COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Lithuania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Lithuania
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Lithuania, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  SWD(2025) 215 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Lithuania  Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Lithuania {COM(2025) 215 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Lithuania has shown resilience in 
the face of shocks, but 
convergence has slowed recently 

In  2024,  Lithuania  saw  a  strong  economic 
recovery,  supported  by  consumption  and 
buoyant  services  exports,  but  trade  and 
geopolitical  risks  cast  a  shadow  over  exports, 
and  over 
investment 
consumption  and 
decisions.  Following  the  slowdown  in  2023 
with  0.3%  growth,  GDP  recovered  strongly  to 
2.8%  growth  in  2024,  compared  to  a  1.6% 
average  across  EU  Member  States,  as  wages 
continued  to  rise  and  private  consumption 
rebounded. Consumer  confidence increased to 
well  above  its  long-term  average  and  retail 
sales  grew  fast  in  2024,  at  8%  year-on-year 
by the end of 2024. However, savings are also 
historically  high,  at  6.8%  of  gross  disposable 
income  in  2023  compared  to  almost  no 
savings  on  average  pre-COVID-19,  likely  due 
to  uncertainty  and  geopolitical  risks.  Savings 
are projected to have increased to over 10% in 
2024  and  to  continue  to  rise  in  2025  and 
2026. In addition, investment saw a decline in 
2024,  mostly  in  equipment  and  machinery. 
Lithuania’s  economy  is  expected  to  continue 
growing  over  the  forecast  horizon,  supported 
by  robust  private  consumption,  a  modest 
recovery  in  investment,  in  large  part  due  to 
public investments and those supported by the 
RRF,  and  buoyant  exports.  However,  trade 
tensions  and  their  impact  on  uncertainty,  in 
addition  to  existing  geopolitical  risks  for  the 
in  particular,  are  set  to  have  a 
Baltics 
dampening 
exports, 
goods 
investments.  Geopolitical 
consumption  and 
risks  from  Lithuania’s  neighbourhood  may  be 
affecting  investment  decisions  and  limiting 
some drivers of growth. Real GDP for 2025 is 
expected  to  grow  by  2.8%.  While  downside 
risks  on  investment  decisions  will  remain, 
strong fundamentals are forecast to support a 

effect 

on 

resumed  acceleration  in  2026  with  3.1%  real 
GDP growth. 

Consumer price inflation dropped in 2024, 
and  while  price  growth  is  expected  to 
increase  again 
in  2025,  trade  and 
commodity  price  developments  will  limit 
this  normalisation.  HICP  (harmonised  index 
of consumer prices) inflation fell from a record 
high  of  18.9%  in  2022  to  0.8%  in  2024,  due 
to energy price deflation and very low inflation 
across most other components of the index. At 
the  same  time,  strong  wage  growth  has  kept 
services  inflation  at  around  6%,  and  this  is 
expected to slow only gradually over 2025 and 
2026.  Higher  excise  duties  on  petrol,  alcohol 
and cigarettes to support defence funding are 
also  expected  to  have  an  impact  on  inflation, 
although to a lesser extent. However, following 
a  jump  in  energy  and  food  prices  in  the  early 
months  of  the  year,  trade  announcements 
have  reversed  movement  in  the  prices  of 
these  commodities,  and  they  are  expected  to 
recover  only  slowly  over  the  forecast  horizon. 
Trade realignments are also expected to keep 
inflation  lower.  In  2025,  HICP  inflation  is 
expected  to  increase  to  2.6%,  followed  by  a 
slowdown to 1.2% in 2026. 

to 

in  2024 

from  Ukraine 

the  unemployment 

Unemployment  increased  in  2023  and 
2024, and structural mismatches remain. 
The  economic  slowdown  in  2023  and  the 
growing  labour  force,  fuelled  by  migration 
and  Belarus) 
(including 
contributed 
rate 
(see  Social 
increasing  to  7.1% 
Scoreboard  in  Annex  13).  The  unemployment 
rate is projected to decrease to around 6.8% in 
2025  and  6.6%  in  2026  given  demographic 
trends  and  the  reduction  in  new  migration 
inflows.  However,  the  job  vacancy  rate  has 
been hovering around 1.8-2% since 2023 and 
has  shown  no  signs  of  coming  down,  which  – 
along  with  some  persistent  unemployment  – 
points  to  labour  market  mismatches.  In  the 
2024  European  Investment  Bank  Investment 

2 

 
 
pensions  and  other  social  benefits,  while 
revenue growth is expected to be lower. This is 
partly  because  Lithuania  has  not  yet 
implemented  the  broader  tax  reform  outlined 
in its recovery and resilience plan (see below), 
only  adopting  some  changes  relating  to 
increases in VAT and excise duties. As a result, 
the general government deficit increased from 
0.7%  in  2023  to  1.3%  in  2024  and  is 
projected to  continue to  rise  to  2.3%  in  2025 
and  2026 
though 
Lithuania’s  VAT  gap 
(the  gap  between 
revenues actually collected and the theoretical 
tax  liability)  fell  sharply  in  recent  years  to 
14.6% in 2022, it is still more than double the 
EU average (see Annex 2). Without accounting 
for  additional  defence  spending,  the  debt-to-
GDP  ratio  is  set  to  increase  from  37.3%  in 
2023  to  43.9%  in  2026  (see  Annex  1)  and, 
under current policies, will reach 58% by 2035, 
mostly due to rapidly increasing costs linked to 
population ageing.  

