the most vulnerable groups, 
complementing ongoing efforts under the European Green 
Deal, REPowerEU and European Green Deal Industrial Plan. 

(60)  In line with the Green Deal Industrial Plan and the Net-Zero 

Industry Act 

(61)  Lithuania submitted its draft updated NECP in July 2023. The 
Commission issued an assessment and country-specific 
recommendations on 18 December 2023.  

contract tariff available on the market. As regards 
heating,  almost  110 000  households  (7.5%  of 
households)  received  compensation  during  the 
2022 –2023 heating season. In 2024 this number 
is  estimated  to  decrease  by  20%  due  to  the  re-
introduced pre-crisis procedure.   

Graph A7.1: Lithuania´s energy retail prices for 
households and industry & service 

(1) For industry, consumption bands are I3 for gas and IC for 
electricity, which refer to medium-sized consumers and 
provide an insight into affordability 
(2) For households, the consumption bands are D2 for gas 
and DC for electricity 
(3) Industry prices are shown without VAT and other 
recoverable taxes/levies/fees as non-household consumers 
are usually able to recover VAT and some other taxes 
Source: Eurostat 

Graph A7.2: Trends in electricity prices for non-
household consumers (EU and foreign partners) 

(1) For Eurostat data (EU and LT), the band consumption is ID 
referring to large-sized consumers with an annual 
consumption of between 2 000 MWh and 20 000 MWh, such 
as in electricity intensive manufacturing sectors, and gives an 
insight into international competitiveness  
(2) JP = Japan 
Source: Eurostat, IEA 

42 

0.000.050.100.150.200.250.300.35€/KWhGas (industry & service) - LTGas (industry & service) - EUGas (households) - LTGas (households) - EUElectricity (industry & service) - LTElectricity (industry & service) - EUElectricity (households) - LTElectricity (households) - EU050100150200250300350Index ( 2018 S2 = 100)JPUKUSLTEU 
 
 
   
 
  
 
have 

consumers 

In  relative  terms,  electricity  prices  for  non-
increased 
household 
significantly  compared  to  the  US  and  Japan. 
Although  there  has  been  a  notable  decline  since 
the  second  half  of  2022,  Lithuania’s  electricity 
prices  have  persisted  above  those  of  the  US  and 
Japan. 
the 
international  competitiveness  of  energy-intensive 
industries in the country. 

potentially  affect 

could 

This 

is 

Consumer  empowerment  in  the  electricity 
market  is  significant, with a  rapidly  growing 
number of prosumers, but the deployment of 
smart  meters 
lagging,  and  energy 
communities  have  not  yet  found  their  place 
in  the  energy  system.  Due  to  a  favourable 
regulatory  framework,  the  number  of  prosumers 
doubled  in  2023,  reaching  almost  90 000  and 
producing  around  5%  of  the  total  electricity 
consumed  in  Lithuania.  Only  12.3%  of  household 
consumers had smart meters in 2022 (EU average 
80%).  

While Lithuania during the period 2021-2022 
transposed  the  EU  provisions  regarding 
energy  communities  and  adopted  a  number 
of incentives including support schemes, light 
permitting  procedures and  priority  access  to 
renewable  energy 
grids,  so  far 
registered.  An 
communities  have  been 
investment  support  programme 
for  energy 
communities  is  set  under  the  national  recovery 
and resilience plan. 

three 

Lithuania 

Lithuania  successfully  diversified  its  energy 
imports  but  is  still  highly  dependent  on 
these,  despite  an  improvement  in  2023  due 
faster  deployment  of  new 
to  much 
is 
capacity.  While 
generation 
maintaining  its  energy  trade  ban  with  Russia,  it 
managed  to  preserve  its  security  of  supply.  The 
Klaipeda  floating  storage  and  regasification  unit 
(FSRU),  which  the  Lithuanian  authorities  plan  to 
acquire by the end of 2024, and the GIPL pipeline 
Interconnection 
with 
it  possible  for 
Poland-Lithuania)  had  made 
its  gas 
Lithuania 
suppliers in recent years.  

to  substantially  diversify 

Poland 

(Gas 

ELLI 

project 

(Enhancement 

The 
of 
Latvia-Lithuania  interconnection),  which  has 
improved  the  gas 
interconnection  with 
Latvia,  has  also  helped  improve  Lithuania’s 
security  of  gas  supply,  by  improving  the 

Inčukalns  underground  gas  storage  site  in 
Latvia. Lithuania also managed to reduce its gas 
demand  during 
the  period  August  2022  - 
December  2023  by  32  %  in  comparison  with  the 
average of the previous five years. The role of gas 
is  expected  to  further  decrease  in  the  coming 
years and should account for around 13 % of the 
energy mix by 2030 (62).  

As for the security of electricity supply, there 
were  no  adequacy  issues  recorded  during  2023 
and  winter  2023-2024,  according  to  ENTSO-E 
analysis. In 2023, according to the TSO, Lithuania 
relied  in  imports  to  cover  49%  of  their  electricity 
demand, a significant decrease compared to 2022 
(-14pp),  driven  by  both  the  decrease  in  electricity 
consumption and the significant additions of wind 
and solar capacity in the latest years.  

a 

new 

signed 

In  December  2023,  Lithuania,  together  with 
Estonia,  Latvia,  Poland  and  the  European 
Commission, 
political 
declaration  paving  the  way  for  the  next 
the  synchronisation 
steps 
project  with  the  EU  continental  grid.  Several 
key 
investment  projects  are 
currently being implemented which will also serve 
the synchronisation project.  

to  complete 

infrastructure 

Renewable installed capacity surged by 59% 
in 2023, driven by the significant increase in 
wind  and  solar,  supported  by  significant 
steps  in implementing  reforms  to  accelerate 
renewables  development.  Total 
renewable 
energy  capacity  in  Lithuania  in  2023  stood  at 
2785  MW.  Total  wind  capacity  in  Lithuania  for 
2023 was 1287 MW, a yearly increase of 36%, of 
which  all  was  onshore  wind (63).  Lithuania  is  also 
making  significant  investment  in  offshore  wind, 
with  two  offshore  wind  parks  planned  to  be 
installed by 2028, with a total capacity of 1.4 GW.  

As  regards  the  great  acceleration  of  solar 
deployment,  the  total  installed  capacity  in  2023 
was 1165 MW, an increase of 103% compared to 
2022 (64).  When  it  comes  to  grid  connection,  in 
Lithuania  grid  connection  is  reserved  for  self-

(62)  Lithuanian government projections 

(63)  IRENA Report 2024 

(64)  IRENA report Renewable Energy Statistics 2024. The data 
might differ from the Eurostat data because a different 
methodology is used to calculate the capacity in AC and DC. 

43 

 
 
consumers,  and  it  has  also  included  in  its  draft 
NECP  update  a  quantitative  self-consumption 
target for 2030. Lithuania aims to develop 1.4 GW 
of  offshore  wind  by  2030.  This  goal  aligns  with 
Lithuania’s  non-binding  agreement,  as  defined  by 
the  non-binding  goals  in the  2023  EU  Sea  Basins 
agreements.  

Graph A7.3: Lithuanian's installed renewable 
capacity (left) and electricity generation mix 
(right) 

(1) "Other" includes solid biofuels, renewable municipal waste, 
and biogas 
Source: IRENA, Ember 

Lithuania  adopted  a  package  of  measures 
which  simplifies  the  permit-granting  framework 
for  wind  and  solar  power  plants,  sets  the 
conditions  for  developing  and  operating  hybrid 
power plants (combining several renewable energy 
technologies  and 
(or)  storage  facilities)  and 
clarifies  the  procedure  for  tendering  and  permit-
granting for offshore projects.  

high 

share 

relatively 

Lithuania’s 
of 
renewables in heating and cooling (51.5% in 
2022)  is  mainly  related  to  biomass  use,  with 
heat pumps covering around 5% of this share. The 
targets  stated  in  the  draft  updated  NECP  do  not 
distinguish  between  bioenergy  and  other  sources 
of renewable heat, such as heat pumps. The share 
of  renewables  in  the  electricity  sector  reached 
26.5%  in  2022,  more  than  half  of  which  was 
covered by wind energy.  

Lithuania  demonstrated  significant  progress 
in  reaching  the  2030  EU  targets  for  energy 
efficiency.  In  2022,  it  had  a  primary  energy 
consumption  of  6.3  Mtoe,  a  4.8%  decrease 
compared to 2021, and a 5.5% increase compared 
to 2012. It had a final energy consumption of 5.4 
Mtoe,  a  4.7%  decrease  compared  to  2021,  and  a 
10.0%  increase  compared  to  2012.  In  this  last 
year,  the  best  results  came  from  the  industry 
sector,  which  decreased 
final  energy 
consumption  by  14.0%,  and  the  worst  from  the 

its 

44 

transport sector, which nevertheless decreased its 
final energy consumption by 0.1%. 

including 

Lithuania  has 
implemented  a  series  of 
energy efficiency measures with the support 
of several EU funds. The recovery and resilience 
plan  includes  reforms  and  investment  worth  EUR 
307  million  for  energy  efficiency  renovation  of 
the 
revised  plan, 
buildings.  The 
REPowerEU  Chapter,  adds  additional  reforms  and 
investment  for  reducing  dependence  on  Russian 
fossil  fuels  and  supporting  the  green  transition. 
Under  cohesion  policy,  EUR  900  million  (15 %  of 
the  overall  funding  allocated  to  Lithuania)  covers 
promoting energy efficiency and renewable energy 
supporting  (i)  the  renovation  of  multi-apartment 
installation  of 
and  public  buildings, 
renewable  energy  sources  and  energy  storage 
solutions in households, and (iii) increasing energy 
efficiency in industrial firms.  

(ii)  the 

Lithuania remains a leader in the EU in using 
financial  instruments  for  the  renovation  of 
multi-apartment 
public 
buildings, developing energy efficiency and using 
renewables in district heating and cooling systems.  

buildings 

and 

the  2020 
Lithuania  has  underachieved 
energy  efficiency  target  in  final  energy 
consumption (FEC) by 19%, which was of 4.3 
Mtoe,  and  overachieved  by  4.4%  the  target 
in  primary  energy  consumption  (PEC),  which 
was  of  6.5Mtoe.  However,  these  results  can 
mainly  be  attributed  to  the  exceptional  drop  in 
energy consumption caused by covid lock-down in 
2020. In 2021 the levels of both primary and final 
energy  consumption  increased  back  to  the  pre-
covid years, accounting respectively for 6.63 Mtoe 
in  PEC  and  5.66  Mtoe  in  FEC.  Therefore,  without 
the exceptional effects of the pandemic, Lithuania 
would have missed both targets in 2020.   

implementing  the  energy  savings 
While 
obligation  for  the  new  obligation  period 
2021-2030,  Lithuania  opted  for  a  mix  of  13 
policy  measures,  including  an  alternative 
approach and  taxation measures.  New  annual 
savings achieved in 2021 were significantly higher 
than what was required (65).   

(65)  National energy and climate progress report (NECPR) 

submitted in 2023, 

 
 
 
Lithuania  is  a  moderate  innovator (67),  with 
its performance at 83.8% of the EU average. 
Lithuania  shows  relative  strength  concerning  the 
tertiary  education, 
share  of  population  with 
innovative  SMEs 
trademark  applications  and 
collaborating  with  others.  It  shows,  on  the  other 
hand, relative weakness in areas such government 
support for business R&D, R&D expenditure in the 
business  sector  and  PCT (68)  patent  applications. 
Performance  is  increasing  at  a  rate  higher  than 
that  of  the  EU.  The  country’s  performance  gap  to 
the EU is becoming smaller.  

Lithuania  remains  dependent  on  non-EU 
countries  for  clean  energy  technologies,  and 
other EU Member States for wind energy, but 
is a regional leader in PV cells and modules. 
Lithuania  presents  good  and  steadily  increasing 
developments  in  PV  manufacturing  and  offers 
innovative PV solutions. The country hosts several 
modules  and  cell  manufacturing  facilities  and 
particularly  increased  its  production  capacity  in 
2023. Regarding batteries, a few lithium batteries 
and energy flow management systems production 
in  Lithuania.  On  wind, 
facilities  are 
Lithuania hosts some industrial capacity supplying 
the wind industry.   

located 

lead 

likely  not 

Lithuania’s  efforts  in  buildings  renovation 
to  a  meaningful 
will 
contribution to its 2030 reduction target for 
energy  consumption  by  buildings.  Residential 
increased  by  7% 
final  energy  consumption 
between  2015  and  2022  while  the  Lithuanian 
long-term renovation strategy sets out a reduction 
in building primary energy consumption of 15% by 
2030  compared  to  2015.  Heating  and  cooling 
account  for  80%  of  the  country’s  residential  final 
energy  consumption,  with  renewables  supplying 
51.5%  of  the  total  energy  used  for  heating  and 
cooling  across  all  sectors.  Approximately  25  000 
hceat  pumps  were  sold  in  2022,  reaching  a  total 
stock  of  around  120 000  installed  heat  pumps  in 
the  residential  sector.  Electricity  in  Lithuania  is 
4.79 times more expensive than gas, meaning that 
end  users  save  energy  but  pay  more  if  they 
choose a heat pump for heating (66) 

in 

chapter 

its 
Lithuania’s  REPowerEU 
recovery  and  resilience  plan  has  increased 
the  overall  budget  dedicated  to  building 
renovation  and  will  contribute  positively  to 
its  target  by  speeding  up  the  rate  of 
renovations  and  ensuring  that  a  30% 
reduction  in  primary  energy  consumption  is 
achieved  for  those  renovation  projects 
receiving  support.  Lithuania  is  developing  a 
hydrogen  interconnector  together  with  Finland, 
Estonia,  Latvia,  Poland  and  Germany  (currently 
known  as  Nordic-Baltic  Hydrogen  Corridor),  which 
is  a  project  of  common  interest  on  the  1st  Union 
list of projects of common interest and projects of 
mutual 
revised  TEN-E 
Regulation.  The  goal  of  the  project  is  to  develop 
hydrogen 
infrastructure  from  Finland  through 
Estonia,  Latvia,  Lithuania  and  Poland  to  Germany 
by  2030.  Lithuania  is  also  developing  a  CO2 
infrastructure project, the CCS Baltic Consortium – 
cross-border CO2 transport via rail between Latvia 
and  Lithuania,  with  a  multi-modal  liquid  CO2 
terminal based in Klaipeda. This is also a project of 
common interest  on the  1st  Union list  of projects 
of  common 
interest  and  projects  of  mutual 
interest  under  the  revised  TEN-E  Regulation.  The 
infrastructure  for  the  project  is  planned  to  be 
developed by 2027, with the project intended to be 
operational as of 2030. 

interest  under 

the 

(66)  Therefore, Lithuania would benefit from analysing how 
taxation and network charges and levies affect the 
economics of decarboniszed heating and addressing any 
imbalances. 

(67)  European Innovation Scoreboard 2023, country profile 

Lithuania 

(68)  Patent Cooperation Treaty 

45 

 
 
 
Table A7.1:  Key Energy Indicators 

(1) The ranking of the main suppliers is based on the latest available figures (for 2022) 
(2) Venture Capital investment includes Venture Capital deals (all stages), Small M&A deals and Private Equity (PE) growth deals 
(for companies that have previously been part of the portfolio of a VC investment firm or have received Angel or Seed funding). 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (03/2024), JRC SETIS (2024) 

46 

20192020202120222019202020212022Import Dependency [%] 75.2%74.9%73.3%72.4%60.5%57.5%55.5%62.5%of Solid fossil fuels 108.1%87.9%91.9%127.8%43.3%35.8%37.3%45.8%of Oil and petroleum products 100.8%102.7%101.7%98.8%96.7%96.8%91.7%97.7%of Natural Gas 100.0%98.9%100.8%101.2%89.7%83.6%83.6%97.6%Dependency from Russian Fossil Fuels [%]of Natural Gas 43.3%41.8%36.6%7.9%39.7%41.3%41.1%21.0%of Crude Oil78.0%72.3%79.1%18.0%28.8%26.7%26.4%19.5%of Hard Coal100.0%100.0%100.0%72.8%43.5%49.1%47.4%21.5%2016201720182019202020212022Gas Consumption (in bcm)2.2                   2.3                   2.1                   2.2                 2.4                 2.3                 1.5                 Gas Consumption year-on-year change [%]-11.9%5.0%-7.5%4.4%6.1%-4.2%-32.4%Gas Imports - by type (in bcm)2.3                   2.5                   2.3                   2.7                 2.9                 2.4                 3.5                 Gas imports - pipeline0.9                   1.3                   1.3                   1.2                 1.2                 0.9                 0.3                 Gas imports - LNG1.41.21.01.61.71.53.3                 Gas Imports - by main source supplier (in bcm) (1)Norway1.4                   0.9                   1.0                   1.5                 1.1                 0.3                 0.9                 Russia0.9                   1.3                   1.3                   1.2                 1.2                 0.9                 0.3                 United States-                   0.2                   -                   0.1                 0.6                 0.9                 2.4                 20192020202120222023LNG Terminals - storage capacity m3 LNGNumber of LNG Terminals1                      1                      1                      1                    1                    LNG Storage capacity (m3 LNG)170,000          170,000          170,000          170,000        170,000        Underground StorageNumber of storage facilities00000Technical Capacity (bcm)0.00.00.00.00.020162017201820192020202120222023Gross Electricity Production (GWh) (2)4,266              4,187              3,511              3,972             5,518             5,079             4,783             -              Combustible Fuels1,750           1,324           1,089           1,210         2,550         2,240         1,845         -              Nuclear0000000-              Hydro1,044           1,181           960              948             1,080         1,094         1,021         -              Wind1,136           1,364           1,144           1,499         1,552         1,362         1,512         -              Solar66                 68                 87                 91               129             191             342             Geothermal0000000-              Other Sources270              250              232              223             207             193             63               -              Gross Electricity Production [%]Combustible Fuels41.0%31.6%31.0%30.5%46.2%44.1%38.6%-              Nuclear0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Hydro24.5%28.2%27.3%23.9%19.6%21.5%21.3%-              Wind26.6%32.6%32.6%37.8%28.1%26.8%31.6%-              Solar1.5%1.6%2.5%2.3%2.3%3.8%7.2%-              Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Other Sources6.3%6.0%6.6%5.6%3.7%3.8%1.3%-              Net Imports of Electricity (GWh)8,275              8,677              9,633              9,344             7,909             9,044             8,568             -              As a % of electricity available for final consumption 77.9%79.2%85.4%81.9%70.9%75.7%74.8%-              Electricity Interconnection [%]-               88.3%80.9%86.5%77.0%81.4%69.2%72.4%Share of renewable energy consumption - by sector [%]Electricity16.9%18.3%18.4%18.8%20.2%21.3%26.5%-              Heating/cooling46.6%46.5%46.0%47.4%50.4%48.6%51.5%-              Transport3.6%4.3%4.3%4.0%5.5%6.5%6.7%-              Overall25.6%26.0%24.7%25.5%26.8%28.2%29.6%-                 20192020202120222023VC investments in climate tech start-ups and scale-ups (EUR Mln)0.40             1.55             21.10           -                 92.38             as a % of total VC investment (3) in Lithuania start-ups and scale-ups1.4%0.8%4.7%-                 55.4%Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)-               -               -               -              -              Public R&I (% GDP)-               -               -               -              -              Private R&I (EUR mln)8.8               19.2             -               -              -              Private R&I (% GDP)0.03%0.06%-               -              -              ELECTRICITY/ENERGYCLEAN ENERGYLithuaniaEUENERGY DEPENDNCEDIVERSIFICATION OF GAS SUPPLIES 
 
   
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

Lithuania’s 

situations. 