(see  Annex  1).  Even 

Taking  into  account  the  flexibility  for 
higher  defence  spending  provided  for  by 
(2),  net 
the  National  Escape  Clause 
expenditure  (3)  in  Lithuania  is  projected 
to  stay  within  the  established  ceiling.  In 
2024,  net  expenditure  in  Lithuania  grew  by 
10.7%  (see  Annex  1).  This  increase  is  mainly 
driven  by 
increasing  general  government 
expenditure  on  public  wages,  social  benefits 
(pensions 
intermediate 
consumption.  In  2024,  Lithuania  implemented 
several  discretionary  revenue  measures  (the 
most significant of them being the increase of 
excise duties adopted as part of the “Green tax 
increasing  net 
package”)  with  a  revenue 

included), 

and 

(2)  On 2 May 2025, Lithuania requested to the Commission 
and to the Council the activation of the National Escape 
Clause.  On  this  basis,  the  Commission  adopted  a 
Recommendation 
for  a  Council  Recommendation 
allowing Lithuania to deviate from, and exceed, the net 
expenditure path COM(2025)609. 

expenditure, 

(3)  Net expenditure is defined in Article 2(2) of Regulation 
(EU)  2024/1263  as  government  expenditure  net  of  (i) 
revenue 
(ii) 
interest 
measures, (iii) expenditure on programmes of the Union 
fully  matched  by  revenue  from  Union  funds,  (iv) 
national  expenditure  on  co-financing  of  programmes 
funded  by 
(v)  cyclical  elements  of 
unemployment  benefit  expenditure,  and  (vi)  one-off 
and other temporary measures. 

discretionary 

the  Union, 

Survey, 76% of firms still cited the availability 
of  skilled  staff  as  a  long-term  barrier  to 
investment,  although  this  percentage  has 
decreased  since  2022,  and  the  proportion  of 
those that describe the availability of skills as 
a  major  obstacle  has  also  decreased  in  the 
past three years (from 47.3% of firms in 2021 
to 42.4% of firms in 2024). 

While  Lithuania  has  weathered  recent 
shocks  relatively  well  compared  to  its 
neighbours,  a  non-negligible  part  of  its 
exports  is  exposed  to  upcoming  and 
further  possible  tariffs.  With  exports 
representing  between  75%  and  80%  of  its 
GDP  in  recent  years,  higher  tariffs  are  set  to 
have  an  impact  on  Lithuania’s  economy.  The 
United  States  (US)  represented  around  5%  of 
Lithuania’s  total  direct  exports  of  goods  in 
2024.  While  this  made  the  US  Lithuania’s 
fourth-largest  export  market  after  Latvia, 
Poland  and  Germany,  it  is  small  compared  to 
intra-EU  trade  taken  as  a  whole,  which 
accounts  for  about  67%  of  the  country’s 
exports.  Nevertheless,  over  half  of  Lithuania’s 
exposure  to  the  US  is  indirect,  going  through 
other  EU  Member  States.  Lithuania  benefited 
from  a  relatively  advantageous  real  effective 
exchange  rate  position  prior  to  recent  crises, 
which  mostly  allowed  it  to  cushion  trade 
shocks 
resilience  of 
Lithuanian  exports  seems  to  reveal  a  good 
degree  of  non-cost  competitiveness.  However, 
additional  strain  from  tariff  increases  could 
add  to  cost-competitiveness  concerns  from 
long-standing growth in unit labour costs. 

(1).  Moreover, 

the 

Increasing  public  sector  spending  needs  will 
continue  to  weigh  on  public  finances,  with 
rising  public  deficit  and  debt  looming  in  the 
medium term. Lithuania has among the lowest 
public debt stocks in the EU, but also some of 
the  lowest  levels  of  public  expenditure  and 
public  revenue.  However,  public  spending  is 
expected to rise due to population ageing (see 
Annex  1),  the  planned  increases  in  defence 
indexation  of  public 
expenditure  and  the 

(1)  Saioa  Armendariz,  Carlos  de  Resende,  Alice  Fan, 
Gianluigi  Ferrucci,  Bingjie  Hu,  Sadhna  Naik,  and  Can 
Ugur.  ‘Competitiveness  and  Productivity  in  the  Baltics: 
Common  Shocks,  Different  Implications’,  IMF  Working 
Papers 2025, 018 (2025). 

3 

 
 
 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Lithuania performs well in SDGs related to, preservation of life below water (SDG 14),quality of 
education (SDG  4) and sustainable cities and communities (SDG 11),  but is moving away from 
the targets for SDG 2 on zero hunger and SDG 15 on life on land. 