This  Annex  monitors  Lithuania’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
particularly  for  workers  and  households  in 
green 
vulnerable 
economy  is  expanding.  Between  2015  and  2024, 
total jobs in the environmental goods and services 
sector  grew  by  38.6%  (to  around  52  600)  (EU: 
18.2%),  reaching  3.9%  of  total  employment  (EU: 
2.7%).  Also  between  2015  and  2020, 
the 
greenhouse  gas  emission  intensity  of  Lithuania’s 
workforce (see Graph A8.1 and Table A8.1) slightly 
declined from 14.6 to 13.9 tonnes per worker, just 
below  the  EU  average  (14.3  tonnes  per  worker  in 
2022) (69), indicating  a positive  trend in  the  green 
transition. 
Council 
Recommendation  on  ensuring  a  fair  transition 
towards  climate  neutrality (70),  the  recovery  and 
resilience  plan  (RRP)  supports  the  update  and 
creation  of  95  vocational  training  programmes 
supporting the green and digital transition. A pilot 
project  by  the  Public  Employment  Service  (PES) 
promotes entrepreneurship and job creation in the 
green  sector.  The  European  Social  Fund  Plus 
(ESF+)  also  supports  the  creation  of  new  and 
better jobs, with particular attention given to skills 
for the green transition and circular economy. 

with 

line 

the 

In 

Employment 
in  Lithuania’s  sectors  most 
affected  by  the  green  transition  increased 
slightly.  In  2023,  employment  in  Lithuania’s 
energy-intensive industries (71)  comprised  1.9%  of 
total  employment  (3.5%  in  the  EU),  a  slight 
increase  from  1.7%  in  2015.  Employment  in 
mining  and  quarrying  has  risen  by  52.2%  since 
2015 (to around 3 500 workers in 2023).  The job 
vacancy  rate  in  construction  (see  Graph  A8.2),  a 
key  sector  for  the  green  transition,  is  lower  than 
the  EU  average  (1.8%  vs  3.6%  in  EU  in  2023). 
Nevertheless,  72%  of  small  and  medium-sized 
enterprises (SMEs) in the sector reported that skills 

(69)  Workforce-related calculations are based on the EU Labour 
Force Survey. Note, in the 2023 country report for Lithuania, 
such indicators were calculated based on employment 
statistics in the national accounts. This may result in limited 
comparability across the two reports. 

(70)  Council Recommendation of 16 June 2022 on ensuring a fair 
transition towards climate neutrality (2022/C 243/04) covers 
employment, skills, tax-benefit and social protection 
systems, essential services and housing. 

(71)  Mining and quarrying (NACE B), chemicals (C20), minerals 

shortages  are  holding  them  back  in  general 
business activities (72). 

Graph A8.1: Fair transition challenges in Lithuania 

Source: Eurostat, EU Labour Force Survey, EMPL-JRC GD-
AMEDI/AMEDI+ and DISCO(H) projects (see Table A8.1). 

limited. 

(EU:  42%) (72). 

Upskilling  and  reskilling  in  energy-intensive 
industries  decreased  and  labour  shortages 
are  relatively 
In  energy-intensive 
industries,  workers’  participation  in  education  and 
training decreased from 10.4% in 2016 to 12.0% 
in  2023,  below  the  EU  average  (10.9%).  In 
Lithuania,  38%  of  the  SMEs  think  that  the  skills 
required  for  greening  business  activities  are 
If 
important 
becoming  more 
Lithuania matches its projected contribution to the 
EU’s  2030  renewable  energy  target,  between100 
and  1  500  additional  skilled  workers  will  be 
needed  for  the  deployment  of  wind  and  solar 
energy,  which may  require  an  investment in  skills 
of  EUR  0.4-0.5  million (73).  Specific  investments 
under  the  Just  Transition  Mechanism  provide 
training to help reskill workers in regions affected 
by the transition, together with a broader training 
offer  under  the  RRP  and  national  programmes. 
Lithuania  also  aims  to 
increase  employment 
support in view of the digital and green transition, 
including  upskilling  and  reskilling  programmes  in 
fields  such  as  the  circular  economy  and  digital 
skills.  Lithuania  committed  to  submitting  ESF+ 
figures for the funding of green skills and jobs at a 
later stage, tentatively in 2025.  

indicators  have  been 
Energy  poverty 
improving in recent years but still remain at 
a  relatively  high  level.  The  share  of  the 

(72)  Eurobarometer on skills shortages, recruitment, and retention 

strategies in small and medium-sized enterprises. 

(C23), metals (C24) and automotive (C29) 

(73)  EMPL-JRC AMEDI+ project. 

47 

0.00.51.01.52.02.53.03.5Greenhouse gasemissions per workerEmployment inEnergy-IntensiveIndustriesEducation & trainingin Energy-IntensiveIndsutriesEnergy povertyTransport poverty(proxy)Carbon inequalityLT Latest vs EU LatestEU LatestLT 2015 vs EU Latest 
 
 
  
 
 
Table A8.1:  Key indicators for a fair transition in Lithuania 

Source: Eurostat (env_ac_ainah_r2, lfsa_egan2d, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-JRC 
GD-AMEDI/AMEDI+ and DISCO(H) projects. 

the 

population unable to keep their homes adequately 
warm decreased from 31.1% in 2015 to 17.5% in 
2022,  still  well  above  the  EU  average  (9.3%) (74). 
However, 
indicator  decreased  by  5.0 
percentage  points  between  2021  and  2022, 
despite  energy  price  increases  due  to  supply 
constraints caused by the COVID-19 pandemic and 
Russia’s  war  of  aggression  against  Ukraine.  This 
improvement  was  attributed 
to  emergency 
measures  implemented  in  Lithuania.  In  2022, 
28.8% of the population at risk of poverty (AROP) 
(EU:  20.1%)  and  20.9%  of  lower  middle-income 
households  (in  deciles  4-5)  (EU:  11.6%)  were  
unable  to  keep  their  homes  adequately  warm.  On 
the other hand, 13.0% of the population at risk of 
poverty  spent  a  considerable  proportion  of  their 
budget (more than 6%)  on private transport fuels 
in  January  2023  (EU:  37.1%) (75).  Lithuania  has 
energy 
established  a 
poor/vulnerable customers, but has not yet revised 
this  definition 
the 
Commission  Recommendation  on  Energy  Poverty 
(EU) 2023/2407.   

legal  definition  of 

it  better  with 

to  align 

Despite  being  below/equal  the  EU  average, 
environmental  inequalities  remain  an  issue  
in Lithuania . In 2021, the consumption footprint 
for 20% of the population with the highest income 
is  1.7  times  higher  than  the  footprint  of  the 
poorest 20% in 2021 (76) (EU: 1.8). For both groups 
, the consumption footprint is highest for food and 

(74)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(75)  Affordability of private transport fuels is one key dimension 

of transport poverty. The indicator has been developed in the 
context of the EMPL-JRC GD-AMEDI/AMEDI+ projects. 
Methodology explained in Economic and distributional 
effects of higher energy prices on households in the EU. 

(76)  Developed in the context of the EMPL-JRC DISCO(H) project. 
Methodology explained in Joint Research Centre, 2024. 
Carbon and environmental footprint inequality of household 
consumption in the EU. JRC137520. The EU average refers to 
EU27 without Italy (household income data not available for 
IT in the HBS) 

48 

housing.      The  average  levels  of  air  pollution  in 
2021 stood equal to the EU average (11.4 vs 11.4 
µg/m3  PM2.5),  with  all  the  population  living  in 
regions  exposed 
levels  of  air 
pollution (77).  This  has  led  to  a  significant  impact 
on  health,  affecting  vulnerable  groups 
in 
particular,  and  around  2 150  premature  deaths 
annually (78). 

critical 

to 

Graph A8.2: Job vacancy rate in transforming 
sectors and mining and quarrying 

B - Mining and quarrying 
C - Manufacturing 
D - Electricity, gas, steam and air conditioning supply 
E - Water supply; sewerage, waste management and 
remediation activities 
F - Construction 
H - Transportation and storage 
Source: Eurostat jvs_a_rate_r2. 

stage  of 
is  at  an  early 
Lithuania 
implementing  measures  for  a  fair  transition 
towards  climate  neutrality.  Active 
labour 
market  policies  in  place  also  address  challenges 
for  those  affected  by  the  green  transition.  In  its 
RRP,  Lithuania plans  actions  to  train  PES  staff  on 
the  green  economy,  create  jobs  relevant  to  the 
green  and  digital  transition  and  promote  the 
circular  economy.  Better  targeted  reskilling  and 
upskilling  measures  are  needed,  as  current 
initiatives  are  rather  general.  Improving  existing 

(77)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3). 

(78)  EEA - Air Quality Health Risk Assessment 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%BCDEFHEU 2023LT 2023LT 2015IndicatorDescriptionLT 2015LTEUGHG per workerGreenhouse gas emissions per worker – CO2 equivalent tonnes14.613.9 (2022)14.3 (2022)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24) and automotive (C29)1.7%1.9% (2023)3.5% (2023)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries9.6% (2016)12.0% (2023)10.9% (2023)Energy povertyShare of the total population living in a household unable to keep its home adequately warm31.1%17.5% (2022)9.3% (2022)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport12.2%13.0% (2023)37.1% (2023)Carbon inequalityRatio between the consumption footprint of the top 20% vs bottom 20% of the income distribution1.71.7 (2021)2.7 (2021) 
 
 
       
 
 
  
 
tools  used  for  analysing  and  forecasting  the 
demand for jobs and skills in the green and digital 
economy  would  enable  the  PES  to  better  address 
labour and skills shortages in sectors and regions 
affected by the green transition (79). 

(79)  Based on the monitoring review of the Council 

Recommendation on ensuring a fair transition towards 
climate neutrality, which took place in October 2023. 

49 

 
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The green transition of industry and the built 
environment,  in  particular  decarbonisation, 
resource  efficiency  and 
is 
Lithuania’s 
boost 
essential 
competitiveness (80).  In  this  regard,  priorities  for 
Lithuania  are  waste  management  and  the  use  of 
circular materials in industry and construction. 

circularity, 

to 

to 

the 

low 

guidelines 

Lithuania  is  not  on  track  to  achieve  the  EU 
Circular  Economy  Action  Plan  goals,  mainly 
levels  of  efficiency  and 
due 
productivity.  Lithuania  presents  one  of  the  EU’s 
highest material footprints. It increased from 18 to 
22.6  tonnes  per  capita  between  2016  and  2022. 
Waste  production  per  capita  increased  between 
2010 and 2018, before dropping to 2.4 tonnes per 
capita in 2020 – below the EU average (4.8 tonnes 
per capita). There is still room to make better use 
of the potential of the circular economy transition 
the  decarbonisation  of  Lithuania’s 
to  drive 
industry. 
for 
Implementing 
Lithuania's  transition  to  a  circular  economy  by 
2035  adopted  in  June  2023  could  help  Lithuania 
bring  about  the  necessary  systemic  change  and 
create  a  fertile  business  environment  for  circular 
innovation  and  circular  economy  practices.  The 
2022 Eco-Innovation Scoreboard listed the country 
among  the  average  performers 
in  terms  of 
eco-innovation.  Lithuania  scored  103.8,  compared 
to  an  EU  average  of  121.47,  which  indicates  the 
country  has  some  ground 
in 
eco-innovation.  Furthermore,  as  of  September 
2023,  Lithuania  totalled  9  awarded  EU  Ecolabel 
licences  and  470  products  with  the  EU  Ecolabel, 
showing  a  rather  low  take-up  of  products  and 
licences.  While  the  number  of  products  has 
steadily  increased  over  the  years,  the  number  of 
licences is rather stable. 

to  make  up 

system 

trading 

In  2023,  the  sectors  covered  by  the  EU 
emissions 
in 
Lithuania (81) emitted 36% less greenhouse gases 
than  in  2013.  In  2023,  almost  88%  of  the 
greenhouse  gases  emitted  by  Lithuania’s  ETS 
installations  came  from  3  installations  (around 
35%  from  a  refinery,  around  29%  a  chemical 

(ETS) 

and 

heat 

Power 

plant,  and  around  19%  from  a  cement  and  lime 
plant). 
generation were 
responsible  for  12% (82),  and  9%  came  from 
industry  sectors  classified  as  ‘other’.  Between 
2019  and  2023, 
the  power  sector  slightly 
increased  its  emissions,  by  3%,  and  the  industry 
sectors decreased theirs by 24%. Greenhouse gas 
emissions  in  the  chemicals  industry  decreased 
significantly,  by    49%  Between  2013  and  2023, 
greenhouse  gas  emissions  in  the  industry  sectors 
declined by 23%. 

Graph A9.1: ETS emissions by sector since 2013 

Source: European Commission 

Lithuania  is  not  keeping  up  with  the  EU 
average  efficiency and productivity  levels in 
industrial  sector.  Lithuania’s  circular 
the 
material use rate was only 4.1% in 2022 – almost 
three times  lower than  the  EU  average  of 11.5%. 
By  contrast,  resource  productivity  has  marginally 
increased  since  2019,  but  has  always  remained 
below  the  EU  average.  It  stood  at  1.5  purchasing 
power standards per kilogram in 2022 (compared 
to  an  EU  average  of  2.5).  Resource  productivity 
expresses  how  efficiently  the  economy  uses 
material  resources  to  produce  wealth.  Improving 
resource  productivity  can  help  minimise  negative 
reduce 
impacts  on 
dependence  on  volatile  raw  material  markets. 
Lithuania’s  dependence  on  imports  decreased  to 
35.4%  of  materials  used  in  2022,  compared  with 
an  EU  average  of  22.4%,  making  the  country 
comparatively  more 
to  market 
disruptions. Furthermore, the manufacturing sector 
accounted for 17.9% of water abstracted in 2019. 
The  Lithuanian  national  energy  and  climate  plan 
recognises the role of circular economy in climate 

the  environment  and 

vulnerable 

(80)  See also Annexes 6, 7 and 12. 

(81)  This analysis excludes air travel. For more details and the 
data sources, see Weitzel, M; van der Vorst, C. (2024), 
Uneven progress in reducing emissions in the EU ETS, JRC 
Science for policy brief, JRC138215, Joint Research Centre. 

(82)  Following the closure of the Ignalina nuclear power plant in 
2010, the vast majority of electrical power consumed in 
Lithuania is either imported or produced from renewable 
sources. 

50 

00.20.40.60.810123456720132014201520162017201820192020202120222023Emissions relative to 2013Mt CO2eCement & LimeChemicalsMetalsRefineriesPower generationOtherLithuania (both axes) 
 
 
 
  
 
 
achieve  the  target  of  a  maximum  of  10%  of 
landfilling  by  2035.  However,  the  country  has 
increased  its  dependence  on  incineration,  which 
could  impede  its  circular  economy  transition. 
Lithuania  did  not  register  any  new  patents  on 
waste and recycling in 2020, confirming a need to 
encourage the circular economy uptake. 

long-term 

The  built  environment  system  continues  to 
exacerbate  the  depletion  of  resources.  In 
2020,  the  residential  floor  area  per  capita  stood 
below  the  EU  average  –  34.2  versus  52.3 m2  per 
capita  –  but  grew  faster  than  the  average.  A 
similar  growth  rate  can  be  observed  for  the 
non-residential  floor  area  per  capita,  which, 
however, remained below the EU average. In 2020, 
renovation 
Lithuania  submitted  a 
strategy  to  decarbonise  the  building  stock.  It 
mentions  the  implementation  of  principles  of 
circular  economy  as  part  of  the  package  of 
support  measures. Despite  some  positive  trends, 
there  is  still  room  for  improving  construction  and 
demolition  waste  management 
in  Lithuania. 
Between  2010  and  2020,  waste  generated  from 
construction  and  demolition  activities  per  capita 
increased,  remaining  below  the  EU  average.  The 
proportion of backfilling has remained stable over 
the  last  decade  and  stood  at  19.6%  in  2020. 
Lithuania’s  recovery  rate  increased  to  98%  in 
2020,  achieving  the  Waste  Framework  Directive’s 
target  for  2020.  In  2020,  the  share  of  the 
population connected to at least  secondary  waste 
water  treatment  was  below  the  EU  average  of 
81%. 

change  mitigation  and  decarbonisation  of  the 
economy  beyond  waste  management.  It  includes, 
for  instance,  preventive  measures  and  alternative 
business models, and underlines the importance of 
circular  economy  in  research, 
innovation  and 
competitiveness. 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

room 

there 

is  still 

Lithuania has made significant progress with 
its  waste  management  system  over  the  last 
decade,  but 
for 
improvement. The municipal waste recycling rate 
stood  at  48.4%  in  2022,  and  the  country  is 
considered  at  risk  of  meeting  neither  the  2025 
target for packaging waste nor the 2025 target for 
municipal  waste.  The  plastic  packaging  recycling 
rate  is  declining  but  still  stands  above  the  EU 
average (39.7%), accounting for 56.1% in 2021. In 
recent years, Lithuania has successfully decreased 
its  dependence  on  landfilling.  It  is  on  track  to 

Table A9.1:  Circularity indicators 

Source: Eurostat, European Environment Agency 

51 

464472483480465010020030040050020182019202020212022Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27201820192020202120222023EU-27Latest yearIndustryResource productivity (purchasing power standard (PPS) per kilogram)1.41.41.31.41.5-2.52022Circular material use rate (%)4.33.94.04.24.1-11.52022Eco-innovation index (2013=100)81.787.892.898.5103.8-121.52022Recycling of plastic packaging (%)69.369.656.1---39.72021Cost of air emissions from industry (EUR bn)1.11.4-----2024Built environmentRecovery rate from construction and demolition waste (%)99.0-98.0---89.02020Soil sealing index (base year = 2006)107.8-----108.32018Non-residential floor area (m2 per capita)11.411.611.7---18.02020Waste backfilled (%)19.6-19.6---9.92020 
      
 
 
   
 
ANNEX 10: DIGITAL TRANSFORMATION 

its 

for 

targets 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  policy  programme,  and  in 
particular  with 
digital 
transformation  by  2030,  this  Annex  describes 
Lithuania’s  performance  on  digital  skills,  digital 
infrastructure/connectivity and the digitalisation of 
businesses  and  public  services.  Where  relevant,  it 
makes reference to progress on implementing the 
recovery  and  resilience  plan  (RRP).  Lithuania 
allocates  23.3%  of 
total  Recovery  and 
its 
Resilience  Facility  budget  to  digital (83).  Under 
cohesion  policy,  an  additional  EUR 309 million  is 
allocated 
digital 
transformation (84). 

country’s 

the 

to 

The  Digital  Decade  policy  programme  sets 
out a pathway for the EU’s successful digital 
transformation  by  2030.  Lithuania’s  national 
roadmap outlines the actions it intends to take to 
reach the objectives and targets at national  level. 
The first report on the state of the Digital Decade 
highlighted the need to accelerate and deepen the 
collective efforts to reach the EU-wide targets and 
objectives (85).  Through  this,  a  digitally  skilled 
population 
the  development  and 
adoption  of  digital  technologies  and  leads  to 
productivity  gains  and  new  business  models.  It 
also  leads  to  higher  inclusion  and  participation  in 
an environment increasingly shaped by the digital 
transformation (86). 
technologies, 
in 
infrastructure  and  tools  all  play  a  role 
addressing 
the  current  structural  challenges, 
including  strategic  dependence  in  various  areas, 
cybersecurity and climate change.  

increases 

Digital 

(83)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII to the 
Recovery and Resilience Facility Regulation. 