Lithuania is catching up in areas such as reduction of poverty (SDG 1) and productivity (SDG9), 
but  further  action  is  required  on  environmental  sustainability  (e.g.  SDG 6  clean  water  and 
sanitation). 

annual  impact  of  around  0.2%  of  GDP.  This 
revenue  increasing  impact  is  deducted  from 
net  expenditure.  In  2025,  net  expenditure  is 
forecast by the Commission to grow by 9.0%, 
which  is  above  the  maximum  growth  rate  as 
reported  by  Lithuania  in  its  medium-term 
fiscal structural plan (4). This increase is driven 
by  the  projected  rapid  growth  in  nationally-
financed  current  primary  expenditure, 
in 
(pensions 
particular  on 
included)  and  operating  expenditure.    The 
projected  deviation  in  2025  is  allowed  under 
the  national  escape 
the  conditions  of 
clause based 
projections 
current 
on 
for defence spending.  

social  benefits 

to 

plans 

implement 

a 
Lithuania 
comprehensive  tax  reform  to  collect 
revenues  to  fund 
increasing  defence 
spending needs. Lithuania’s tax revenue as a 
share of GDP is currently among the lowest in 
the  EU,  reaching  only  32.1%  of  GDP  in  2023 
(vs the 39.0% EU average) (see Annex 2). This 
shortfall is primarily due to low revenues from 
taxes,  with 
labour,  property  and  capital 
Lithuania's  capital  taxes  ranking  as  the  fifth 
lowest  in  the  EU  in  2023.  The  tax  system  is 
characterised by numerous special tax regimes 
taxation 
and 
inequalities and opportunities for tax arbitrage. 
increased 
Defence  spending  was  already 
following  Russia’s 
invasion  of 
Lithuanian 
Ukraine. 
government  is  discussing  plans  to  increase 
defence spending further, from 2.5% of GDP in 

full-scale 
the 

exemptions, 

Meanwhile, 

resulting 

in 

(4)  The medium-term plan has been positively assessment 
by the Commission (Commission recommendation for a 
Council 
the  national 
medium-term 
fiscal-structural  plan  of  Lithuania, 
COM/2025/616 final).  

recommendation  endorsing 

income  and 

2023  to  5.5%  in  2026,  and  to  keep  it  at 
around  that  level  until  2030.  To  achieve  this 
objective,  Lithuania  will  need  to  increase  its 
annual defence expenditure by around EUR 2.3 
billion (in 2024 prices).  To cover part of these 
the 
spending  needs,  on  14  May  2025 
Lithuanian  Government  approved  a 
tax 
package  proposal  and  submitted  it  to  the 
Parliament  for  deliberation.  The  package 
includes  measures  to:  (i)  partly  unify  the 
personal  income  tax  rates  across  different 
sources  of 
its 
progressivity;  (ii)  raise  the  corporate  income 
tax rate by one percentage point; (iii) broaden 
the  recurrent  property  tax  base;  (iv)  increase 
the  reduced  value  added  tax  (VAT)  rate  from 
9%  to  12%  for  accommodation,  passenger 
transport,  and  cultural  events,  but  decreasing 
it to 5% for books; (v) remove the reduced VAT 
rate for central heating and firewood intended 
for  heating  by  increasing  it  to  the  standard 
21%  rate;  (vi)  partly  remove  the  personal 
income  tax  exemption  on  private  health 
insurance;  and  (vii)  introduce  new  taxes  on 
non‐life 
insurance  premiums  and  sugary 
beverages. 

increase 

to 

Slowing productivity growth could 
affect competitiveness over the 
medium term 

Convergence  stagnated  recently,  but  the 
In  2025, 
is  broadly  positive. 
outlook 
Lithuania  is  forecast  to  be  the  seventh-
fastest-growing economy in the EU in terms of 
real  GDP  growth  at  2.8%.  At  the  same  time, 
Lithuania’s  rate  of  convergence  to  the  EU 
average has slowed since 2020, with GDP per 
capita in purchasing power standards hovering 

4 

 
 
 
 
around  87-88%  of  the  EU  average  in  2020-
2024.  This  stagnating  convergence  can  partly 
be  attributed  to  high  inflation  differentials, 
with  Lithuania  having  seen  HICP  inflation  1.7, 
9.7 and 2.3 percentage points higher than the 
EU  aggregate 
in  2022,  2023  and  2024 
respectively, undermining purchasing power. 

However,  competitiveness  concerns  are 
mounting.  Labour  productivity  growth  per 
person  has  stagnated,  and  productivity  per 
hour  worked  even  decreased  between  2022 
and 2024, more strongly than at EU level. This 
is likely due to firms retaining workers even in 
times  of  slower  activity.  Unit  labour  costs  in 
Lithuania  have  been  among  the  fastest 
growing  in  the  EU,  particularly  in  2022-2023, 
implying  a  risk  for  cos()t  competitiveness.  At 
the same time, while growth in export market 
shares  has  almost  come  to  a  halt  recently, 
Lithuania  has  not  yet  seen  any  decrease  in 
these  overall  shares,  as  a  growing  market 
share  in  services  has  compensated  for  a 
shrinking  goods  market  share  (Graph  1.1). 
Considering  the  importance  of  trade  in  the 
economy,  strong  wage  increases  over  time 
combined with slower productivity growth may 
affect  Lithuania’s  competitiveness  over  the 
medium term. 

Graph 1.1: Trade performance and unit labour 
costs (ULC) (EMS = export market share, rate 
of change, y-o-y %) 

Source: Eurostat 

changing 

geopolitical 

Lithuania  will  need  to  advance  to  a 
higher  value-added  economy  in  order  to 
and 
face 
Lithuania 
demographic 
is 
projected 
the  sixth-largest 
population decline globally by 2050, an almost 
20%  decline  from  its  current  2.89  million. 
Moreover,  the  contribution  of  total  factor 

to  experience 

dynamics. 

and 

renewal 

productivity(5)  to  potential  growth  has  been 
declining 
since  2019.  Lithuania’s  open 
economy,  centred  on  industry,  manufacturing, 
transport  and  trade,  requires  investments  in 
advanced 
technological 
technologies, as well as a focus on innovative 
activities  to  transition  towards  higher  value-
added  production.  The  regional  divide 
is 
widening  between  Vilnius  and  the  regions, 
indicating a need to attract  investment to the 
regions. At the same time, constrained access 
to finance creates challenges both for industry 
and  for  innovative  small  and  medium-sized 
enterprises and start-ups. Business investment 
in  R&D  remains  low,  while  the  disconnect 
between  business  and  science  further  limits 
investment  potential.  Skills  shortages  in  key 
sectors  constrain  investments  by  innovative 
companies,  and  an  ageing  workforce,  teacher 
shortages  and  challenges 
in  vocational 
tertiary  education  and  adult 
education, 
learning  hamper productivity improvements. It 
would  also  be  beneficial  if  Lithuania  tackled 
emissions  in  the  transport  sector,  improved 
resource  productivity  and  embarked  on  the 
transition  to  a  circular  economy.  Lastly,  high 
inequality  and 
persistent 
challenges  in  the  healthcare  system  remain 
obstacles  to  improving  quality  of  life  and 
people’s participation in economic activity. 

poverty  and 

(5)  The overall productivity of the economy due to 

improvements from technological progress and skills of 
workers/managers. 

5 

-15-10-505101520091011121314151617181920212223Rate of change y-o-y (%)Contribution to EMS: goodsContribution to EMS: servicesExport market share growthULC growth 
   
 
Box 2: 

Barriers to private and public investment 

Lithuania’s  investment  landscape  is  generally  favourable,  driven  by  a  robust  economic 
recovery,  a  supportive  regulatory  environment  for  businesses,  and  an  expanding  start-up 
ecosystem. Nevertheless, some barriers to investment persist.  

•  Access to finance. Some 51% of Lithuanian firms cite a lack of financial resources as 
an  impediment  to  investment, according  to  the  2024  European  Investment  Bank  (EIB) 
Investment Survey. Risk aversion, including due to geopolitical risks, and concentration 
within  the  banking  sector  are  potential  reasons  for  restricted  bank  lending  conditions, 
with  bank  loans  to  GDP  accounting  for  only  33.5%,  compared  to  the  EU  average  of 
74.5%.  In  addition,  while  Lithuania’s  start-up  ecosystem  has  experienced  substantial 
growth  in  venture  capital,  scale-up  financing  remains  limited,  with  Lithuania’s  capital 
markets remaining underdeveloped on the whole. 

• 

Labour and skills shortages. The availability of skilled staff is a reported obstacle to 
investment, with 76% of firms citing the availability of skilled staff as a barrier to long-
term  investment,  compared  to  the  EU  average  of  59%,  according  to  the  2024  EIB 
Investment  Survey.  Labour  market  challenges  are  systematically  reported  to  be  more 
pronounced  in  Lithuania  than  in  other  EU  Member  States,  particularly  in  high-skill 
sectors  and  for  smaller  firms.  In  this  context,  the  low  appeal  and  insufficient  labour 
market relevance of vocational training and limited adult  learning contribute to labour 
and  skills  shortages  and  mismatches.  Skills  forecasting  is  also  fragmented  across 
multiple institutions, limiting the effective use of its results to develop skills in line with 
labour market needs. 

•  Regional  disparities.  Transport  connections  and  infrastructure  vary  significantly 
across counties, with Vilnius having better accessibility than other regions both in terms 
of transport and gigabit connectivity. In Vilnius county, 81% of the population within a 
120 km  radius  can  be  reached  in  under  90  minutes  by  car,  compared  to  the  national 
average  of  68%,  and  just  47%  in  Šiauliai  county.  Poor  connections  limit  the  pool  of 
suitable  candidates  to  be  hired  by  employers,  which  in  turn  hinders  investment.  In 
addition,  while  only  34%  of  businesses in  Lithuania  identify  digital  infrastructure  as a 
barrier  to  long-term  investment,  compared  to  the  EU  average  of  41%,  and  Lithuania 
excels at  5G  connectivity,  the  slow  roll-out  of  gigabit  connectivity  in  rural  areas  could 
hamper long-term investment. 

• 

Limited innovative activity. Unattractive R&D incentives, bureaucratic hurdles, weak 
business-science  linkages  and  remaining  inefficiencies  in  Lithuania’s  research  and 
innovation support system discourage private R&D investment. 

The implementation of Lithuania’s RRP is delayed. At present, Lithuania has fulfilled 30% of 
the  milestones  and  targets  in  its  RRP.  The  above  challenges  as  well  as  the  fragmentation 
and limited cooperation among national, regional, local authorities and stakeholders also act 
as a bottleneck to the implementation of EU funds. 

It remains important to accelerate the implementation of cohesion policy programmes. The 
mid-term review offers opportunities to speed up progress and better address EU strategic 
priorities  related  to  competitiveness,  defence,  housing,  water  resilience  and  the  energy 
transition. 