(84)  This amount includes all investment specifically aimed at or 
substantially contributing to digital transformation in the 
2021-2027 cohesion policy programming period. The source 
funds are the European Regional Development Fund, the 
Cohesion Fund, the European Social Fund Plus, and the Just 
Transition Fund. 

(85)  European Commission (2023): Report on the state of the 

Digital Decade 2023, 2023 Report on the state of the Digital 
Decade | Shaping Europe’s digital future (europa.eu). 

(86)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org) and OECD (2019): Going Digital: 
Shaping Policies, Improving Lives – Summary, 
https://www.oecd.org/digital/going-digital-synthesis-
summary.pdf. 

52 

of 

number 

information 

The 
and 
communication  technology  (ICT)  specialists 
has  grown  significantly.  The  proportion  of 
people in Lithuania with at least basic digital skills 
is  slightly  below  the  EU  average  (53%  versus 
56%).    However,  with  4.9%,  the  rate  of  ICT 
specialists  in  employment  is  now  slightly  above 
the  EU  average  (4.8%),  showing  a  very  positive 
dynamic  during  the  last  year.  It  is  quite  positive 
given  the  ICT  sector  has  an  important  role  in  the 
Lithuanian economy. 

The  country  could further  improve  on digital 
infrastructure/connectivity,  where  broader 
network  coverage  could  enable  wider  use  of 
digital technologies. Very high capacity network 
(VHCN)  coverage  is  almost  aligned  on  the  EU 
average  (78%  versus  79%),  but  in  overall  5G 
coverage  Lithuania  stands  above  the  EU  average 
(99%  versus  89%)  after  having  implemented 
different measures since 2022.  

Lithuania’s performance on the digitalisation 
of businesses is overall positive. The share of 
small  to  medium-sized  enterprises  with  at  least 
basic  digital  intensity  is  slightly  above  the  EU 
average  (60%  versus  58%),  while  the  use  of 
advanced  technologies  like  artificial  intelligence, 
data  analytics  or  cloud  computing  services  is 
slightly below the EU  average (54% versus 55%). 
In 2022, 0.8% of enterprises in Lithuania reported 
ICT  service  outage  due  to  cyberattacks  (e.g. 
ransomware  attacks,  denial  of  service  attacks). 
Over  the  same  year,  16.9%  of  enterprises 
developed  or  reviewed  their  ICT  security  policy 
within the previous 12 months. 

Lithuania  performs  well  on  digital  public 
services. This is most notable in the availability of 
digital  public  services  for  businesses,  where  it 
performs  comfortably  above  the  EU  average  (96 
out of 100 versus 85 out of 100). In the provision 
of  digital  services  for  citizens,  the  country’s 
performance is slightly lower, although still above 
the  EU  average  (87out  of  100  versus  79  out  of 
100).  For  access  to  electronic  health  records, 
Lithuania  scores  95  out  of  100,  considerably 
above  the  EU  average.  The  country  has  one 
electronic  identification  (eID)  scheme  that  has 
been  notified  under  the  eIDAS  Regulation.  A 
digital 
considerable 
transformation  measures  set  out  in  Lithuania’s 
RRP  are  focused  on  public  services,  including 
measures to support the digital transformation of 
implement  a  government  cloud 
healthcare, 

proportion 

the 

of 

 
 
 
 
Table A10.1:Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The fibre to the premises coverage indicator is included separately as its evolution will also be monitored separately and taken 
into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75% of EU enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.   

Source: Digital Economy and Society Index 

infrastructure,  increase  interactivity  for  end  users, 
and  increase  the  use  of  advanced  technologies, 
such  as  artificial  intelligence  in  digital  public 
services.  

53 

EUDigital Decade target by 2030 2022202320242024(EU)Digital skillsAt least basic digital skills49%49%53%56%80%% individuals20212021202320232030ICT specialists (1)3.8%4.4%4.9%4.8%20 million% individuals in employment aged 15-7420212022202320232030Digital infrastructure/connectivityFixed very high capacity network (VHCN) coverage78%78%78%79%100%% households20212022202320232030Fibre to the premises (FTTP) coverage (2)78%78%78%64%-% households2021202220232023Overall 5G coverage33%90%99%89%100%% populated areas20212022202320232030Digitalisation of businessesSMEs with at least a basic level of digital intensity57%NA60%58%90%% SMEs2021202320232030Data analyticsNANA41%33%-% enterprises20232023Cloud28%28%34%39%-% enterprises2021202120232023Artificial intelligence5%5%5%8%-% enterprises2021202120232023AI or cloud or data analytics (3)NANA54%55%75%% enterprises202320232030Digitalisation of public servicesDigital public services for citizens82848779100Score (0 to 100)20212022202320232030Digital public services for businesses93949685100Score (0 to 100)20212022202320232030Access to e-health recordsNA929579100Score (0 to 100)2022202320232030Lithuania 
 
 
     
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of 
the performance of Lithuania’s research and 
innovation  system,  which 
is  essential  for 
delivering  the  twin  transition  and  ensuring  long-
term competitiveness. 

the  European 

Lithuania  is  a  ‘moderate  innovator’  steadily 
nearing  to  the  EU  average.  According  to  the 
Innovation 
2023  edition  of 
Scoreboard  (EIS) (87),  its  innovation  performance 
has  increased  by  16.7  percentage  points  since 
2016,  at  a  higher  rate  than  the  EU’s  (8.5pp). 
However,  its  overall  performance  remains  below 
the EU average (83.8% of the EU performance). 

innovation 

Lithuanian 

The 
ecosystem 
benefits  from  an  entrepreneurial  dynamism, 
a  nurturing  start-up  environment,  and  some 
niches  of  technological  excellence.  Birth  and 
death  rates  in  industry  are  one  of  the  highest  in 
the  EU;  the  unicorn  valuation,  in  comparison  to 
GDP,  is  one  of  the  highest  in  the  world (88);  and 
Lithuania  performs  better than  the  EU  average in 
terms of high-growth enterprises (89).  In 2023, for 
the  first  time,  a  Lithuanian  company  won  a 
European 
Innovation  Council  Pathfinder  grant, 
illustrating  the  presence  of  some  niches  of 
time, 
technological  excellence.  At 
business  enterprise  expenditure  on  R&D, 
in 
comparison to GDP, has stalled in recent years and 
remains  three  times  lower  than  the  EU  average, 
limiting  business  innovation  potential.  In  addition, 
despite  rapid  development  and  several  relevant 
initiatives,  the  availability  of  venture  capital  in 
Lithuania  remains  below  the  EU  average  (Table 
A11.1). 

the  same 

should 

reforms 

improve 

Ongoing 
the 
attractiveness  of  researchers’  careers.  The 
number  of  doctoral  graduates  has  dropped  by 
11.4%  since  2016  as 
the  career  has  an 
unattractive  salary  in  the  junior  researcher  stage. 
In 2024 a new remuneration system is expected to 
increase researcher careers appeal, as the average 
salary should reach 150% of the median national 

(87)  2023 European Innovation Scoreboard (EIS), Lithuania: 

https://ec.europa.eu/assets/rtd/eis/2023/ec_rtd_eis-country-
profile-lt.pdf. 

(88)  8.4% GDP, ties with Estonia, Israel, Senegal, and the United 

States, Global innovation Index, WIPO 2023. 

(89)  Employment share of high growth enterprises measured in 

wage. Moreover, the career model will be adapted 
in line with the European framework. 

Science-business linkages remain overall too 
weak.  The  overall 
level  of  cooperation 
low 
between the public science base and businesses is 
illustrated  by  a 
rate  of  public-private  co-
publications which  is  the  lowest  in  the  EU  (Table 
A11.1).  National  missions  established  under  the 
recovery  and  resilience  plan  (RRP)  will  enable 
targeted cooperation between public research and 
businesses to carry out joint projects, develop and 
ideas, 
commercialise  start-ups  and  business 
conduct  applied  scientific  research,  improve  skills, 
and  fill  service  and 
infrastructure  gaps  for 
experimental  development  activities (90).  However, 
mission-based science and business cooperation is 
still 
to  be 
in  a  pilot  phase  and  needs 
mainstreamed to gain macroeconomic relevance. 

to 

The fragmentation of the public science base 
further 
remains  a  major  obstacle 
its 
strengthening 
its  performance  and 
contribution  to  the  economy.  After 
the 
the 
outstanding  merger  having  established 
Lithuanian  University  of  Health  Sciences  in  2010 
and  successful  integration  of  several  institutions 
into  Vytautas  Magnus  University  in  2019  and 
Vilnius  University  in  2021,  further  consolidation 
efforts  remain  to  be  carried  out.  In  its  RRP, 
Lithuania  committed  to  setting  up  a  voluntary 
scheme  for  reorganisation  and  mergers  amongst 
the higher education institutions. 

Inadequate  funding  for  the  public  science 
its  progression. 
base  risks  undermining 
Together with reforms, the availability of adequate 
funding  for  the  public  science  base  from  the 
national  budget  is  essential  to  increase  public 
research performance. In that respect, the decline 
in  public  R&D  intensity (91)  from  0.6%  in  2020  to 
0.52%  in  2022,  its  lowest  level  since  2007,  is  a 
major  concern.  This  issue  could  be  addressed  by 
implementing  the  2021  national  agreement  to 
reach  a  level  of  public  support  for  R&D  from 
national sources equal to 1% of GDP by 2030, if a 
substantial  part  of  the  additional  resources  were 
allocated  to  the  public  science  base.  For  2024 
Lithuania  has  increased  allocations  to  R&D  from 
the national budget from 0.31% to 0.46% of GDP. 

(90)  STIP Compass Lithuania Overview, EC/OECD (2023). 

employment (%). 

(91)  Public expenditure on R&D as % of GDP. 

54 

 
 
 
 
 
In  addition  to  national  funding,  almost 
EUR 1 billion  of  cohesion  policy  funds  for 
2021-2027  are  dedicated  to  boosting  R&I 
and accelerating digitalisation, enhancing the 
competitiveness  and  productivity  of  SMEs, 
and driving smart specialisation. 

Lithuania  bolsters  research  and  innovation 
activities in the field of defence and security. 
The  country  established  new  venture  capital  fund 
MILInvest  dedicated  to  defence  innovation  and 
decided  to  participate  in  the  activities  of  NATO’s 
Innovation 
Innovation  Fund  and  the  Defence 
Accelerator 
(DIANA). 
Innovators, including early-stage technology start-
ups,  will  participate  in  the  development  of  dual-
use  technologies  in  optics  and  optoelectronics, 
artificial 
intelligence,  big  data,  autonomous 
systems,  biotechnology,  quantum,  ultrasonic  and 
space technologies, and new materials. 

the  North  Atlantic 

for 

for 

requirements 

the  R&I  support  measures  often  takes  more  time 
than  expected  due  to  lack  of  dialogue  between 
different government bodies. Timing for the launch 
of  measures  lacks  predictability  and  depends  on 
the  administrative  capacity  of  institutions  rather 
than  market  needs,  which  burdens  planning  by 
potential  beneficiaries.  Reporting,  compliance,  and 
procurement 
potential 
beneficiaries in some cases are not adapted to the 
specific  features  of  R&I  and  go  beyond  what  is 
necessary,  making  R&I  support  instruments  less 
attractive  for  researchers  and  innovators.  Public 
support for R&I is also adversely impacted by the 
institutional  structure:  the  involvement  of  several 
implementing  agencies 
to  additional 
administrative  costs  and  less  efficient  processes. 
While  the  creation  of  the  Innovation  Agency  and 
the  first  round  of  consolidation  were  successful, 
the 
substantial 
simplification. 

processes 

further 

leads 

need 

Complex  public 
investment  management 
rules  hinder  effective  implementation  of 
innovation  support  measures.  The  launch  of 

Table A11.1:Key innovation indicators 

(1) EU average for the latest available year or the year with the largest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical Database), Invest Europe 

55 

EUaverage (1)R&D intensity (GERD as % of GDP)0.781.041.131.11.022.24Public expenditure on R&D as % of GDP0.550.760.60.570.520.73Business enterprise expenditure on R&D (BERD) as % of GDP0.230.290.530.540.51.48Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 34.35.49::9.6Patent Cooperation Treaty (PCT)  patent applications per billion GDP (in PPS)0.40.40.52::3.4Public-private scientific co-publications as % of total publications5.54.85.65.45.17.6Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0820.0910.0430.056:0.054New graduates in science & engineering per thousand pop. aged 25-3423.318.414.413.2:16.9Total public sector support for BERD as % of GDP0.0670.0830.1710.221:0.204R&D tax incentives: foregone revenues as % of GDP0.0130.0210.0370.05:0.104Share of environment-related patents in total patent applications filed under PCT (%)36.1198.7::14.7Venture capital (market statistics) as % of GDP0.00030.0260.0120.0430.0740.085Employment share of high growth enterprises measured in employment (%):15.2816.11::12.51Key indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation 2020Finance for innovation and economic renewal202120102015Lithuania2022 
 
   
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

Lithuania’s  overall  competitiveness  ranking 
has  been  relatively  stable  since  2019. 
According  to  the 
IMD  World  Competitiveness 
Ranking  for  2023,  Lithuania  ranks  32nd,  a  slight 
drop  from  29th  in  the  previous  year.  It  trails 
Estonia  (26th)  but  is  well  ahead  of  Latvia  (51st) 
and Poland (43rd). Despite strong external  shocks 
and economic contraction, the Lithuanian economy 
has  still  proven  to  be  competitive  and  resilient. 
Nevertheless,  persistently  high  inflation,  rising 
interest  rates  and  weak  external  demand  are 
weighing  on  its  performance.  Overcoming  the 
consequences  of  Russia’s  invasion  of  Ukraine  has 
been identified by the Innovation Agency Lithuania 
as a major challenge to the competitiveness of the 
country’s economy (92). 

Graph A12.1: Labour productivity (GDP per hour 
worked in purchasing power standards, % of EU-
27) 

Source: Eurostat 

Lithuania  builds  its  competitiveness  on  a 
regulatory  environment, 
business-friendly 
with  firms  reporting  appropriate  transport 
and  digital  infrastructure.  A  relatively  high 
share  of  Lithuanian  firms  uses  online  planning 
tools  and  has  significantly  high  shares  of  online 
sales (32% of small and medium-sized enterprises 
(SMEs)  vs  EU  average  of  18%  in  2023)  and 
purchases (33.4% vs 26%). This indicates a higher 
degree  of  digitalisation  than  the  EU  average.  The 

Investment  Survey,  Lithuanian 

take-up of digital tools is also widespread in public 
administration  (see  Annex  13).  Moreover,  only 
reported  digital 
22%  of  Lithuanian 
firms 
infrastructure  as  being  an 
to 
impediment 
investment,  compared  to  the  EU  average  of 
43% (93).  Considering  the  results  from  the  2023 
EIB 
transport 
infrastructure seems to be comparably favourable 
for  firms.  Only  28%  of  them  reported  it  to  be  an 
impediment  to  investment  (EU  average  46%) (94). 
On  regulation,  flexible  labour  markets  among 
other  factors  enabled  an  efficient  reallocation  of 
resources during the multiple crises and therefore 
contributed 
In 
addition,  only  47%  of  Lithuanian  firms  reported 
labour regulation to be an obstacle to investment 
(compared to the EU average of 60%) (96). 

to  an  economic 

recovery (95). 

Productivity  growth  in  Lithuania  recovered 
strongly after the global financial crisis, but 
has  recently  stagnated.  Over  the  past  two 
decades,  labour  productivity  per  hour  worked  in 
Lithuania grew rapidly as the economy  converged 
towards  the  EU  average  (see  Graph  A12.1). 
However,  Lithuania  has  experienced  a  slight 
decline in labour productivity in recent years, but it 
is  still  closer  to  the  EU  average  than  Latvia  and 
Estonia.  The  recent  decline  in  labour  productivity 
can  be  partly  attributable  to  a  wide  productivity 
gap  between  Lithuania’s  export  and  domestic 
sectors.  The  former  is  prone  to  external  shocks 
such as supply chain disruptions and energy price 
spikes (97). In 2023, Lithuania’s labour productivity 
as a percentage of the EU average stood at 70% 
in purchasing power parity, ahead both Latvia and 
Estonia.  The  still  relatively  low  productivity  level 
attained  is  due  to  the  structure  of  the  economy, 
which  is  concentrated  in  less  knowledge-intensive 
processing  activities (98)  Nevertheless,  Lithuania 
succeeded  in  growing  the  sophistication,  product 
diversity  and  global  interconnectedness  of  its 
export  market (99).  Simplification  and  effective 
implementation  of  public  support  to  research  and 
innovation (R&I) and addressing the fragmentation 

(93)  EIB Investment Survey (2023). 

(94)  EIB Investment Survey (2023) 

(95)  IMF Art IV Consultation, Lithuania (2023). 

(96)  EIB Investment Survey (2023). 

(97)  OECD (2022). Economic surveys: Lithuania, October 2022. 

(98)  SME Country Fact Sheet, 2022. 

(92)  IMD World Competitiveness Index 2023. 

(99)  IMF Art IV Consultation, Lithuania (2023). 

56 

0102030405060708000020406081012141618202224% of EU27LithuaniaLatviaEstonia 
 
          
 
 
 
of the public science base is therefore crucial (see 
Annex 11).  

Graph A12.2: Real labour productivity (GDP per 
hour worked), 2015=100 

increase  prices,  endangering  their  competitive 
position (103).  Continuing  its  transformation  into  a 
more knowledge-intensive economy and increasing 
the  complexity  of  its  export  market  is  key  to 
securing  the  competitive  position  of  Lithuania’s 
economy.  