While  Lithuania  has  leveraged  the  Strategic  Technologies  for  Europe  Platform  (STEP)  to 
reallocate some Cohesion Policy resources towards this priority, it still has the opportunity to 
further  support  the  development  or  manufacturing  of  critical  technologies  in  the  areas  of 
digital and deep tech, clean and resource efficient technologies, and biotechnologies through 
other instruments, including the Recovery and Resilience Facility.  

6 

 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

in 

proportion  of  medium-high-  and  high-
technology  manufacturing 
industrial 
production has increased from around 11% in 
1999 to 26% in 2024 (1.7% to 4.8% for high-
technology  alone),  but  medium-low-  and  low-
technology  manufacturing  still  represent  35% 
and 38% of production, respectively. Moreover, 
while  the  combined  proportion  of  information 
and 
and 
professional,  scientific  and  technical  services 
in Lithuania’s gross value added has increased 
from 11% to 18% in the past decade, exports 
are still dominated by manufacturing. 

communication, 

financial, 

Bridging the regional divide by 
attracting investment to the 
regions 

and 

innovation 

Divergence  in  labour  productivity  growth 
amplifies  regional  disparities  in  GDP  per 
high-skilled 
capita, 
employment.  Labour  productivity  grew  by 
around  20%  in  2014-2024  in  Vilnius,  Kaunas 
and Tauragė (see Annex 17). In the meantime, 
Marijampolė  and  Telšiai  counties  saw  much 
lower  productivity  growth  of  7%  over  the 
period,  further  widening  the  productivity  gap. 
These  disparities  are  reflected  in  GDP  per 
capita and in key growth drivers such as R&D, 
innovation  and  high-skilled  employment. 
Namely,  the  high-tech  sector  accounts  for 
10%  of  total  employment  in  Vilnius,  while  in 
the  rest  of  Lithuania  this  share  reaches  only 
2.7%.  As  a  result,  urban  regions  attract  a 
highly skilled workforce developing high value-
added  products,  while  the  rest  of  the  country 
is  populated  mainly  by  micro-enterprises  in 
low-performing  economic  areas, 
limiting 
productivity spillovers to the regions. 

regions 

The 
accelerating 

could 

from 
investment  attraction  to 

benefit 

Moving to higher value-added 
production to maintain 
competitiveness 

Graph 2.1: Productivity growth (labour 
productivity per person, three-year window 
annualised growth rate, 1996-2022) 

Source: Eurostat 

As  Lithuania  nears  the  income  levels  of 
advanced  EU  economies,  shifting  to  a 
higher  value-added  economy  is  key  to 
the  global 
staying  competitive.  Since 
financial  crisis,  Lithuania  has  experienced  a 
general  slowdown  in  productivity  growth  (see 
Graph  2.1).  More  recently,  multiple  crises 
caused  a  decline  in  productivity:  by  2.3%  in 
2022 and by 1.1% in 2023. At the same time, 
the  slowdown 
in  productivity  growth  – 
although still above the EU average – may be 
a result of the progress made in catching up to 
the  advanced  economies.  The  2022-2023  dip 
in productivity can also be partly attributed to 
labour  hoarding  during  the  recent  economic 
downturn:  amid  a  structurally  tight  labour 
market,  companies  may  have  preferred  to 
keep  people  on.  Nevertheless,  as  a  result  of 
negative  productivity  growth  in  2022-2023 
and  a double-digit rise in wages (amid strong 
inflation),  unit  labour  costs  increased  by  15% 
in  2022  and  by  12%  in  2023,  after  more 
moderate  increases  of  roughly  between  3% 
and  6%  per  year  in  the  preceding  decade 
(Graph  2.1).  Since  the  early  2000s,  the 

7 

-2-101234567897990103050709111315171921LTEU 
 
   
government,  with 
investment and creating local clusters. 

the  aim  of  attracting 

Improving access to finance and 
capital markets development 

lending 

to  high 

Restrictive lending conditions and limited 
external  financing  options  are  hindering 
economic  growth.  In  Lithuania,  the  banking 
industry,  predominantly  under  foreign  control, 
has  one  of  the  highest  levels  of  market 
concentration  in  the  EU.  This  structure  may 
affect 
competitive  dynamics,  potentially 
rates  and 
contributing 
collateral  requirements,  particularly  in  the 
corporate  lending  segment.  Despite  a  recent 
recovery  in  credit  growth  over  2024,  the 
country  still  has  a  high  proportion  of  finance-
constrained  firms  (13.7%),  with  many  firms 
relying  heavily  on  self-financing.  This 
is 
reflected  in  a  low  bank-loans-to-GDP  ratio 
(33.5%,  compared  to  the  EU  average  of 
74.5%).  Addressing 
these  challenges  by 
fostering  competition  among  market  players 
conditions,  while 
to 
increasing 
transparency  on  products  and 
pricing  from  smaller  banks,  could  potentially 
reduce  borrowing  costs  for  bank  customers 
and  bolster  the  growth  of  the  Lithuanian 
economy (see Annex 5). 