Graph A12.3: Export market share (goods and 
services), % GDP 

Source: Eurostat 

in 

increases 

In  the  last  decade,  labour  productivity  has 
been improving in Lithuania’s main exporting 
sectors  –  manufacturing,  transport  and 
agriculture  –  driven  by  increasing  export 
market  shares,  but  recent  developments 
have  been  challenging.  The  manufacturing 
industry  has  shown  big 
labour 
productivity  in  recent  decades  and  has  continued 
to  grow (100).  Also,  transportation  and  agriculture 
has  seen  large  increases  in  labour  productivity, 
with  the  latter  recently  decreasing  (see  Graph 
A12.2). Specifically, export market shares in goods 
(chemicals,  wood  and  furniture,  and  agricultural 
goods)  and  services  (transport  and  logistics)  have 
been increasing steadily  since the global financial 
crisis  (see  Graph  A12.3),  rising  from  56%  of  GDP 
in 2006 to 87% in 2022 (101). Lithuania’s economic 
performance  relies  heavily  on  its  export  sectors. 
While  strong  nominal  wage  growth,  even  in  non-
export sectors, was in line with productivity gains, 
real unit labour costs have been broadly constant. 
Recently,  disposable  incomes  of  households  have 
decreased  due  to  spikes  in  inflation.  Combined 
labour  shortages,  these  put 
with  continuing 
pressure  on  nominal  wages,  which  have  risen 
sharply in the last few years. Nominal unit labour 
costs were 40% higher in 2023 than in 2019 (102). 
As  a  small  open  economy,  strong  international 
competition  limits  Lithuanian  firms’  ability  to 

(100) Eurostat. 

(101) Eurostat. 

(102) Eurostat. 

Source: Eurostat 

inventory,  while  government 

Lithuania  has  experienced  relatively  strong 
investment  growth  in  recent  years,  which  is 
now  challenged  by  elevated  inflation,  high 
borrowing  costs,  relatively 
low  business 
confidence and deteriorating expectations of 
the export sector (104). Following a recent strong 
increase  in  private  investment  since  2020,  from 
10%  of  GDP  to  20%  in  2022,  there  was  a  slight 
drop in 2023, mainly caused by the drawing down 
of 
investment 
continued to grow. Since the global financial crisis, 
private  investment  has  contributed  to  economic 
growth and has been directed mainly towards non-
residential construction and equipment. This points 
to  an  increased  build-up  of  capacities (105).  With 
weak  private  consumption,  sluggish  external 
demand and a very low rate of capacity utilisation, 
the  demand  for  investment  is  now  dampened. 
Nevertheless,  consumer  confidence  showed  the 
first  signs  of  recovery  in  2023,  supported  by  low 
unemployment,  nominal  wage  growth  and 
declining inflation, all of which point to an upward 
trend  in  private  domestic  consumption.  In  recent 
years, public investment has been directed mainly 
to digital and green infrastructure, energy security, 

(103) Central Bank of Lithuania (2023). Lithuanian Economic 

Review, September 2023. 

(104) ECFIN Investment Radar (Eurostat). 

(105) ECFIN (Eurostat). 

57 

708090100110120130140150201520162017201820192020202120222023Industry (except construction)ConstructionWholesale and retail trade, transport, accommodation and food service activitiesInformation and communicationFinancial and insurance activitiesProfessional, scientific and technical activities; administrative and support serviceactivities80901001101201301401501601701800607080910111213141516171819202122232016=100LithuaniaEstoniaLatvia 
        
 
          
 
healthcare  and  R&I  projects.  This 
is  mainly 
supported  by  recurring  EU  funding  programmes. 
Investment  in  the  construction  sector  and  in 
renewable  energy  generation  has  been  increasing 
in  particular (106).  Overall,  public  investment  in 
Lithuania has been strongly supported by EU funds 
in recent years (107). 

Skills  shortages  and  mismatches  are  also 
hampering  investment.  Despite  an  increase  of 
the  unemployment  rate  in  2023  (6.9%  compared 
to  6.0  %  in  2022)  the  tightness  in  the  labour 
market,  measured as the ratio of job vacancies to 
the  unemployed  continued.    End  of  2023,  the  job 
vacancy  rate  was  one  of  the  highest  since  the 
start  of  the  observation  period  despite  the  influx 
of  Ukrainian  refugees (108).  While  still  lower  than 
the  EU  average  (2.7%),  the  indicator  increased 
from 1.4% in 2019 to 2% in 2023, mainly driven 
by  developments  in  the  public  administration  and 
defence, transport and finance. This points to skills 
mismatches  and  skills  shortages,  which  are  of 
great concern to Lithuanian firms according to the 
2023  EIB  Investment  Survey  (72%  of  firms 
surveyed, compared to 81% in the EU).  

Lithuania’s  financial  environment  and  its 
financial  markets  are  functioning  well 
overall, but the situation has deteriorated in 
recent  years  due  to  tighter  monetary 
conditions  and  late  payments.  Amid  rising 
interest  rates,  the  corporate  sector  continued  to 
increase its financial liabilities in 2023, albeit at a 
significantly  slower  pace.  The  slowdown  can  be 
explained  by  tighter  risk  management  due  to 
elevated interest rates, but this also contributed to 
the  financial  assets  of 
a  net 
companies (109).  Nevertheless, 
ratio  of 
the 
financially constrained firms in Lithuania is one of 
the highest in the EU (110), and 22% of Lithuanian 
firms (EU average 15%) reported that the general 
availability  of  bank  loans  has  deteriorated (111). 
While  adaption  to  monetary  circumstances  is 

increase 

in 

appropriate  and  points  to  a  well-functioning  debt 
market,  this  development  worsens  the  financing 
environment  of  firms.  Compared  to  their  peers  in 
the  other  Baltic  countries,  Lithuanian  firms  rely 
more  on  external  financing  such  as  bank  loans, 
and  18%  (17%  in  the  EU)  reported  that  their 
demand for bank loans had increased in 2023 (112). 
Moreover,  the  share  of  SMEs  experiencing  late 
payments  increased  by  roughly  8  percentage 
points  from  51%  to  59%,  compared  to  an  EU 
average of 49%. 

The  pan-European  structural  problem  of  a 
lack of venture capital and equity finance is 
also  evident  on  Lithuanian  markets.  While 
venture  capital  investments  as  a  percentage  of 
GDP  increased  slightly  from  0.09%  to  0.1%,  the 
value  of  Lithuania’s  IPO  market  and  the  share  of 
SMEs  using  equity  finance  decreased  significantly 
in 2022 (113). This is especially the case for young 
in  Lithuania (114).  The 
and  expanding 
development  of  the  fintech  sector  and the  use  of 
venture 
private 
management,  has  further potential,  particularly  in 
targeting  start-ups  in  their  later  life  cycle (115). 
However,  the  financial  size  of  projects  is  often 
small and therefore not that attractive for venture 
capitalists. 

especially 

capital, 

firms 

via 

Lithuania  is  well  integrated  into  the  single 
market. Trade integration is high and amounts to 
more than half of its GDP. Lithuania performs very 
well  when  it  comes  to  transposing  EU  directives, 
having  a  deficit  of  only  0.3%  and  ranking  among 
the  best  performing  Member  States  (EU  average 
0.7%).  It  also  ranks  4th  in  conformity,  with  only 
0.7%  of  directives  being  wrongly  transposed  (EU 
average  1.2%).  Moreover, 
in  2023  Lithuania 
managed to  solve  all  SOLVIT  cases  (6)  it handled 
as  lead  centre,  which is  above  the  EU  average  of 
88.3 % (116). 

(106) Central Bank of Lithuania (2024). Lithuanian Economic 

Review, March 2024. 

(107) OECD (2022). Economic surveys: Lithuania, October 2022. 

(108) Central Bank of Lithuania (2023). Lithuanian Economic 

Review, September 2023. 

(109) Central Bank of Lithuania (2023). Lithuanian Economic 

Review, September 2023. 

(110) SAFE Survey (2023). 

(112) EIB Investment Survey, 2023 

(113) Torfs, Wouter (2023): The 2022 EIF SME Access to Finance 
Index. August 2023 update, EIF Research and Market 
Analysis WP 2023/92. 

(114) Foda, K., Shi, Y., and M. Vaziri (2022): Financial Constraints, 
productivity, and investment, evidence from Lithuania, IMF 
WP/22/249. 

(115) OECD (2022). Economic surveys: Lithuania, October 2022. 

(111) EIB Investment Survey (2023) 

(116) Single Market Scoreboard. 

58 

 
 
 
to 

Lithuania  is  a  front  runner  on  green  and 
social  public  procurement,  but  there  is  room 
for  improvement  in  boosting  competition  on 
the  public  procurement  market.  Lithuania’s 
share  of  contracts  awarded  after  receiving  only  a 
single  bid  is  still  high  (37%  in  2023) (117).  It  is 
this  and  has 
making  efforts 
to  address 
implemented  several  measures 
improve 
competition and attract new suppliers, in particular 
SMEs, to public procurement. This includes specific 
training,  the  development  of  marketing  tools  and 
new  training  material.  Reforms  to  promote  the 
centralisation  of  the  public  procurement  market 
have  been  carried  out,  and  improvements  can  be 
seen in the health sector and in the establishment 
of 
in  each 
municipality.  The  relaunch  of  the  project  to 
develop a new IT procurement platform that aims 
to  minimise  administrative  burden  could  further 
help improve the competitive environment.  

contracting  authorities 

central 

recovery  and 
(RRP)  with  a 
resilience  plan 
REPowerEU  chapter  in  2023.  It  includes  several 
ambitious  measures  to  expand  renewable  energy 
production and energy efficiency. 

the  system  will  enable 

Lithuania  has  reached  the  preliminary  stage 
of  implementing  the  components  needed  to 
connect  to  the  ‘Once-Only’  technical  system 
(OOTS) (120). As part of the Single Digital Gateway 
Regulation (121), 
the 
automated  cross-border  exchange  of  evidence 
between  competent  authorities,  improving  online 
access  to  information,  administrative  procedures 
and  assistance  within  the  EU.  The  onboarding  of 
Lithuanian competent authorities is crucial for the 
system  to  function  smoothly  and  to  reduce 
administrative burden. 

firms  under 

High  dependence  on  energy  imports  puts 
Lithuanian 
intense  price 
pressure,  making  a  shift  in  the  energy  mix 
necessary.  Lithuania  is  highly  dependent  on 
energy  imports.  Despite  successful  efforts  to 
diversify sources of energy supply, price pressures 
on  industry  and  SMEs  remain  high  (see  Annex  7). 
74% of Lithuanian firms mention energy costs as 
the main impediment to investment (118). To reduce 
the  risks  related  to  the  dependency  of  energy 
imports,  building  up    the  capacity  to  generate 
renewable  energy  sources  is  important.  Despite 
having  adopted  a  legislative  package  to  ease 
permitting  procedures  for  wind  and  solar  energy 
projects, the National  Audit Office stated that the 
2030  target  for  the  installation  of  renewable 
energy  sources  is  at  risk  due  to  a  lack  of 
investment  in  the  electricity  grid.  Nevertheless, 
with  52.6%  of  total  energy  production  capacity 
stemming  from  renewable  energy  sources  (see 
Table A12.1), Lithuania is ahead of the EU average 
of  47%  (see  also  Annex  7) (119).  Lithuania  has 
started  implementing  measures  to  increase  its 
share  of  renewables  and  other  non-hydrocarbon 
energy.  Moreover,  Lithuania  adopted  its  revised 

(117) The currently available data is preliminary. Due to the 

technical preparation of a new public procurement platform, 
only the regular data available in Tenders Electronic Daily 
(TED) has been taken into account. 

(118) EIB Investment Survey (2023) 

(119) Eurostat, latest data from 2021. 

(120) Implementing Regulation (EU) 2022/1463. 

(121) Regulation (EU) 2018/1724. 

59 

 
 
   
 
Table A12.1:Industry and the Single Market 

Source: (1) AMECO, (2) Eurostat, (3) Single Market Scoreboard, (4) OECD, (5) ECFIN BCS, (6) COMEXT and Commission 
calculations, (7) EIB Investment Survey, (8) Intrum Payment Report, (9) SAFE survey, (10) EIF SME Access to Finance Index. 
* Own Commission calculations for the EU27 average  

60 

POLICY AREAINDICATOR NAME20192020202120222023EU27 average*Net Private investment, level of private capital stock, net of depreciation, % GDP18,46,48,59,39,63,8Net Public investment, level of public capital stock, net of depreciation, % GDP10,41,80,50,71,81,2Real labour productivity per person in industry (% yoy)24,92,83,44,2-6,9-1,24Cost competitivenessNominal unit labour cost in industry (% yoy)26,204,911,2139,83Single Market integrationEU Trade integration, % (Average intra-EU imports + average intra EU exports)/GDP247,545,451,257,951,742,9Transposition deficit, % of all directives not transposed30,20,81,70,30,30,7Conformity deficit, % of all directives transposed incorrectly30,81,1110,71,1SOLVIT, % resolution rate per country3100,0100,0100,0-100,088,3Number of pending infringement proceedings3101217161525,9RestrictionsEEA Services Trade Restrictiveness Index40,040,040,040,040,040,05Single bids, % of total contractors3282830343728,6Direct Awards, %35106668,1Material Shortage (industry), firms facing constraints, %58,88,821,226,99,917,2Labour Shortage using survey data (industry), firms facing constraints, %515,511,621,925,814,223,3Vacancy rate, % of vacant posts to all available ones (vacant + occupied)21,451,32,01,92,02,5Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials60,20,20,20,170,180,22Installed renewables electricity capacity, % of total electricity produced20,50,40,50,750Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle724,521,122,420,013,022,2Bankruptcies, Index (2015=100)278,040,138,653,853,2105,6Business registrations, Index (2015=100)2124,2133,0145,0138,5150,9120,2Payment gap - corporates B2B, difference in days between offered and actual payment8-1612121315Payment gap - public sector, difference in days between offered and actual payment8-1811171916Share of SMEs experiencing late payments in past 6 months, %955,052,252,850,659,248,7EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1100,540,650,340,42-0,49EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 110 0,130,250,540,14-0,17ECONOMIC STRUCTUREShortagesStrategic dependenciesBUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financePublic procurement LithuaniaHEADLINE INDICATORSEconomic StructureSINGLE MARKETCompliance 
 
   
 
ANNEX 13: PUBLIC ADMINISTRATION 

environment. 

Lithuania’s public administration is essential 
for  the  economy's  competitiveness  by,  in 
particular,  shaping  the  conditions  for  the 
twin  transitions  and  creating  a  favourable 
perceived 
business 
effectiveness  of government  in  Lithuania  remains 
stable  around  the  EU  average  (Graph  A13.1).  The 
2022-2030  public  governance  development 
programme (122)  is  still  the  main  framework  for 
reforming  human  resource  management  and 
contains  initiatives  to  improve  the  quality  of 
interaction  between 
regional  and 
the 
national administrations. 

local, 

The 

Graph A13.1: Government effectiveness 

Agency is building an inventory of data from over 
275  public  sector  institutions  to  integrate  the 
resources into a state data lake (123). 

Lithuania has taken action to strengthen the 
use  of  evidence  and  data  in  policymaking. 
Specialised  units  in  several  ministries  and  an 
analytics  and  sustainable  governance  unit  at  the 
Government  Office  aim  to  promote  evidence-
informed  policymaking  and  improve  sustainable 
governance.  A  newly  created  network  of  research 
and  innovation  advisers  in  ministries  and  the 
Government  Office  aims  to  strengthen  the  R&I 
component in all fields of policy. Moreover, as part 
of  its  open  government  plan  for  2024-2025, 
Lithuania  intends  to  make  it  mandatory  to  carry 
out public consultations when preparing legislation 
and to publish the results (124). 

Graph A13.2: Share of people employed by 
occupation and by sector 

Average value over 2018-2022 and change over 2018-2022. 
The GDP per head bar shows the mean value of the 
government effectiveness indicator for the group of EU 
countries belonging to the same GDP per head cluster as 
Lithuania (EU countries are ranked in terms of their GDP per 
head and grouped into three equally sized clusters). 
Source: Worldwide Governance Indicators. 

Lithuania has improved its e-government and 
open  data  and  portal  maturity  (Table  A13.1.) 
The  degree  of  development  of  e-government 
services and the share of individuals who interact 
with public  authorities  online  is  high  although  the 
latter  dropped  in  the  last  year.  In  line  with  its 
recovery  and 
resilience  plan,  Lithuania  has 
launched  an  overhaul  of  data  management  with 
the aim to strengthen data-based decision-making 
in  the  public  administration.  The  State  Data 

(122) Public Management Development Programme 2022-2030, 
Ministry of Interior, 206 Dėl 2022–2030 metų plėtros 
programos valdytojos Lietuvos Respublikos vidaus reikalų 
ministerijos ... (e-tar.lt) 

2023 data. 
High: International Standard Classification of Occupations 
(ISCO) categories 1-3; medium: ISCO4-8; low: ISCO 9. 
Source: Eurostat. Employment by sex, age, occupation, and 
economic activity. 

Lithuania  has  a  highly  skilled  civil  service 
and  gender  parity  among  senior  managers 
(Table  A13.1).  The  share  of  public  administration 
employees  with  higher  education  and 
their 
participation  in  adult  learning  indicate  a  high-

(123)https://experience.arcgis.com/experience/03398d383eca47e

4a17cc853d72df2d4 

(124) https://e-

seimas.lrs.lt/portal/legalAct/lt/TAK/e2e695906cef11eea182d
ef3ac5c11d6?positionInSearchResults=1&searchModelUUID
=e35fd987-72f0-4170-90a8-4d69fdea2e7e 

61 

-0.20.00.20.40.60.81.01.2LTEU-27GDP perhead clusterChange 2018-2022Average 2018-20220%10%20%30%40%50%60%70%80%90%100%LTEU27LTEU27LTEU27Publicadministration (O)Publicadministration,education andhealthcare O-QTotal economyHigh skilled occupationsMedium skilled occupationsLow skilled occupationsArmed forces 
 
     
 
   
 
 
Table A13.1:Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2023 value. If unavailable, the latest value available is 
shown. (3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions.  
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: E-government activities of individuals via websites, Eurostat (# 1); E-government benchmark report (# 2); Open data 
maturity report (# 3); Labour Force Survey, Eurostat (# 4, 5, 7); European Institute for Gender Equality (# 6); Fiscal Governance 
Database (# 8, 9); OECD Indicators of Regulatory Policy and Governance (# 10). 

skilled  workforce  compared  to  the  EU-27  (Chart 
A13.2). However, there are challenges in recruiting 
young talent: only 9% of Lithuanians consider the 
public  administration 
to  be  an  attractive 
employer (125).  Lithuania  has  approved  the  new 
Law  on  Civil  Service.  As  part  of  it,  the  newly 
created  Public  Management  Agency  has  moved 
under the Government Office to ensure consistent 
implementation  of  a  new  civil  service  policy (126). 
This  reform  aims  to  improve  the  selection  and 
skills development of senior civil servants. 