facilitate 

lending 

Lithuanian capital markets continue to be 
relatively  underdeveloped,  characterised 
by  limited  activity  and  liquidity,  largely 
attributable  to  restricted  demand  and 
supply  for  funding.  Lithuania’s  capital 
market  development  lags  significantly  behind 
the EU average. By the end of the third quarter 
of  2024,  equity  market  capitalisation 
in 
Lithuania was only 5.9% of GDP, compared to 
the  EU  average  of  69.3%.  In  2023,  listed 
shares and bonds comprised just 6.5% of the 
funding  sources  for  Lithuanian  non-financial 
corporations.  Local  businesses  prefer  bank 
intermediation  over  stock  and  bond  issuance. 
This  reliance  on  traditional  banking  limits 
investment  opportunities  and  reduces  interest 
from  institutional  and  retail  investors.  Further 
harmonising  reporting  requirements  across 

sites 

through 

competitiveness 

upgrade  the  regional  economic  base, 
facilitated  by 
infrastructure,  skilled 
labour, competitive incentives and strong 
public  services.  The  regions  could  capitalise 
on  their  cost  competitiveness  and  available 
industrial 
advanced 
manufacturing,  as  pointed  out  in  the  Invest 
strategy (6).  A 
Lithuania 
successful example is in Kaunas region, where 
automotive  electronics 
investments  have 
spurred  the  development  of  local  clusters, 
demonstrating  how  targeted  industrial  zones 
and  specialised  training  programmes  can 
attract foreign direct investment and generate 
quality  employment.  To  replicate  such  best 
practice  the  following  are  needed.  First, 
regional  connectivity  –  in  addition  to  Rail 
Baltica  and  upgrades  to  the  Via  Baltica 
highway 
regional 
competitiveness.  This  is  exemplified  by  the 
joint management of public transport services 
in  Tauragė  region,  which has  improved  labour 
mobility and could serve as a model for other 
regions.  Second,  bringing  workforce  skills  into 
line  with  industry  demands  is  essential  for 
advanced  manufacturing  and  requires  closer 
collaboration  between  education  institutions 
and  businesses  to  develop  specialised  skills. 
including 
Third,  clearly  defined 
competitive 
streamlined 
administrative  procedures  and  pre-developed 
industrial sites, are key for attracting strategic 
foreign and domestic investors. 

incentives, 

incentives, 

critical 

tax 

to 

is 

– 

To  improve  the  efficiency  and  quality  of 
municipal  services,  regional  cooperation 
could be strengthened further. Lithuania is 
currently  considering  sharing  the  provision  of 
municipal  services  to  improve  the  efficiency, 
accessibility  and  quality  of  public  services (7). 
In 
legal  and 
institutional  framework  could  benefit  from 
being reviewed, as inter-municipal cooperation 
faces  obstacles  due  to  conflicting  regulations 
and  loopholes.  Regional  cooperation  could  be 
taken  even  further,  by  clarifying  regional 
central 
strategies 

this  context, 

the  current 

facilitated 

the 

by 

(6)  Invest Lithuania ‘Acceleration of the Lithuanian 

economy: strategic guidelines for rapid growth’ (2024). 

(7)  See ‘Enabling inter-municipal shared services provision 

in Lithuania’, OECD 2024. 

8 

 
 
Baltic  capital  markets  could 
attractiveness of non-bank finance. 

increase  the 

the  national  promotional  institutions  Altum  in 
Latvia  and  ILTE  (Investment  in  the  Lithuanian 
Economy) in Lithuania. 

Planned  changes  to  the  second-pillar 
pension  scheme(8)  raise  risks  related  to 
the  further  development  of  Lithuanian 
capital  markets. 
In  January  2025,  the 
Ministry  of  Social  Security  and  Labour 
presented  proposals  to  reform  the  second-
pillar pension scheme. This is partly a response 
to  a  constitutional  court  ruling  stating  that 
legislation should  set out the special personal 
circumstances  under  which  contributors  can 
withdraw  their  pension  savings  from  the 
second pillar. However, aside  from  setting out 
these circumstances, the proposed reform also 
gives  participants  a  21-month  window  to 
withdraw  their  pension  savings  and  includes 
proposals  to  abolish  an  automatic  enrolment 
of  the  citizens  to  the  second  pillar  schemes, 
creating  a  voluntary  ‘opt-in’  enrolment  model. 
At  present,  the  Lithuanian  second-pillar  funds 
have  accumulated  around  EUR 9.1 billion 
around 
(11.6% 
EUR 1 billion  of  which  is  invested  in  the 
national  market.  An  ‘opt-in’  model  combined 
with a withdrawal option is likely to reduce the 
further 
level  of 
undermining  capital  market  development  and 
complicating access to finance. 

in  Lithuania, 

of  GDP) 

savings, 

savings 

in 

The  Lithuanian  venture  capital  sector 
shows  some  potential,  although 
it 
remains  underdeveloped  relative  to  EU 
standards.  Lithuania’s  start-up  ecosystem 
has  grown  in  parallel  to  venture  capital,  with 
start-ups raising EUR 292 million in 2023. The 
sector  has  seen  enterprise  value  grow  to  7.1 
times  the  value  of  2018,  outpacing  regional 
and  European  averages.  Despite  this,  private 
equity  investments  relative  to  GDP  remain 
below  the  EU  average.  The  small  scale  of 
projects and the overall shallow capital market 
make  the  Lithuanian  equity  market 
less 
attractive  to international  investors.  Steps  are 
being  taken  to  set  up  a  fund  for  initial  public 
offerings  (IPOs)  of  small  and  medium-sized 
enterprises  in  the  Baltic  states,  supported  by 

(8)  The second pillar refers to a supplementary pension 

saving scheme which is run by private-sector 
investment funds. 