To  help  address  fiscal  challenges,  the 
Independent  Fiscal  Institution  (IFI)  could  be 
strengthened.  The  Lithuanian 
is 
embedded  in  the  National  Audit  Office,  has  a 
relatively  broad  mandate.  Although  the  IFI  has 
legal  grounding  and  a  Memorandum  of 

IFI,  which 

Understanding,  its  access  to  information  could  be 
improved. Its embedded nature could also make it 
difficult to discern its own role. 

in 

instance 

commercial 

The  justice  system  continues  to  perform 
efficiently (127).  In  2022,  the  disposition  time  at 
first 
and 
civil, 
administrative  cases  remained  the  lowest  in  the 
EU.  However,  at  higher  instances,  the  disposition 
time  in  civil  and  commercial  cases  increased, 
reaching  450  days.  While  the  case  backlog  in 
Lithuania remains comparatively low, in 2022, the 
number  of  cases  (in  all  categories)  entering  the 
system  was  slightly  higher  than  those  resolved. 
The  use  of  digital  tools  in  the  justice  system  is 
widespread.  However,  concerns  have  emerged 
about the remuneration levels for prosecutors and 
court staff, which were only partially addressed by 
judicial 
recent 

legislative 

reforms. 

On 

(125) https://europa.eu/eurobarometer/surveys/detail/3054  

(126) https://vva.lrv.lt/lt/naujienos/viesojo-valdymo-agentura-taps-

pavaldi-vyriausybei/ 

(127) For more details, see the 2024 EU Justice Scoreboard and 
the Commission’s 2024 Rule of Law Report (forthcoming). 

62 

LT20192020202120222023EU-27(2)1n/an/an/a83.180.775.02n/a80.783.485.186.075.830.50.90.90.90.90.8479.379.977.2 (b)75.176.852.9514.412.417.2 (b)17.722.817.960.82.44.47.46.69.271.92.12.0 (b)1.71.91.580.70.80.80.8n/a0.792.62.62.62.6n/a1.410n/an/a1.85n/an/a1.7Medium-term budgetary framework indexIndicator (1)E-government and open government dataShare of internet users within the last year that used a public authority website or appE-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with higher education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
 
 
 
     
 
independence, no systemic deficiencies have been 
reported. 

63 

 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS 

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Lithuania’s 
progress in implementing the Pillar’s 20 principles 
and  the  EU’s  headline  and  national  targets  for 
2030 on employment, skills and poverty reduction. 

Table A14.1:Social Scoreboard for Lithuania 

promote  membership  of 
trade  unions  and 
employers'  organizations  and  improve  collective 
bargaining. 

Labour  and  skills  shortages  in  the  private 
sector (128) in 2023 were most pronounced in 
the  transport  and  services  sectors.  The  2024 
quota  for  facilitated  hiring  of  non-EU  workers  for 
professions in short supply has been set at 40 250 
posts  (4 300  more  than  in  2023) (129).  The  job 
vacancy rate in Q4-2023 (1.9%) was below the EU 
average  (2.5%),  albeit  still  higher  than  the  pre-
pandemic  level  (46%  higher  than  Q4-2019).  The 
combination  of  demographic  challenges  and  skills 
and labour shortages also undermines Lithuania’s 
potential to increase its economic competitiveness. 
As  part  of  its  recovery  and  resilience  plan  (RRP), 
Lithuania  is  working  on  the  employment  service’s 
digital  customer  service  system,  with  the  aim  to 
free  up  resources  for  more  personalised  services 
with improved quality and better access. Together 
with other RRP measures and more than EUR 250 
million from the European Social Fund Plus (ESF+) 
for tailored active labour market policy measures, 
these  efforts  will  support  progress  towards  the 
national  employment  rate  target  of  80.7%  by 
2030. 

Update of 25 April 2024. Members States are categorised 
based on the Social Scoreboard according to a methodology 
agreed with the EMCO and SPC Committees. Please consult 
the Annex of the Joint Employment Report 2024 for details on 
the methodology. 
Source: Eurostat. 

despite 

resilient 

The  labour  market  in  Lithuania  remained 
relatively 
economic 
challenges  in  2023.  The  employment  rate  in 
2023 (78.5% vs EU 75.4%) fell by 0.5 percentage 
points (pps) year-on-year. The unemployment rate 
increased  by  0.9  pps  to  6.9%  (vs  EU:  6.0%).  The 
influx  of  more 
than  52 000  working  age 
Ukrainians  since  February  2022  did  not  have  a 
negative  impact  on  the  labour  market,  as  more 
than half of them (around 30 000) were employed 
in  Q3-2023.  The  disability  employment  gap 
recorded a spike from 23.9% to 35.0% in 2022 (vs 
EU: 21.4%). More than EUR 2 million of ESF+ funds 
(around 22% more than in 2014-2022) have been 
allocated  to  strengthen  the  capacity  of  social 
partners  (especially  in  the  private  sector),  to 

in 

upper-secondary 

The  lack  of  attractiveness  of  vocational 
education and training (VET) and the low rate 
of  adult  participation  in  lifelong  learning  is 
hindering  the  development  of  skills.  In  2021, 
vocational 
enrolment 
education and training was substantially below the 
EU  average  (25.6%  vs  48.7%  in  the  EU),  as  was 
the share of adults who had taken part in learning 
activities in the previous 12 months (27.4% vs EU: 
39.5%  in  2022).  The  relevance  of  vocational 
education and training to the needs of the labour 
market is insufficient, with recent VET participants 
(ISCED 3 and 4) less likely to be employed (71.3%) 
than the EU average in 2023 (81%). In 2023, the 
share  of  individuals  with  basic  or  above  basic 
overall digital skills was 52.9% (vs EU: 55.5%). To 
address  this,  a  reform  under  the  RRP  has  been 
rolled  out  to  create  a  one-stop-shop  model  for 

(128) Whereas the public sector suffers from labour and skills 

shortages in education, healthcare and public administration. 

(129) Including 25 100 workers in haulage and other service 

companies, 9 800 in construction and 5 050 in industry. 

64 

27.46.452.913.51.56.478.56.92.3141.424.622.430.33353.522.82.9Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2023)Unemployment rate(% of the active population aged 15-74, 2023)Long term unemployment(% of the active population aged 15-74, 2023)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2022)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2022)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2022)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2022)Disability employment gap (percentage points, population aged 20-64, 2022)Housing cost overburden (% of the total population, 2022)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2022)Self-reported unmet need for medical care (% of the population aged 16+, 2022)Better than averageBest performersPolicy areaHeadline indicatorEqual opportunities and access to the labour marketAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Early leavers from education and training(% of  the population aged 18-24, 2023)Share of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Young people not in employment, education or training(% of the population aged 15-29, 2023)Gender employment gap(percentage points, population aged 20-64, 2023)Income quintile ratio (S80/S20, 2022) 
 
 
 
   
 
 
 
lifelong  learning  based  on  individual  learning 
accounts. With other RRP measures to increase the 
relevance of VET to the labour market, a boost to 
the digital skills of VET students and trainers, and 
EUR 64 million of ESF+ funding to implement the 
Lithuanian  skills  strategy,  this  is  expected  to 
contribute  to  achieving  the  target  of  at  least 
53.7%  of  all  adults  participating  in  training  every 
year by 2030.  

Income inequality remains critically high and 
has  further  increased  in  2022.  The  income  of 
the  top  20%  of  the  income  distribution  was  6.39 
times bigger than that of the bottom 20% in 2022 
(vs EU: 4.74%). The gap is increasing between the 
income levels of the richest top 20% and the 20% 
middle-income  population  (S80/S50).  The  impact 
of social transfers (excluding pensions) in reducing 
income  inequality  is  below  the  EU  average  (31% 
vs EU: 37%). The record levels of inflation in 2022 
(18.9%)  eroded  much  of  the  value  of  significant 
increases  in  the  non-taxable  amount  of  income, 
the  minimum  wage,  pensions  and 
social 
benefits (130), which is likely to further increase the 
S80/S50 divide.  

reversed 

the  positive 

Increasing  rates  of  poverty  and  social 
exclusion 
trend 
observed in 2017-2021. The share of people at 
risk  of  poverty  or  social  exclusion 
(AROPE) 
increased from 23.5% in 2021 to 24.6% in 2022. 
The situation is particularly difficult for vulnerable 
groups,  such  as  older  persons  (65+)  and  persons 
with  disabilities.  In  2022,  the  AROPE  rate  for  the 
65+  age  group  was  more  than  twice  the  EU 
average  (41.4%  vs  EU:  20.2%).  The  rate  for 
persons  with  disabilities  increased  from  38.9%  in 
2021  to  44.3% in  2022 (vs  EU:  28.8%).  Although 
the  AROPE  rate  for  unemployed  people  aged  18 
and  above  was  61%  in  2022  (vs  EU:  65.2%),  the 
monetary  poverty  (AROP)  rate  of  the  population 
(aged  16-64)  living  in  (quasi)  jobless  households 
was among the highest in the EU in 2022 (78.2% 
vs  EU:  59.9%).  The  rate  for  unemployed  people 
(51%  in  2022)  was  also  higher  than  the  EU 
average (46.1%), albeit on a downward trend since 
2018.  

The low adequacy of pensions contributes to 
poverty  among  older  people  (65+).  In  2022, 

(130) EUROMOD simulation on the impact of inflation on the 

increases in non-taxable amount of income, minimum wage, 
pensions and social benefits in 2022 and 2023. 

(26.3%),  mainly  due 
their 

the  monetary  poverty  (AROP)  rate  for  this  group 
was  one  of  the  highest  in  the  EU  (39.5%  vs  EU: 
17.3%), and much higher than for the working-age 
population 
(15.8%).  Women  are  particularly 
affected by old-age poverty (46.9%)  compared to 
family  care 
to 
men 
responsibilities  during 
career.  Despite 
improving for the second year in a row, the share 
of  children  under  3  years  of  age  in  formal 
childcare  (22.8%  in  2022)  is  still  below  the  EU 
average (35.7%). The aggregate replacement ratio 
for  old-age  pensions  fell  for  a  third  consecutive 
year  in  2022  (33%  vs  EU:  58%)  and  the  average 
pension  was  below  the  poverty  threshold (131). 
Besides changes in the indexation rules, Lithuania 
introduced several measures in recent years aimed 
at  improving  the  adequacy  of  statutory  pension 
benefits by bringing pensions closer to the poverty 
threshold  in  the  short  to  medium  term.  However, 
there 
is  still  scope  to  further  enhance  the 
adequacy of pensions in the longer term.  

Persons  with  disabilities  are  also  at  risk  of 
poverty.  The  AROP 
rate  of  persons  with 
disabilities in 2022 stood at 37.7% (vs EU: 20.5%, 
up  from  32.6%  in  2021), driven  by  low  adequacy 
of social benefits and incapacity pensions for this 
group.  Recent  reforms  in  the  assessment  of 
disability  (as  of  2024)  and  in  the  participation  of 
persons with disabilities in an open labour market 
(as  of  2023),  along  with  efforts  to  improve  the 
adequacy  of  the  minimum  income  could  help 
address the high levels of poverty for persons with 
disabilities. 

schemes 

Gaps  remain  in  access  to  social  protection. 
Self-employed  people  are  not  covered  by  the 
insurance 
for  unemployment  and 
accidents  at  work,  and  some  of  them  are  not 
covered by the insurance scheme for sickness and 
maternity.  To  address  this,  the  Parliament  is 
currently  discussing  an  RRP-based  reform,  which 
aims,  among  other  things,  to  include  the  self-
employed in the unemployment insurance scheme 
and 
accessing 
unemployment benefits. Overall, there is scope for 
further  social  policy  action  to  achieve  Lithuania’s 
national target of 223 000 fewer people at risk of 
poverty or social exclusion by 2030. The available 
quantitative  and  qualitative  evidence  and  the 
policy  response  undertaken  and  planned  analysed 
in  the  second-stage  analysis  of  the  Social 

conditions 

ease 

the 

for 

(131) EUR 539 in 2023 vs the 2023 poverty threshold of EUR 564. 

65 

 
 
 
of  May 

Framework 

Convergence 
2024 
(SWD(2024)132) point to challenges related to the 
high  at-risk-of-poverty  or  social  exclusion  rates 
and  income  inequality  but  do  not  point  to  major 
social  convergence  challenges 
for  Lithuania 
overall,  in  light  of  the  positive  developments 
especially in relation to employment. 

Table A14.2:Situation of Lithuania on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months, special extraction excl. guided on-the-job training 
(2) Change in the number of persons at risk of poverty or 
social exclusion (AROPE), reference year 2019. 
Source: Eurostat, DG EMPL. 

66 

IndicatorsLatest dataTrend            (2016-2022)2030 targetEU target 78.5(2023)27.4(2022)-22(2022)Poverty reduction2 (thousands)-223-15,000Employment (%)80.778Adult learning1 (%)53.760 
 
  
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  of 
Lithuania’s  education  and  training  system 
based on the 2023 Education and Training Monitor 
and  the  2022  OECD  Programme  for  International 
Student Assessment (PISA) results. 

According to the latest PISA study, more than 
20%  of  15-year-olds  have  insufficient  basic 
skills, putting upskilling and reskilling efforts 
at risk (Annex 14). The share of underachieving 
students  in  mathematics,  reading  and  science,  as 
measured by the 2022 PISA study, is below the EU 
average  (see  Table  A15.1  and  Graph  A15.1), 
although above the EU-level target of 15% set for 
2030.  Since  2012,  it  has  remained  stable  in 
mathematics and reading. In science, however, the 
share  increased  by  5.7 pps  between  2012  and 
2022, less than at EU level (7.5 pps), and reached 
21.8% in 2022 (EU 24.2%). The percentage of top 
performers  has  remained  statistically  unchanged 
since  2012  and  is  below  the  EU  average  in  all 
three  domains; 
this  may  have  negative 
consequences for the future innovation capacity of 
the country. 

Graph A15.1: Underachievement rates by field, 
PISA 2012, 2018 and 2022 

residence: results are higher in Vilnius and in other 
cities  than  in  rural  areas (132).  Implementation  of 
revised  school  network  rules  and  the  Millennium 
Schools programme envisaged in the recovery and 
resilience plan (RRP) may help address inequalities 
in access to quality education through the closure 
of  small  schools,  a  ban  on  small  classes  and  the 
creation of schools networks in municipalities. 

implementation  started 

Several  measures  are  being  implemented  to 
increase learning outcomes. In 2018, Lithuania 
started  to  work  on  a  new  competence-based 
in 
curriculum  whose 
September  2023.  This  reform  is  accompanied  by 
changes  in  the  assessment  system.  The  ministry 
has  prepared  a  2023-2030  plan  to  improve 
mathematics  outcomes.  In  addition,  a  plan  to 
increase  students’  interests  in  STEAM  (science, 
technology,  engineering,  arts,  and  mathematics) 
competences  and  careers  was  adopted  in  2023. 
With  the  help  of  EU  funds,  since  2022,  seven 
regional  STEAM  centres  have  been  operating  and 
another  three  are  being  developed  in  the  three 
biggest  cities.  Funded  by  the  Recovery  and 
Resilience  Facility,  the  EdTech  Project  is  also 
underway  promoting  educational 
innovations 
based on digital technologies. 

Source: OECD (2023). 

Socio-economic background remains a strong 
predictor  of  student  underachievement.  In 
in  mathematics  was 
2022,  underachievement 
higher  among  socio-economically  disadvantaged 
students (46.5% v 48.0% at EU level) than among 
their socio-economically advantaged peers (11.0% 
vs  10.9%).  These  figures  have  not  changed 
significantly since 2012, making equity one of the 
main challenges for the Lithuanian school system. 
The  socio-economic  gap  stands  at  35.5 pps,  just 
(37.2 pps).  Student 
below 
performance  is  also  associated  with  place  of 

the  EU  average 

level,  and 

(ECEC)  and  primary 

Teacher  shortages  are  a  longstanding  issue, 
varying  by  region,  subjects  and  level  of 
education,  and  putting  the  quality  of  school 
education at a risk. The demand for teachers is 
higher in rural areas, at early childhood education 
and  care 
in 
mathematics  and  Lithuanian.  About  39%  of  all 
schoolteachers  were  aged  over  55  in  2021  (EU 
25%) and are likely to reach retirement age within 
the  next  10  years.  Even  if  Eurostat’s  baseline 
projections  indicate  a  12%  decline  in  the  student 
population  (0-16)  by  2030,  it  is  expected  that 
many  retiring  teachers  will  need  to  be  replaced. 
Some  steps  have  been  taken  to  renew  the 
teaching  workforce  and  salaries  have  been 
increased  to  improve  working  conditions  and 
attract  more  people  into  the  profession.  However, 
the  existing  career  system  contributes  to  the  low 
interest  of  young  graduates  in  the  teaching 
profession.    

(132) Ministry of Education, Science and Sport (2023).Lithuanian 
pupils’ achievements are in line with the average of most 
advanced OECD countries. Press release, 5 December 2023. 

67 

05101520253035LTEULTEULTEUMathematicsReadingScience%2012201820222030 EU target 
 
  
 
 
 
Table A15.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source:  

Participation  in  ECEC  continues  to  increase, 
but tackling imbalances remains a priority. In 
2021, 92.1% of children between the age of 3 and 
the  starting  age  of  compulsory  primary education 
participated in ECEC (EU 92.5%). A positive trend is 
also observable for children up to 3 years old (see 
Annex  14).  Despite  improvements,  participation 
tends remain lower in rural areas and for children 
at  risk  of  social  exclusion,  and  a  lack  of  public 
places is recorded in big cities, especially in Vilnius. 
Investment  to  gradually  extend  ECEC  accessibility 
as  of  September  2023  and 
compulsory 
participation  for  children  from  disadvantaged 
families  are  expected 
increase 
participation rates. 

further 

to 

to 

improve  quality  of 

Lithuania  is  reforming  the  higher  education 
tertiary 
sector 
programmes.  Although  Lithuania  has  one  of  the 
highest  tertiary  education  attainment  rates  in  the 
EU  of  people  aged  25-34  (57.4%  vs  EU  43.1%, 
faces 
the  higher  education  system 
2023), 
challenges  with  respect  to  quality  and  labour-
market 
to  skills 
relevance.  This  contributes 
shortages  (see  Annex  14)  and  low  innovation 
capacity  (see  Annex  11).  As  part  of  its  current 

reforms,  the  government  aims  to  promote  the 
development  of  a  more  efficient  and  effective 
institutional landscape to respond to the decline in 
the enrolment rates - in particular in colleges - due 
to  demographic  changes  and  the  demand  for  a 
higher  quality  of  studies  and  research.  While 
colleges  vary  considerably  in  size  and  focus,  only 
47% of college graduates find jobs to match their 
level  of  education.  The  RRP  includes  measures  to 
incentivise  a  reorganisation  of  the  country’s 
colleges and Lithuania aims to renew the network 
by  the  beginning  of  the  2024-2025  academic 
year.  However,  college  reorganisation  will  only 
result in cost savings and higher quality if mergers 
in  terms  of 
lead  to  better  complementarity 
programmes,  a  more  efficient  use  of  resources, 
and  if  applied  research  is  adequately  promoted 
and supported. 

68 

96%83.4%201391.8%201388.9%92.2%92.1%202192.5%2021,dReading< 15%21.2% 18.0%24.4% 22.5%24.9%202226.2%2022Mathematics< 15%26.0% 22.1%25.6%22.9%27.8%202229.5%2022Science< 15%16.1% 16.8%22.2%22.3%21.8%202224.2%2022< 9 %6.5%12.6%4.6%10.5%6.4%9.5%Men8.1%14.5%6.1%12.1%6.6%11.3%Women4.6%u10.6%3.0%u8.7%6.1%7.7%Cities:bu11.2%2.4%u9.4%4.4%u8.6%Rural areas10.4%b14.0%6.6%11.0%7.6%9.9%5By country of birthNative6.4%11.3%4.6%9.2%6.4%8.2%EU-born:26.2%:u22.4%:u21.0%Non EU-born:u30.1%:u23.0%:u21.6%6Socio-economic gap (percentage points)32.3:31.629.535.5202237.220227Exposure of VET graduates to work-based learning≥ 60% (2025) ::: :57.5% 64.5%45%48.6%34.1%55.6%38.7%57.4%43.1%Men39.8%29.1%46.6%33.3%47.5%37.6%Women57.6%39.2%65.2%44.2%68.1%48.8%Cities63.9%b43.5%70.4%49.0%71.1%53.3%Rural areas29.7%b24.8%34.9%27.7%42.3%31.7%Native48.4%35.4%55.8%39.7%57.1%44.2%EU-born:u29.3%:u36.7%:u40.2%Non EU-born:u24.2%44.5%u31.0%76.0%37.1%11Participation in adult learning (age 25-64)≥ 47% (2025) ::25.0%201637.4%201627.4%202239.5%202225.1%201322.7%201334.5%23.8%38.5%202124.5%2021Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth12Share of school teachers (ISCED 1-3) who are 55 years or over1Participation in early childhood education (age 3+)2Low-achieving 15-year-olds in:Early leavers from education and training(age 18-24)3Total3By gender4By degree of urbanisation201220182023IndicatorTargetLithuaniaEU-27LithuaniaEU-27LithuaniaEU-27 
 
  
 
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Lithuania. 

Life  expectancy  in  Lithuania  remains  among 
the  lowest  in  the  EU  –  nearly  5 years  below 
the  EU  average.  Following  a  steep  drop  of  2.3 
years  between  2019  and  2021,  life  expectancy 
increased in 2022 by 1.6 years compared to 2021. 
This recent increase can be partially explained by a 
decrease  in  COVID-19  mortality  in  2022 (133). 
Levels  of  preventable  and  treatable  mortality  in 
Lithuania remain high compared to the EU overall, 
suggesting  that  the  effectiveness  of  the  health 
system  is  lagging  behind.  In  2021,  the  leading 
causes  of  death  were  diseases  of  the  circulatory 
system  (‘cardiovascular  diseases’)  followed  by 
cancer  and  COVID-19.  Lithuania  has  made 
progress  in  reducing  historically  high  mortality 
rates  from  suicide,  but  it  remains  a  significant 
cause  of  death,  particularly  among  men.  At  the 
same  time,  mortality  in  the  economically  active 
age  groups,  as  a  share  of  total  mortality  and 
relative  to  the  workforce  size,  is  among  the 
highest in the EU. 

Graph A16.1: Life expectancy at birth, years 

largest  share  of  health  expenditure  went  on 
outpatient  care  (35%),  followed  by  inpatient  care 
(27%)  and  pharmaceuticals  and  medical  devices 
(24%).  There  is  substantial  reliance  on  out-of-
pocket  expenditure,  which  amounts  to  30%  of 
total  health  spending,  driven  by  household 
spending  on  medicines  and  dental  care.  However, 
recent  policies  on  reducing  co-payments  for 
medicines  are  expected  to  lessen  the  financial 
burden on the most vulnerable households. Based 
on  the  age  profile  of  the  Lithuanian  population, 
public  expenditure  on  health 
is  projected  to 
increase by 0.8 percentage points of GDP by 2070, 
compared  to  0.6  percentage  points  for  the  EU 
overall (see Graph 16.2 and Annex 21). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2024-2070 

Baseline scenario 
Source: European Commission / EPC (2024) 

immunisation  programmes., 

In 2021, spending on prevention in Lithuania 
amounted  to  5.6%  of  total  spending  on 
healthcare,  compared  to  6.0%  for  the  EU 
overall.  Between  2019  and  2021,  spending  on 
prevention in Lithuania more than doubled, closely 
following  the  trend  across  the  EU.  Proportionally, 
budget  shares  for  prevention  across  the  EU 
increased  most  for  emergency  response,  disease 
In 
detection  and 
Lithuania, the main factor behind the big increase 
in  spending  on  preventive  care  in  2021  was  the 
massive  2 483% increase  in  spending  on  disaster 
response 
preparedness 
programmes.  On  the  other  hand,  spending  on 
health  promotion  programmes  seems  insufficient 
considering  the  very  high  levels  of  preventable 
mortality. 
in  2019 
approximately  44%  of  all  deaths  in  Lithuania 
could 
and 
environmental  risk  factors,  including  dietary  risks, 
tobacco  smoking,  alcohol  consumption  and  low 
physical  activity.  Furthermore,  between  2019  and 
2021,  coverage  of  some  cancer  screening 
programmes fell sharply. 

is  estimated 

behavioural 

emergency 

attributed 

that 

and 

be 

to 

It 

Source: Eurostat 

Health expenditure in Lithuania is among the 
lowest  in  the  EU  and  only  68.6%  of  it  was 
publicly  funded 
total 
in  2021. 
healthcare spending increased to 7.8% of GDP, up 
from  7.5%  in  2020.  Provisional  data  from  the 
OECD  suggest  that  in  2022  total  healthcare 
spending  fell  back  to  7.5%  of  GDP.  In  2021,  the 

In  2021, 

(133) Based on data provided directly by Member States to the 

European Centre for Disease Prevention and Control, under 
the European Surveillance System. 

69 

75.876.076.575.174.275.880.981.081.380.480.180.6201720182019202020212022LithuaniaEU6.64.30.60.802468EULithuania% of GDP20242070increase 
 
   
 
   
 
Table A16.1:Key health indicators 

Note: The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used. Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) and 
Slovakia (professionally active). Nurses’ density data refer to practising nurses in all countries except Ireland, France, Portugal, 
Slovakia (professionally active) and Greece (hospital only). 
Source: Eurostat Database; except: * OECD, ** Joint Questionnaire on non-monetary healthcare statistics, *** ECDC, **** Council 
Recommendation on stepping up EU actions to combat antimicrobial resistance in a One Health approach. 

reported  unmet  needs 

Structural  reforms  aim  to 
improve  the 
resilience  and  efficiency  of  the  health 
system,  but  the  results  are  still  to  be  seen. 
Self-reported  unmet  needs  for  medical  care  went 
up  to  2.9%  in  2022  from  2.4%  in  2021  - 
exceeding the EU average of 2.2% (see Annex 14). 
As  in  many  EU  countries,  a  significant  number  of 
for  mental 
people 
healthcare  during  the  pandemic.  According  to  a 
Europe-wide  survey (134),  28%  of  Lithuanians 
reported unmet needs for healthcare, including 8% 
for mental healthcare. Improving mental health is 
one of the priorities of the Lithuania’s 2022-2030 
health  protection  and  promotion  development 
strategy.  Primary  care  services  suffer  from 
multiple  weaknesses,  including  a  limited  range  of 
preventive, early diagnostic and primary-level care 
services,  and  a  lack  of  appropriate  competencies 
within  primary  care  teams.  Further  barriers  to 
improving 
uneven 
distribution  of  skills  among  health  workers;  the 
limited  scope  of  primary,  long-term  and  palliative 
care services; over-reliance on the hospital sector; 
the slow rollout of health technology assessment; 
a 
for  updating 
reimbursable  medicines  lists;  non-rational  use  of 
medicines; and financing mechanisms that do not 
encourage  efficiency 
In 
response,  an  ongoing  structural  reform  aims  to 
expand the functions of primary care, optimise the 
centralise 
network  of  healthcare  providers, 

lack  of  effective  systems 

in  service  provision. 

efficiency 

include: 

an 

(134) Eurofound (2021), Living, working and COVID-19 survey, 

rounds one, two and three (spring 2020, summer 2020 and 
spring 2021). Dublin & Eurofound (2022), Living, working and 
COVID-19 survey, rounds four and five (November 2021 and 
May 2022). Dublin 

to 

ambulance services, create a model for long-term 
care and strengthen the health system’s resilience 
by  2024.  To  achieve  their  goals,  the  reforms  will 
clarity  about 
need 
restructuring 
the  hospital  network,  ensure 
cooperation with stakeholders (particularly general 
practitioners)  and  overcome  longstanding  health 
workforce issues. 

sufficient 

provide 

Lithuania  faces  shortages  and  an  uneven 
distribution  of  health  workers.  Lithuania  had 
7.9 nurses per 1 000 population in 2021, equal to 
the EU average. However, a shortage of more than 
3 000 nurses is forecasted by 2030 in view of the 
growing  demand  for  care (135).  Over  a  third 
(34.7%)  of  nursing  personnel  and  41.5%  of 
physicians  are  aged  55  years  or  over.  Working 
conditions  are  a  significant  issue,  with  low  pay 
acting as a deterrent to entering the profession, in 
particular  for  nurses.  Further,  the  geographical 
spread  of  doctors  presents  a  challenge,  with  the 
biggest  concentration  of  doctors  being  in  the 
Vilnius and Kaunas districts. 

in 

Lithuania. 

EU  funds  support  substantial investments  in 
healthcare 
Historically, 
investments  levels  in  healthcare  have  lagged 
behind  in  Lithuania.  This  is  reflected  in  the  low 
availability  of  key  diagnostic  (medical  imaging) 
technology.  Through  its  recovery  and  resilience 
plan  (RRP),  Lithuania  is  investing  EUR 268  million 
(7%  of  the  RRP’s  total  value)  in  healthcare. 
Measures  aim  to  strengthen  emergency  care, 
tackle  infectious  diseases,  develop  digital  health 

(135) National Audit Office (2023a), Review of reorganisation of 

healthcare network. Vilnius. 

70 

20182019202020212022EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)185,6181,0199,7190,9NA93.3 (2021)Cancer mortality per 100 000 population272,8271,5276,5259,4NA235.4 (2021)Current expenditure on health, % GDP 6,57,07,57,8NA10.9 (2021)Public share of health expenditure, % of current health expenditure67,266,470,268,6NA81.1 (2021)Spending on prevention, % of current health expenditure 2,32,73,95,6NA6.0 (2021)Available hospital beds per 100 000 population643635601605NA525 (2021)Doctors per 1 000 population4,64,64,54,5NA4.1 (2021)*Nurses per 1 000 population7,87,77,87,9NA7.9 (2021)Total consumption of antibacterials for systemic use, daily defined dose per       1 000 inhabitants per day ***16,116,314,214,118,519.4 (2022) 
 
 
 
  
 
infrastructure, build capacity for advanced medical 
therapies,  create  a  competence  platform  for 
healthcare  professionals,  and  set  up  a  system  to 
monitor  quality  of  care.  Lithuania  will  also  invest 
EUR 475 million from the cohesion policy funds in 
2021-2027  to  improve  the  health  infrastructure 
and  the  accessibility,  quality  and  resilience  of 
health services (136). 

(136) The EU cohesion policy data reflect the status as of 13 May 

2024. 

71 

 
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Annex 17 showcases the economic and social 
regional  dynamics  in  Lithuania.  It  provides  an 
analysis  of  economic,  social  and 
territorial 
cohesion  in  the  Lithuanian  regions  and  assesses 
investment  and  subnational  reform 
emerging 
social 
needs 
development and competitiveness in the country. 

foster  economic  growth, 

to 

of 
Overview 
performance at regional level 

economic 

and 

social 

Map A17.1:  GDP per capita (in PPS) in Lithuania, 
NUTS3, 2021 

to 

the 

10% 
the  country, 
total  GDP  of 
respectively (138).  The  three  counties  attract  most 
of the investment in knowledge intensive industry 
and locate a major part of high value-added jobs 
while  manufacturing  and  lower  value-added  jobs 
are predominant in the other counties. 

Internal  convergence  was  hampered  by 
slower  growth  in  GDP  per  capita  in  some 
counties. GDP per capita has grown at a fast pace 
in  the  country  (3,87%),  much  above  the  EU 
average  (1.44%) (139).  The  highest  growth  rates 
were  recorded  in  Šiauliai,  Vilnius  and  Kaunas 
counties (4.27-4.85% per year between 2012 and 
2021).  Telšiai  and  Klaipeda  counties  had  the 
slowest growth, at 2.5-2.6% per year (Map A17.2). 

Map A17.2:  Lithuania, NUTS3: GDP per capita 
growth 2012-2021 

Source: Eurostat, DG REGIO elaboration 

Source: DG REGIO 

Regional disparities in Lithuania remain high. 
In  2021,  GDP  per  capita  was  above  the  EU 
average  only  in  Vilnius  county  at  around  133%, 
followed by Kaunas county with 91%. At the other 
end  of  the  spectrum,  GDP  per  capita  was  just 
above  half  of  the  EU  average  in  several  counties 
(NUTS 3 regions) in 2021, reaching a low at 49% 
in 
economic 
development  takes  place  in  Vilnius,  Kaunas  and 
Klaipeda counties, which contribute 43%, 20% and 

county (137).  Most 

Tauragė 

(137) For NUTS 3 regions, the latest available GDP per head (PPS) 

and labour productivity (PPS) are for 2021.  

72 

Labour  productivity 
in  Lithuania,  while 
generally on the rise, remains lower than the 
EU  average  in  all  NUTS  3  regions.  In  2021,  it 
was  the  highest  in  the  region  of  Kaunas  county 
(99%  of  the  EU  average),  followed  by  Klaipėda 
and Vilnius counties (90%). At the other end of the 

(138) https://osp.stat.gov.lt/lietuvos-regionai-2022/ekonomika/ukis-

ir-finansai  

(139) GDP per head growth and labour productivity growth are 

estimated as the average annual real growth rate from 2013 
through 2022 for EU27 and for Lithuania and from 2012 
through 2021 for NUTS 3 regions.  

 
 
 
 
 
 
 
 
 
 
 
Table A17.1:Selected indicators at regional level in Lithuania 

Source: Eurostat, EDGAR database 

spectrum,  labour  productivity  in  Tauragė  county 
corresponded to 54% of the EU average.  

at 84.4% of the population and the unemployment 
rate at 4.6% of labour force.  

Lithuania is one of the most depopulating EU 
countries  with  the  Central-Western  region 
experiencing  acute  demographic  decline  and 
depopulation.  Between  2013  and  2021,  the 
population in the Capital region increased by 1.6% 
per  1  000  while  it  decreased  by  9.5%  in  Central-
Western Lithuania. Such a decrease mainly caused 
by a high departure in the population aged 15-39, 
puts  the  Central-Western  region  at  risk  of  falling 
into a talent development trap in the future (140). 

Human  capital  is  also  considerably  limited 
outside of the Capital region (at NUTS 2 level). 
In  2022,  only  53%  of  those  aged  30-34  held  
a tertiary education degree in the Central-Western 
region (albeit well above the EU average) while in 
the  Capital  region  it  was  76%.  The  population 
living  outside  the  Capital  region  also  faces  less 
skilled and less advantageous labour market, with 
employment (141)  and  unemployment  rates (142)  in 
Central-Western  Lithuania,  respectively,  at  76.6% 
and 6.6%. In the Capital region employment stood 

(140) Communication Harnessing talent in Europe’s regions, 

COM(2023) 32 final.  

social 

Acute depopulation combined with an ageing 
population 
in  Central-Western  Lithuania 
translates  into  higher  percentages  of  those 
at-risk-of-poverty 
exclusion 
or 
(AROPE (143),  including  suffering  from  severe 
material and social deprivation (SMSD (144) in 
the  region,  especially  for  older  people  and 
persons with disabilities. While in 2022, AROPE 
was  at  19.2%  in  the  Capital  region,  it  reached 
26.8%  in  the  rest  of  the  country.  Similarly,  while 
5.4%  of  the  population  in  the  Capital  region 
suffered 
from  severe  and  social  material 
deprivation,  the  rate  outside  the  region  reached 
6.3%.  However,  in  2022  the  SMSD  rate  increased 
notably  in  the Capital  region  by  0.9 pp.  compared 
to  2021,  but,  it  decreased  in  Central-Western 
Lithuania (-0.8 pp.).   

the 
Significant 
transportation  infrastructure,  which  hinders 

disparities 

remain 

in 

(143) Risk of poverty or social exclusion (AROPE) relates to people 
who are in at least one of the situations: risk of monetary 
poverty (AROP in the previous year), severe material and 
social deprivation (SMSD in the concurrent year) and very low 
work intensity of household (VLWI in the previous year). 

(141) Employment rate of people aged 20-64 
(142) Unemployment rate is for the age group 15 years and older   

(144) Severe material and social deprivation rate is a proportion of 
population experiencing an enforced lack of at least 7 out of 
13 deprivation items (6 individual and 7 household items). 

73 

NUTS 3 RegionGDP per head (PPS)GDP per head growthProductivity (GVA (PPS) per person employed)Real productivity growthPopulation growthNet migrationPopulation aged 0-14 yearsPopulation aged 65+ EU27=100, 2022, regions 2021Avg % change on preceding year, 2013-2022; 2012-2021 (regions)EU27=100, 2022, regions 2021Avg % change on preceding year, 2013-2022; 2012-2021 (regions)Avg annual change per 1000 residents, 2013-2021Avg annual change per 1000 residents, 2013-2021% of total population, 2023% of total population, 2023European Union1001.441000.71.9 14.921.3Lithuania893.8783.82.0-7.2-1.714.920Vilnius county1334.3590.22.51.62.816.817.3Alytus county513.1359.41.5-12.7-4.112.223.1Kaunas county914.8599.32.9-4.50.115.120.3Klaipėda county822.5190.71.5-2.50.716.119.5Marijampolė county533.9163.21.8-15.2-8.313.720.8Panevėžys county623.9172.42.1-14.5-6.412.523.1Šiauliai county664.2776.32.7-11.8-5.113.721.4Tauragė county493.9754.13.2-17.4-10.613.621.4Telšiai county622.5668.60.0-12.8-8.214.420.4Utena county522.7368.31.5-16.5-4.711.424.4 
 
 
 
   
 
socio-economic  development  and  quality  of 
life.  Fragmentation  and  a  lack  of  coordination  in 
the  municipal  public  transport  systems  hinders 
mobility to  workplaces  and  services,  which  lowers 
the  likelihood  to  attract  investment  in  the  areas 
outside the major cities. In the Capital region, 81% 
of the population living in a radius of 120 km can 
be  reached  in  less  than  90  minutes  by  car (145). 
This  ratio  drops  to  less  than  68%  (national 
average)  in  Central-Western  Lithuania,  reaching  a 
low at 47% in Šiauliai county. 