9 

for 

increase 

some  progress, 

capital 
to 

The  Bank  of  Lithuania’s  2022  action 
market 
guidelines 
development  aim 
the 
market’s  appeal  to  both  domestic  and 
foreign  investors,  promoting  alternative 
financing  avenues  such  as  securities 
issuance.  Despite 
key 
measures  have  yet  to  mature,  such  as 
improving the legal framework to facilitate the 
issuance  of  a  wider  range  of  financial 
instruments and modern investment tools. The 
Capital  Market  Council,  set  up  in  January 
2023,  seeks  to  combine  market  and  public 
sector  efforts  to  advance  capital  market 
growth.  The  historically  low  saving  rate  of 
limits  credit 
Lithuanian  households  also 
availability 
investments, 
enterprise 
for 
spurring  reliance  on  either  internal  financing 
from the company’s withheld profits or foreign 
savings.  A  significant  portion  of  household 
savings  is  held  in  demand  deposit  accounts, 
with  relatively  few  assets  in  investments, 
insurance  and  pension  funds.  Although  the 
proportion  of  financial  assets  in  these  areas 
has  increased  from  13.5%  in  2015  to  19.3% 
in 2023, it remains well below the EU average 
of 45.4%. (see Annex 5). 

Unlocking R&D potential through 
improved incentives and stronger 
science-business links 

innovative  activity, 

Low  levels  of  private  R&D  investment 
hamper 
indicating 
further  potential  for  Lithuania’s  R&D 
ecosystem.  R&D  intensity  in  Lithuania,  at 
around  1%  of  GDP,  is  well  below  the  EU 
average (2.25%), with the difference explained 
by  low  business  investment  in  R&D.  After 
business 
several 
investment  in  R&D  as  a  percentage  of  GDP 
declined  for  the  first  time  in  2023,  to  0.44% 
of GDP, which is more than three times lower 
than  the  EU  average  (see  Annex  3).  Similarly, 
the  number  of  patent  applications  is  three 
times  lower  than  the  EU  average  (only  45 

stagnation, 

years 

of 

 
 
applications  per  million  inhabitants  compared 
to  an  EU  average  of  152),  pointing  to  limited 
innovative activity. 

One  challenge  is  that,  while  Lithuania 
offers  generous  R&D  incentives,  small 
and  medium-sized  enterprises  do  not 
consider  them  to  be  attractive.  The  tax 
incentives  offered  by  Lithuania  include  a 
300% deduction for R&D costs, a reduced 6% 
tax  rate  on  intellectual  property  income,  and 
accelerated  depreciation  for  R&D  assets  (see 
Annex  2).  However,  to  date  these  incentives 
have  had  limited  impact  on  overall  business 
R&D  activity.  In  particular,  small  and  newly 
established  firms  are  often  not  profitable 
enough to benefit from deductions or reduced 
rates for R&D expenditure. They also shy away 
from 
of 
administrative 
demonstrating  that  their  projects  qualify  as 
R&D  projects  under  the  tax  rules.  In  addition, 
the  reduced  corporate  income  tax  rate  for 
small  businesses  (6%)  is  straightforward  and 
widely  used  by  eligible  small  and  medium-
sized  enterprises,  making  the  additional  gain 
provided  by  R&D  incentives  not  attractive 
enough.  As  a  result,  the  take-up  of  tax 
incentives to engage in R&D is low, suggesting 
the 
a  need 
framework 
R&D 
investment. 

review  and  streamline 
to 

increase 

burden 

private 

the 

to 

there 

research  and 

innovation 
Lithuania’s 
improved  but 
system  has 
support 
inefficiencies 
the 
Although 
remain. 
consolidation of agencies under the Innovation 
Agency  and  ILTE,  supported  by  the  recovery 
and  resilience  plan,  was  successful,  and  R&D 
support  in  Lithuania  has  been  somewhat 
is  still  a  degree  of 
streamlined, 
fragmentation. Strengthening the capacities of 
the  Research  Council  of  Lithuania  (RCL)  and 
fine-tuning  the  institutional  framework  could 
further boost efficiency. There is also a lack of 
independent  research  and  innovation  policy 
monitoring,  which  may  hinder  evidence-based 
policymaking.  The  Ministry  of  Education, 
Science, and Sports is in the process of setting 
up its own policy monitoring and analysis unit, 
as the RCL is not performing this function, and 
STRATA,  the  Government  Strategic  Analysis 
Center,  has  paused  its  analytics  on  research 
and innovation. (see Annex 3). 