Significant  regional  disparities  emerge  when 
breaking  down  statistics  by  the  degree  of 
urbanisation (146). In 2022, the employment rate 
in cities was, on average, as high as 83.7% while it 
was much lower in towns and suburbs, and in rural 
areas  (at  74.9%  and  75.1%).  The  unemployment 
rate  was,  on  average,  as  low  as  4.6%  while  it  is 
much  higher  in  towns  and  suburbs,  and  in  rural 
areas  (at  6.8%  and  7.4%).  Highly  skilled  people 
tend  to  be  concentrated  in  cities  in  Lithuania. 
While  62%  of  people 
in  cities  are  tertiary 
educated,  this  percentage  drops  to  34-35%  in 
towns and suburbs and rural areas (2022).  

Investment  and  subnational  reform  needs 
ahead 

country’s 

Cohesion  policy  investments  in  Lithuania 
overall 
support 
the 
green 
competitiveness 
growth, 
and 
transition,  social 
inclusion  and  reducing 
regional  disparities.  The  investment  priorities 
agreed in the cohesion policy programmes remain 
relevant.  

It would be beneficial if Lithuania speeds up 
the implementation of the programme, which 
substantial  part  (EUR  1.2  bn  or  one  fifth  of 
the  total  programme  EU  allocations) 
is 
dedicated  to  the  integrated  and  place-based 
development  leaving  it  to  the  municipalities 
to define the type of interventions needed to 
best  meet  their  development  needs  and 

(145) DG REGIO calculations based on the Eurostat population 

data and TomTom data on the road network 

(146) The Degree of urbanisation (DEGURBA) is a classification 

that indicates the character of an area, based on population 
grid data and Local Administrative Units (LAU) boundaries. It 
classifies LAUs into Cities (densely populated areas); Towns 
and suburbs (intermediate density areas) and Rural areas 
(thinly populated areas). 

potential.  These 
investments  could  play  an 
important  role  to  reduce  economic  and  social 
disparities  and  ensure  more  balanced  and 
polycentric development of the country.  

research 

innovation, 
and 
Boosting 
accelerating 
promoting 
digitalisation, 
competitiveness  and  productivity  of  SMEs 
remains one of the key investment priorities 
in  Lithuania,  in  particular  eliminating  the 
regional  innovation  divide  between  the  two 
regions,  as  the  Capital  region  is  a  strong 
innovator  while  the  region  of  Central-
Western 
emerging 
innovator (147).  Therefore,  accelerating  SME 
growth,  increasing  productivity  and  development 
of  start-ups  in  Central-Western  Lithuania  should 
be strengthened to improve the region’s innovation 
ecosystem.   

Lithuania 

an 

is 

Lithuania’s  progress  in  reducing  energy  use 
has  been  slow  due  to  a  high  proportion  of 
unrenovated  building  stock 
(88%).  The 
situation is particularly acute in the major cities of 
Vilnius  and  Kaunas (148),  and  due  to  the  high 
energy  intensity  of  Lithuanian  industry.  Major 
investment  needs  remain  in  energy  efficiency 
measures,  increasing  the  share  of  renewable 
energy  sources 
in  total  energy  consumption, 
deployment  of  smart  electricity  technologies  and 
solutions  in  energy  grids.  Lithuania  should  speed 
up the implementation of the Just Transition Fund 
investments  programmed  to  Kaunas,  Telsiai  and 
Siauliai  counties  facing  serious  challenges  from 
the  industrial  transition  process.  Lithuania  could 
benefit  from  facilitating  investments  in  net-zero 
technologies  manufacturing,  as  well  as  from  the 
opportunities  of  the  Strategic  Technologies  for 
Europe  Platform initiative to boost  investments in 
critical 
industry 
transformation. 

technologies 

support 

to 

Skills  shortages  and  mismatch  are  among 
the  obstacles  preventing  businesses  from 
expanding 
activities 
knowledge-based 
throughout  the  country.  This  is  particularly  the 
case  in  Central-Western  Lithuania  due  to  the 

(147) According to the Regional Competitiveness Index (RCI) 2022, 
the two regions differ in terms of competitiveness: RCI in the 
capital is above the EU average (114) while it is below in 
Central-Western Lithuania (89). 

(148) https://renomap.apva.lt/map. 

74 

 
 
 
region’s  risk  of  falling  into  a  talent  development 
trap.  Therefore,  investing  in  upskilling,  reskilling 
and job-to-job transitions, improving the quality of 
education,  in  particular  in  general  and  vocational 
education,  and  adult  learning  remains  a  major 
investment priority in the years to come.   

and 

other 

recommendations 
crowdfunding 
in  the  OECD  study (150)  could  be 
mentioned 
considered, 
strengthening 
with 
administrative  capacity  and  strategic  planning  of 
municipal  services  to  develop  and  implement 
qualitative investment projects.  

combined 

the 

care 

country,  primary 

Life  expectancy  at  birth  remains  below  the 
EU  average,  at  around  75  years  for  the 
whole  country.  However,  it  differs  among  the 
two  regions  -  lower  in  Central-Western  Lithuania 
(74 years) and slightly higher in the Capital region 
(76 years) (149). In order to increase life expectancy 
in 
should  be 
strengthened  by  increasing  the  range  of  services 
provided  by 
teams, 
expanding  their  capacity  including  in  integrated 
services. The difference in health outcomes among 
the  regions  are  also  exacerbated  by  an  uneven 
distribution  of  health  professionals.  Investments 
from  cohesion  policy  funds  into  the  training  of 
initiatives  aimed  at 
professionals  and 
healthcare 
addressing 
professionals 
Lithuania 
remains key to addressing and ensuring the supply 
of health professionals in the region.   

the 
shortage 
Central-Western 

the  primary  healthcare 

the 
in 

of 

raise  comparatively 

However,  the  long-term  sustainable  regional 
development  cannot  be  achieved  relying 
solely  on  the  EU  funding.  Currently,  Lithuanian 
municipalities 
few  own 
financial  resources  to  fund  public  investment. 
Instead,  they  heavily  rely  on  EU  funding  and 
national  assistance  in  mobilising  resources.  Local 
governments  only  account  for  33%  of  public 
in  Lithuania  while  on  average 
investment 
subnational  governments  account  for  46%  of 
public investment in the OECD.  

The  recently  adopted  amendments  to  the 
Constitutional Law on the Implementation of 
the  Fiscal  Treaty  will  provide  municipalities 
wider  opportunities  to  borrow  for  securing 
national  contributions  when  implementing 
projects  financed  by  the  EU.  This  is  a  positive 
development  in  improving  access  to  the  finance 
needed to benefit from the EU funding. However, it 
is  too  early  to  assess  if  municipalities  and  the 
banking  sector  will  use  the  new  law.  Other  more 
for 
financing  measures 
innovative 
public 
instruments,  civic 
financial 
investments, 

like 

(149) https://osp.stat.gov.lt/statistiniu-rodikliu-

analize?hash=ada0ad7d-4739-4988-acb8-33b7f012f1ae#/ 

(150) OECD, Raising Local Public Investments in Lithuania, 2021. 

75 

 
 
 
 
 
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

The  Lithuanian  banking  sector  is  relatively 
small  compared  with  other  EU  countries and 
is  exposed  to  concentration  and  spillover 
risks  due  to  its  integration  in  the  region.  At 
the end of Q3-2023 banks’ assets were equivalent 
to 87.2% of GDP. The two largest banking groups, 
Swedbank  and  SEB,  are  owned  by  their  parent 
banks  in  Sweden.  The  Lithuanian  government  has 
no stake in the banking sector. Lithuania’s banking 
sector  remains  one  of  the  most  concentrated  in 
the  EU,  which  implies  a  high  dependency  of  the 
sector  on  individual  banks.  The  parent  companies 
of  the  two  largest  banks  also  serve  the  housing 
market  in  Sweden,  so  developments  in  Sweden 
may also impact their Lithuanian business.  

interest 

rates.  Given 

Most  performance 
indicators  for  banks 
operating in Lithuania are among the best in 
in  Lithuania  are 
the  EU.  Banks  operating 
characterised  by  good  loan  quality,  high  capital 
and  high  liquidity  buffers.  This  makes  them 
resilient to potential shocks. The current climate of 
rising  interest  rates  is  resulting  in  exceptionally 
high  bank  profits.  The  current  profitability  of 
Lithuanian  banks  is  mostly  driven  by  a  strong 
increase  in  interest  margins  as  a  result  of  rising 
the  predominantly 
key 
variable-rate  loan  portfolio  of  Lithuanian  banks, 
this has quickly fed through to banks’ net interest 
income,  as  deposit  rates  have  adjusted  more 
slowly.  Net  interest  income  as  a  share  of  total 
income reached a record high of 89.2% at the end 
of  Q3-2023.  In  addition,  credit  institutions  also 
earn  significant  returns  from  their  large  liquidity 
reserves  held  at  the  central  bank.  Moreover,  the 
cost-to-income 
in 
Lithuania, which historically is one of the lowest in 
the EU, has decreased even further in a significant 
fall from 51.4% in 2022 to 35.9% in Q3-2023. At 
the  end  of Q3-2023,  return  on  equity  was  22.9% 
vs 9.9% in the EU, and return on assets was 1.3% 
vs  0.5%  in the  EU.  With  a  liquidity-coverage  ratio 
of  433.9%  at  the  end  of  Q3-2023  the  banking 
sector  remains  highly  liquid.  At  20%,  the  capital 
adequacy  ratio  remains  well  above  the  required 
minimum.  As  the  health  of  companies  and 
households improved over 2023, the share of non-
performing  loans  in  banks  fell  to  its  lowest  level 
since 2008 at the end of Q3-2023 (0.7%). A very 
low  loan-to-deposit  ratio  of  63.6%  in  Q3-2023 
reflects  the  historically  high  amount  of  deposits 
held  with  credit  institutions.  Thanks  to  the  strong 
and  stable  domestic  customer-deposit  base (83% 

ratio  for  banks  operating 

of total funding) credit institutions do not need to 
draw  additional  funding  from  financial  markets. 
This  mitigates  their  exposure  to  possible  global 
financial  stress  and  capital  flight  in  times  of 
market  volatility.  It  also  limits  their  reliance  on 
cross-border parent banking groups.  

Given  the  high  profitability  of  the  banking 
system,  the  authorities  have  introduced  a 
temporary  windfall  levy  on  banks.  The  newly 
introduced levy will amount to 60% of banks’ net 
interest  income  earned  in  2023  and  2024  that 
exceeds the 4-year average net interest income by 
more than 50%. As most banks are profitable and 
their  profits  are  growing,  Lithuania’s  central  bank 
also  decided  at  the  end  of  2022  to  build  up 
additional  capital  buffers  for  credit  institutions, 
and  raised  the  CCyB  from  0%  to  1%,  effective 
from  1 October  2023.  High  levels  of  capital  and 
liquidity  will  help  banks  to  withstand  potential 
economic difficulties and losses if uncertainty and 
interest  rates  remain  high  and  the  economic 
outlook remains weak. 

to 

Lithuanian  banks  have  significant  exposures 
to business loans secured by commercial real 
estate.  Banks  account  for  almost  90%  of  the 
financial  sector’s  total  exposure  to  commercial 
real  estate  in  Lithuania.  Although  mortgages  still 
account  for  the  largest  share  of  bank  assets,  the 
share  of  commercial  real  estate  loans  as  a 
proportion  of  total  bank  loans  was  23%  in  Q2-
2023,  according 
the  European  Banking 
Authority’s  Risk  Dashboard.  61%  of  all  loans  to 
non-financial corporations are for commercial real 
estate  and  nearly  70%  of  all  business  loans  are 
collateralised  with  commercial  real  estate.  In  the 
future, variable interest rate loans, which make up 
more  than  50%  of  commercial  real  estate  loans, 
will result in higher interest charges. The latter will 
negatively affect both borrowers’ ability to service 
debt  and  banks’  asset  quality,  if  they  are  not 
hedged  by  borrowers.  In  case  commercial  real 
estate  prices  decrease,  the  value  of  banks’ 
collateral  will  also  go.  This means  higher  loan-to-
value  ratios,  which  may  force  banks  to  increase 
their provisions to cover credit risk. Although large 
capital buffers and profitability are able to absorb 
potential losses from a likely deterioration in loan 
performance,  it  is  crucial  that  banks  also  have 
robust  credit-risk-management  frameworks 
in 
place,  including  frameworks  to:  (i)  identify  and 
classify  distressed  borrowers  at  an  early  stage; 

76 

 
 
 
 
 
Table A18.1:Financial Soundness Indicators 

1Last data: Q3 2023. 
2Data are annualised. 
3Data available for EA countries only, EU average refers to EA area.  
Source: ECB, Eurostat. 

companies  have  accumulated  financial  reserves 
which  are  helping  them  to  service  their  loans  on 
time.  

from  new  entrants  using 
Competition 
financial technology has intensified in recent 
years  for  the  incumbent  players  in  the 
financial  sector.  Such  competitive  forces  are 
mostly  evident  in  payment  services  and  retail 
banking.  After  an  exponential  expansion  since 
2014, the fintech sector is now consolidating, with 
around 280 such companies currently operating in 
Lithuania.  For  example,  Revolut  started  as  an 
innovative  Lithuanian 
fintech  company,  and 
received a Lithuanian banking licence in 2019. It is 
now the third biggest bank in Lithuania, with 18% 
of 
Since 
1 January 2024,  Revolut  has  been  supervised  by 
the  EU’s  Single  Supervisory  Mechanism.  With  an 
online banking model, it relies on non-resident EU 
depositors.  Changing  consumer  habits  and  the 
growing  popularity  of  financial  technologies  have 
fuelled banking-sector digitalisation and created a 
strong driver for increased technology adoption by 
incumbents.  The  digital  transition  also  brings  new 
challenges  for  anti-money  laundering  supervision. 
In this respect, the authorities have already taken 
increase  supervisory  resources  and 
action  to 
strengthen the regulatory framework including for 
providers of virtual-asset services. 

banking-sector 

assets. 

total 

(ii)  mitigate  any  vulnerabilities 

and 
commercial real estate market. 

in 

the 

The  tighter  lending  environment  is  cooling 
down  the  residential  and  commercial  real 
estate  market,  after  both  expanded  rapidly 
following  the  pandemic.  From  2010  to  end-
2023,  house  prices  in  Lithuania  increased  more 
than  158%  –  the  third  highest  rate  in  the  EU 
during  this  period.  In  October  2022,  the  annual 
growth  rate  of  bank  lending  for  house  purchase 
level  since  the 
reached  12.6%,  the  highest 
financial  crisis.  With  higher  borrowing  costs  and 
weakening  economic  activity,  the  pace  of  lending 
has gradually declined since then, leading to fewer 
housing sales. The number of house sales already 
started to decline in the spring of 2022, and by the 
beginning  of  2023  was  at  its  lowest  level  in  the 
previous  5  years.  However, 
in 
transactions  has  not  yet  translated  into  falling 
prices,  although  the  nominal  annual  increase  in 
residential  property  prices  has  slowed  down  to 
10.4%  as  of  October  2023  from  an  average  of 
19% in 2022. Similarly, the commercial real estate 
market  has  now  entered  a  period  of  fewer 
transactions,  but  there  is  no  sign  yet  of  a  broad 
downturn, with prices holding up relatively well for 
now. However, the profitability of commercial real 
estate  investors  is  adversely  affected  by  lagging 
rent growth. Higher debt-servicing and refinancing 
costs  also  pose  challenges,  most  notably  for 
market  participants  with  short-term  liabilities  and 
exposures  to  the  retail  segment.  On  the  other 
hand,  rental  income  flows  are  positively  affected 
by low vacancy rates, and commercial  real estate 

the  slump 

77 

2017201820192020202120222023EUMedianTotal assets of the banking sector (% of GDP)67.566.165.779.478.685.287.2257.0184.6Share (total assets) of the five largest banks (%)90.190.990.491.889.890.0--69.6Share (total assets) of domestic credit institutions (%)18.48.99.59.711.625.528.0-62.9NFC credit growth (year-on-year % change)5.45.1-0.7-14.011.218.64.9-2.4HH credit growth (year-on-year % change)7.68.67.16.110.411.97.8-1.4Financial soundness indicators:1        - non-performing loans (% of total loans)3.22.61.72.21.20.90.71.81.8- capital adequacy ratio (%)19.118.619.921.923.520.420.019.620.1- return on equity (%)29.112.314.510.010.413.522.99.913.2Cost-to-income ratio (%)148.944.947.048.660.351.435.952.844.9Loan-to-deposit ratio (%)178.879.577.263.361.859.263.693.380.2Central bank liquidity as % of liabilities1.20.70.20.54.13.10.9-0.7Private sector debt (% of GDP)56.256.155.254.353.651.4-133.0118.4Long-term interest rate spread versus Bund (basis points)-0.8-8.756.373.453.4-52.944.6107.7104.2Market funding ratio (%)18.021.722.336.736.233.1-50.839.8Green bonds outstanding to all bonds (%)3---3.33.23.13.04.02.71-34-1011-1718-2424-27Colours indicate performance ranking among 27 EU Member States. 
 
  
 
ANNEX 19: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Lithuania’s tax system. It includes 
information on the tax structure (the types of tax 
that  Lithuania  derives  most  of  its  revenue  from), 
the  tax  burden  on  workers,  and  the  progressivity 
and redistributive effect of the tax system. It also 
provides 
tax  collection  and 
compliance.  

information  on 

remained  considerably  below 

Lithuania’s revenues from labour and capital 
taxes  are  relatively  low.  Table  A19.1  shows 
that  Lithuania’s  tax  revenues  as  a  percentage  of 
the  EU 
GDP 
aggregate  in  2022,  falling  by  0.3 pps  compared 
with  2021.  Lithuania’s  revenues  from  labour  and 
capital  taxes  were  significantly 
lower  as  a 
percentage  of  GDP  than  the  EU  aggregate. 
and 
Revenues 
environmental 
the  EU 
taxes  were  close 
aggregate as a share of GDP but higher as a share 
of total taxation (see Graph A19.1).  

consumption 

taxes 
to 

from 

There  is  scope  for  increased  use  of  the 
income,  property  and  environmental  tax 
bases.  The  income  of  the  self-employed  is  taxed 
comparatively  lightly.  Revenues  from  recurrent 
property  taxes,  which  are  among  the  taxes  least 
detrimental  to  growth,  are  currently  very  low. 
Environmental  taxes  could  be  more  based  on  the 
application  of  the  ‘polluter  pays’  principle.  This 
includes  scope  to  expand  waste  disposal  taxes 
(including  incineration)  and  implement  taxes  on 

Table A19.1:Taxation indicators 

NOx emissions, fertilisers and pesticides.  

Lithuania has committed itself to a range of 
tax  reforms  as  part  of  its  Recovery  and 
Resilience Plan (RRP). The commitments include 
less 
broadening  the  tax  base  with  sources 
detrimental  to  economic  growth  and  abolishing 
inefficient  or  environmentally  unfriendly 
tax 
exemptions  and  special  tax  regimes  (see  also 
Annex  6).  The  reforms  are  expected  to  make  the 
tax  system  simpler,  more  transparent  and  fairer, 
and  to  create  a  more  adequate  and  sustainable 
revenue base. They should also address the highly 
differentiated  tax  treatment  of  different  income 
sources  and  reduce  incentives  for  tax  arbitrage. 
The adopted measures include a gradual increase 
of excise duties and the introduction of a CO2 tax 
component  that  will  gradually  increase  budget 
revenues, with the yield set to reach 0.6% of GDP 
by  2028.  However,  the  adoption  of  other  key 
elements  of  the  tax  reform  package  is  currently 
delayed and the outcome is uncertain. In addition, 
good  progress  has been made in  some  areas,  for 
example with measures to reduce informality and 
improve tax compliance.  

Lithuania  has  reduced  the  labour  tax  wedge 
in  recent  years,  especially  at  lower  earnings 
levels.  Graph  A19.2  shows  that  the  labour  tax 
wedge  for  Lithuania  in  2023  was  lower  than  the 
EU average for single people at the average wage 
as  well  as  at  wage  levels  both  below  and  above 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2022, if available. For more details on the VAT gap, see European Commission, Directorate-General for 
Taxation and Customs Union, 2023, VAT gap in the EU, https://data.europa.eu/doi/10.2778/911698. 
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage, 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
Source: European Commission and OECD 

78 

LT2010202020212022202320102020202120222023Total taxes (including compulsory actual social contributions) (% of GDP)28.331.231.931.637.940.040.440.2Labour taxes (as % of GDP)14.116.016.015.920.021.320.720.3Consumption taxes (as % of GDP)11.211.611.711.310.810.711.211.0Capital taxes (as % of GDP)2.93.74.14.37.18.08.68.9Of which, on income of corporations (as % of GDP)1.01.72.12.32.42.53.03.4Total property taxes (as % of GDP)0.70.30.30.31.92.32.22.1Recurrent taxes on immovable property (as % of GDP)0.40.30.30.31.11.21.11.0Environmental taxes as % of GDP1.81.91.81.52.42.22.32.0Tax wedge at 50% of average wage (Single person) (*)36.929.931.029.729.133.931.732.131.831.7Tax wedge at 100% of average wage (Single person) (*)40.637.137.638.438.941.040.139.940.040.2Corporate income tax - effective average tax rates (1) (*)13.713.713.719.519.019.0Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)6.26.87.47.78.68.18.27.9Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)12.18.240.935.5VAT Gap (% of VAT total tax liability, VTTL)(**)29.618.714.513.59.75.4LithuaniaEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
       
 
Graph A19.1: Tax revenues from different tax types, % of total revenue 

Source: European Commission 

large values in a few Member States. The VAT gap 
(the gap  between  revenues  actually  collected  and 
the  theoretical  tax  liability)  remained  relatively 
wide  in  Lithuania  at  13.5%  in  2022  (more  than 
double  the  2021  EU  average  of  5.4%),  but  it  has 
decreased sharply in recent years and is now less 
than half the 2010 level. VAT compliance appears 
to have improved most in the sectors where it was 
previously weakest. 

Graph A19.2: Tax wedge for single and second 
earners, % of total labour costs, 2023 

A second earner tax wedge assumes a first earner at 100% of 
the average wage and no children. For the methodology of 
the tax wedge for second earners, see OECD, 2016, Taxing 
Wages 2014-2015. 
Source: European Commission 

the average wage. Second earners at a wage level 
of 67% of the average wage, whose spouses earn 
the average wage, are subject to a tax wedge that 
is lower than the EU average (and equal to the tax 
wedge of single persons at the same wage level). 
In  recent  years,  the  ability  of  the  Lithuanian  tax 
and  benefit  system  to  reduce  income  inequality 
(as  measured  by  its  ability  to  reduce  the  GINI 
coefficient)  has  been  increasing,  although  it  was 
still  slightly  below  the  EU  average  in  2022  (see 
Table  A19.1).  As  part  of  its  RRP,  Lithuania  has 
published  an  OECD-prepared  assessment  of  the 
effectiveness  of 
in 
preventing  poverty  and  reducing  inequality.  It  has 
also  committed  to  following  this  up  with  relevant 
reforms to the personal income taxation and social 
security  systems.  Changes  to  the  tax-exempt 
amount of personal income which come into effect 
in  2024  will  increase  net  earnings,  especially  for 
people  with  comparatively  low  earnings,  which  is 
likely  to  make  the  personal  income  tax  system 
more progressive.  

tax-benefit  system 

its 

Lithuania  is  making  progress  in  increasing 
tax  compliance  and  the  effectiveness  of  its 
tax administration. Through its RRP, Lithuania is 
taking  a  range  of  actions  to  strengthen  tax 
administration. This includes digitalisation projects; 
improving IT tools and automatic collection of data 
on  transactions;  and  training  to  improve  tax  and 
customs  specialists’  competences.  Measures  to 
limit  cash  transactions,  regulate  the  sale  of  used 
vehicles and track alcohol sales should also help to 
reduce  the  size  of  the  shadow  economy.  Tax 
arrears  fell  back  by  3.9 pps  in  2021  to  8.2%  of 
total  net revenue, after a sharp increase in 2020. 
This  is  significantly  below  the  EU-27  average  of 
35.5%, although that average is distorted by very 

79 

29.134.138.940.634.12025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - LTSingle earner - EU averageSecond earner -  LTSecond earner -  EU average50.627.322.150.535.913.6Tax revenue shares in 2022, Lithuania (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital4.13.90.30.90.40.20.92.50.22.70123456Lithuania -environmentaltaxationEU -environmentaltaxationLithuania -propertytaxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Lithuania and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
 
     
      
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1:Key economic and financial indicators 

(1) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) NIIP excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2024-5-17, where available; European Commission for forecast figures (Spring forecast 2024). 

80 

2004-072008-122013-2020212022202320242025Real GDP (y-o-y)8.2-0.43.06.32.4-0.32.02.9Potential growth (y-o-y).1.82.84.13.62.82.52.3Private consumption (y-o-y)11.0-2.22.68.12.0-1.03.24.5Public consumption (y-o-y)2.9-0.7-0.21.20.40.20.7-0.4Gross fixed capital formation (y-o-y)17.2-6.85.69.43.610.63.84.4Exports of goods and services (y-o-y)10.67.35.017.012.2-3.32.24.8Imports of goods and services (y-o-y) 15.72.14.219.912.4-4.93.55.9Contribution to GDP growth:Domestic demand (y-o-y)11.8-3.52.76.92.01.72.93.6Inventories (y-o-y)0.1-0.1-0.4-0.40.0-3.50.00.0Net exports (y-o-y)-3.72.80.6-0.30.41.5-0.8-0.7Contribution to potential GDP growth:Total Labour (hours) (y-o-y).-0.70.31.21.41.00.60.2Capital accumulation (y-o-y).1.11.41.82.02.22.12.0Total factor productivity (y-o-y).1.41.11.20.2-0.3-0.10.1Output gap4.9-4.51.62.00.9-2.2-2.7-2.1Unemployment rate7.313.28.07.16.06.97.06.9GDP deflator (y-o-y)6.23.32.16.516.67.12.21.9Harmonised index of consumer prices (HICP, y-o-y)3.34.71.44.618.98.71.91.8HICP excluding energy and unprocessed food (y-o-y)2.43.52.13.213.610.73.12.2Nominal compensation per employee (y-o-y)15.22.67.311.911.410.28.26.8Labour productivity (real, hours worked, y-o-y)6.12.52.83.4-2.7-2.81.32.7Unit labour costs (ULC, whole economy, y-o-y)6.80.65.06.514.212.26.33.6Real unit labour costs (y-o-y)0.6-2.72.80.0-2.04.83.91.7Real effective exchange rate (ULC, y-o-y)4.4-1.53.26.49.64.31.31.1Real effective exchange rate (HICP, y-o-y)1.11.90.81.87.73.5..Net savings rate of households (net saving as percentage of net disposable income)-0.90.1-0.57.61.2...Private credit flow, consolidated (% of GDP)16.6-1.32.75.86.8...Private sector debt, consolidated (% of GDP)56.972.155.453.651.4...of which household debt, consolidated (% of GDP)17.428.022.723.421.8...of which non-financial corporate debt, consolidated (% of GDP)39.444.032.730.229.6...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)0.711.93.40.70.5...Corporations, net lending (+) or net borrowing (-) (% of GDP)-8.06.15.9-0.7-1.73.41.90.9Corporations, gross operating surplus (% of GDP)33.435.633.831.233.129.927.927.0Households, net lending (+) or net borrowing (-) (% of GDP)-0.30.1-1.64.5-1.6-0.51.82.7Deflated house price index (y-o-y)18.1-9.95.110.90.41.1..Residential investment (% of GDP)2.52.52.83.13.63.7..Current account balance (% of GDP), balance of payments-10.3-3.21.71.1-5.51.90.3-0.3Trade balance (% of GDP), balance of payments-9.4-3.52.94.5-2.03.8..Terms of trade of goods and services (y-o-y)1.8-0.30.9-5.2-7.65.80.30.3Capital account balance (% of GDP)1.33.31.91.41.52.0..Net international investment position (% of GDP)-47.0-56.5-34.3-7.4-7.01.3..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)-15.4-25.6-4.622.121.227.9..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)51.271.669.569.259.160.2..Export performance vs. advanced countries (% change over 5 years)..12.542.233.223.9..Export market share, goods and services (y-o-y)6.54.42.72.73.2-4.4-1.21.1Net FDI flows (% of GDP)-3.9-1.1-1.1-2.2-2.5-1.1..General government balance (% of GDP)-0.7-6.2-0.8-1.1-0.6-0.8-1.8-2.2Structural budget balance (% of GDP)..-1.6-2.0-1.10.1-0.8-1.4General government gross debt (% of GDP)17.431.139.743.438.138.338.941.6forecast 
 
 
 
  
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks  for  Lithuania  over  the  short,  medium 
and  long  term.  It  follows  the  multi-dimensional 
approach  of  the  European  Commission’s  2023 
Debt Sustainability Monitor, updated based on the 
Commission 2024 spring forecast. 

1  –  Short-term  risks  to  fiscal  sustainability 
low.  The  Commission’s  early-detection 
are 
indicator  (S0)  does  not  point  to  any  major  short-
term  fiscal  risks  (Table A21.2) (151).  Government 
gross financing needs are estimated at 7% of GDP 
on  average  in  2024-2025  (Table A21.1, Table 1). 
Financial  markets’  perceptions  of  sovereign  risk 
are  positive,  as  confirmed  by  the  ratings  of  the 
main agencies. 

2  –  Medium-term  fiscal  sustainability  risks 
appear medium.   

The baseline DSA shows that the government 
debt  ratio  is  projected  to  remain  at  a 
moderate  level  over  the  medium  term,  with 
debt  rising  to  52%  of  GDP  in  2034  (Graph 1, 
Table 1) (152).  The  assumed  structural  primary 
balance  (0.0%  of  GDP  prior  to  changes  in  ageing 
costs) 
these  developments. 
Compared to historical data since 1980, the deficit 
appears  relatively  plausible.  Indeed,  most  of  past 
fiscal  positions  were  more  stringent  than  the  one 
assumed  in  the  baseline  (Table  A21.2) (153).  The 

contributes 

to 

(151) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of fiscal and financial-
competitiveness indicators that have proven to be a good 
predictor of emerging fiscal stress in the past.  

(152) The assumptions underlying the Commission’s ‘no-fiscal 

policy change’ baseline include in particular: (i) a structural 
primary balance, before ageing costs, of 0.0% of GDP from 
2024 onwards; (ii) inflation converging linearly towards the 
10-year forward inflation-linked swap rate 10 years ahead 
(which refers to the 10-year inflation expectations 10 years 
ahead); (iii) the nominal short- and long-term interest rates 
on new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10; (iv) 
real GDP growth rates from the Commission 2024 spring 
forecast, followed by the EPC/OGWG ‘T+10 methodology 
projections between T+3 and T+10 (average of 1.6%); (v) 
ageing costs in line with the 2024 Ageing Report (European 
Commission, Institutional Paper 279, April 2024). For 
information on the methodology, see the 2023 Debt 
Sustainability Monitor (European Commission, Institutional 
Paper 271, March 2024). 

(153) This assessment is based on the fiscal consolidation space 

indicator, which measures the frequency with which a tighter 
fiscal position than assumed in a given scenario has been 
observed in the past. Technically, this consists in looking at 
the percentile rank of the projected SPB within the 

debt  dynamics  benefit  from  a  small  favourable 
snowball effect in 2025-2034. 

four 

The  baseline  projections  are  stress-tested 
against 
deterministic 
alternative 
scenarios to assess the impact of changes in 
key  assumptions  relative  to  the  baseline 
(Graph 1).  Under  the  historical  structural  primary 
balance  (SPB)  scenario  (i.e.  the  SPB  returns  to  its 
historical  15-year  average  of  -1.1%  of  GDP)  the 
debt ratio would be about 9 pps. higher than under 
the  baseline  in  2034.  Under  the  adverse  interest-
growth  rate  differential  scenario  (i.e.  the  interest-
growth  rate  differential  deteriorates  by  1 pp. 
compared with the baseline), the debt ratio would 
be about 4 pps. of GDP higher in 2034 than under 
the  baseline.  Under  the  financial  stress  scenario 
(i.e.  interest  rates  temporarily  increase  by  1 pp. 
compared with the baseline) the government debt 
ratio  would  be  similar  in  2034.  Under  the  lower 
the 
structural  primary  balance  scenario 
projected  deterioration  in  the  SPB  in  2024  is 
increased by half), the debt-to-GDP ratio would be 
about 4 pps. higher. 

(i.e. 

to 

plausible 

The  stochastic  projections  indicate  low  risk, 
pointing to limited sensitivity of the baseline 
unforeseen 
projections 
events  (154). These stochastic simulations indicate 
a 66% probability that the debt ratio will be higher 
in 2028 than in 2023, implying low risks given the 
is,  however,  some 
current  debt 
the  baseline  debt 
uncertainty 
projections,  as  measured  by 
the  difference 
between  the  10th  and  90th  debt  distribution 
percentiles,  at  31 pps.  of  GDP  in  five  years’  time 
(Graph 2).  

level.  There 

surrounding 

3  –  Long-term  fiscal  sustainability  risks 
appear  overall  medium.  This  assessment  is 
based  on  the  combination  of  two  fiscal  gap 
indicators,  capturing  the  required  fiscal  effort  to 
stabilise debt (S2 indicator) and bring it to 60% of 
GDP  (S1  indicator)  in  the  long  term (155).  This 

distribution of SPBs observed in the past in the country, 
taking into account all available data from 1980 to 2023. 

(154) The stochastic projections show the joint impact on debt of 

10,000 different shocks affecting the government’s 
budgetary position, economic growth, interest rates and 
exchange rates. This covers 80% of all the simulated debt 
paths and therefore excludes tail events. 

(155)The S2 fiscal sustainability indicator measures the 

permanent SPB adjustment in 2025 that would be required 

81 

 
 
 
 
 
 
 
 
assessment 
increase in age-related spending.  

is  mostly  driven  by  a  projected 

The  S2  indicator  points  to  medium  fiscal 
sustainability  risks.  The  indicator  shows  that, 
relative  to  the  baseline,  the  SPB  would  need  to 
improve by 3.9 pps. of GDP in 2025 to ensure debt 
stabilisation  over  the  long  term.  This  reflects  the 
in  ageing-related  spending 
projected 
(contribution of 3.6 pps.), which is driven by public 
pension  expenditure  (2.5 pps.)  and,  to  a  lesser 
extent,  health  care  and  long-term  care  spending 
(0.7 pp. each) (Table A21.1, Table 2). 

increase 

The S1 indicator also points to medium fiscal 
sustainability  risks.  The  indicator  shows  that 
preventing  government debt  from  exceeding  60% 
of GDP by 2070 would require an improvement of 
the fiscal position by 2.8 pps. of GDP in 2025. This 
effort is mostly due to the projected rise in ageing 
costs (2.3 pps.) (Table A21.1, Table 2).  

4  –  Finally,  several  additional  risk  factors 
need to be considered in the assessment.  On 
the  one  hand,  risk-increasing  factors  include  the 
recent increase in interest rates and the relatively 
large  share  of  public  debt  held  by  non-residents. 
On  the  other  hand,  risk-mitigating  factors  include 
the fact that debt is fully denominated in euro and 
the low share of short-term debt in total debt. 

to stabilise public debt over an infinite horizon. It is 
complemented by the S1 indicator, which measures the 
permanent SPB adjustment in 2025 to bring the debt ratio to 
60% by 2070. The impact of the drivers of S1 and S2 may 
differ due to the infinite horizon component considered in the 
S2 indicator. For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6% of GDP, 
‘medium risk’ if it is between 2% and 6% of GDP, and ‘low 
risk’ if the effort is negative or below 2% of GDP. The overall 
long-term risk classification combines the risk categories 
derived from S1 and S2. S1 may notch up the risk category 
derived from S2 if it signals a higher risk than S2. See the 
2023 Debt Sustainability Monitor for further details. 

82 

 
 
 
Table A21.1: Debt sustainability analysis - Lithuania 

Source: Commission services. 

Table A21.2: Heat map of fiscal sustainability risks - Lithuania 

Source: Commission services. 

83 

Table 1. Baseline debt projections20212022202320242025202620272028202920302031203220332034Gross debt ratio (% of GDP)43.438.138.338.941.742.142.442.943.845.046.448.049.751.6Changes in the ratio-2.8-5.40.20.62.80.40.20.51.01.21.41.61.71.9of whichPrimary deficit0.70.20.21.11.31.31.00.91.11.31.41.61.82.0Snowball effect-5.0-6.7-1.8-0.9-0.8-0.9-0.7-0.4-0.1-0.1-0.10.0-0.1-0.1Stock-flow adjustments1.51.11.80.42.30.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)6.05.15.05.98.26.26.06.06.26.56.87.17.47.8S1S2Overall index  (pps. of GDP)2.83.9of which Initial budgetary position0.20.3Debt requirement-0.4Ageing costs3.03.6of which    Pensions2.32.5     Health care0.50.7     Long-term care0.50.7Education-0.3-0.3Table 2. Breakdown of the S1 and S2 sustainability gap indicators01020304050607020212022202320242025202620272028202920302031203220332034Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p9001020304050607020212022202320242025202620272028% of GDPGraph 2. Stochastic debt projections 2024-2028MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMMEDIUMMEDIUMMEDIUMMEDIUMLOWDebt level (2034), % GDP51.661.055.555.451.9Debt peak year20342034203420342034Fiscal consolidation space30%51%41%30%30%Probability of debt ratio exceeding in 2028 its 2023 level66%Difference between 90th and 10th percentiles (pps. GDP)31.0Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)(1)Debtlevelin2034.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2028its2023level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifferencebetweenthe90thand10thpercentilesmeasuresuncertainty,basedonthedebtdistributionunder10000differentshocks.Green,yellowandredcellsindicateincreasinguncertainty. (For further details on the Commission's multidimensional approach, see the 2023 Debt Sustainability Monitor)LOWMEDIUMMEDIUMMEDIUMMEDIUM