is 

for 

indicator 

The  disconnect  between  business  and 
science  limits  R&D  potential,  due  to  a 
fragmented public science base and weak 
incentives  for  academia  to  engage  with 
business.  Lithuania's  rate  of  public-private 
scientific co-publications has remained among 
the  lowest  in  the  EU  for  the  past  decade,  an 
important 
science-business 
linkages  (see  Annex  3).  Such  collaborations 
could  be  particularly  useful  for  small  and 
medium-sized  enterprises  without  sufficient 
resources  to  conduct  in-house  R&D.  Lithuania 
has  taken  steps  to  increase  collaboration 
between  science  and  business  by  revising  the 
Law on Science and Studies, to strengthen the 
R&D  component  in  the  evaluation  criteria  for 
higher  education  institutions.  National  joint 
science-business  missions  are  planned  under 
the  recovery  and  resilience  plan,  and  the 
to 
Lithuanian  government 
implement a financial scheme with mandatory 
participation  of  at  least  one  college  in  the 
missions.  However,  the  full  potential  of  the 
missions  is  limited  due  to  Lithuania’s  science 
base being spread across different universities 
and many small colleges, with the latter being 
less likely to engage in such R&D programmes. 
Under  the  recovery  and  resilience  plan,  the 
government 
implementing  measures  to 
address  this  fragmentation  by  encouraging 
mergers  of  higher  education  institutions.  This 
includes  a  legal  framework  for  the  voluntary 
reorganisation  of universities. However, so far 
no university has announced any merger plans. 
Financial 
incentives  could  be  ensured  to 
optimise  the  university  network  in  order  to 
reach  critical  mass  and  achieve  scientific 
excellence.  With 
colleges, 
consolidation  plans  are  taking  shape,  but  the 
ability  of  colleges  to  meet  new  performance 
criteria – including those concerning R&D – will 
only  be  demonstrated  in  2028  when  these 
criteria come into effect (see Annex 12).  

planning 

respect 

to 

is 

Tackling declining numbers of 
STEM specialists to address skills 
mismatches hampering innovation 

Declining  tertiary  enrolments  in  science, 
technology, engineering and mathematics 

10 

 
sectors. 

in  key 

jeopardising 

innovative 
(STEM)  are 
capacity.  Although  medium-level  vocational 
education  and  training  enrolments  in  STEM 
fields  in  Lithuania  exceed  the  EU  average, 
tertiary  enrolments  especially  in  engineering, 
manufacturing  and  construction  have  fallen 
significantly (see Section 4), exacerbating skills 
gaps 
Information  and 
communication technology enrolments have in 
the meantime slowly increased (4.1% to 6.3% 
between  2017  and  2022),  yet  the  supply  of 
information  and  communication  technology 
labour  market 
graduates  falls  short  of 
demand. The Lithuanian government has taken 
steps  to  address  these  challenges  via  the 
college reorganisation scheme and the science, 
technology, engineering, arts and mathematics 
(STEAM) education strategic plan (2023-2030) 
(see  Annex  12).  Overall,  skills  mismatches 
have  so  far  not  improved,  with  76%  of  firms 
citing the lack of appropriately skilled staff as 
an  impediment  to  long-term  investment  (see 
Section 4, as well as Annex 4), in turn causing 
a  drag  on  innovative  capacity.  The  failure  to 
attract  skilled  workers  from  abroad  and  the 
limited  retention  of 
international  students 
exacerbate this issue. 

11 

 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

Transport emissions remain 
persistently high 

The  transport  sector  remains  the  largest 
emitter of greenhouse gases in Lithuania, 
accounting  for  31.7%  of  the  country’s  total 
emissions  in  2022  (excluding  the  land  use, 
land-use  change,  and  forestry  sector).  While 
Lithuania’s  overall  greenhouse  gas  emissions 
have remained relatively stable since the turn 
of  the  century,  emissions  from  the  transport 
sector  have  followed  a  general  upward  path, 
particularly  in the last decade – increasing by 
38%  between  2013  and  2022 (9).  This 
increase  can  be  partly  attributed  to  the 
significant growth in the road transport service 
sector in recent decades. 

old 

Lithuania’s 

Nevertheless, 
and 
polluting car fleet remains the key factor 
behind its high greenhouse gas emissions, 
and  prevents  it  from  complying  with  air 
pollution  reduction  obligations.  In  2023, 
77.1%  of  Lithuania’s  private  cars  were  10 
years or older, and 25.9% were over 20 years 
old,  making  it  one  of  the  oldest  fleets  in  the 
EU (10).  Although  the  proportion  of  zero-  and 
low-emission  vehicles  in  Lithuania  has  been 
increasing  in  recent  years,  their  adoption 
remains  below  the  EU  average.  In  2023,  only 
8.2% of newly registered vehicles in Lithuania 
were  battery-operated,  compared  to 14.5%  in 
the EU (Annex 7). Additionally – at 76.4% (11) – 
Lithuania  had  the  fifth-highest  proportion  of 
petrol-powered cars (including hybrids) among 

new registrations in the EU. Ensuring sufficient 
public  charging  infrastructure  is  essential  for 
the  roll-out  of  electric  mobility.  At  the  same 
time,  Lithuania  has  some  of  the 
lowest 
transport taxes in the EU and is one of the few 
EU  countries  without  an  annual  car  pollution 
tax.  The  absence  of  such  a  tax  reduces 
towards  more 
incentives 
the  shift 
transport 
sustainable 
alternatives. 

low-emission 

and 

for 

are 

showing 

Recent  efforts  to  promote  sustainable 
preliminary 
transport 
results,  but  major  challenges  remain. 
Despite the overall increase in greenhouse gas 
emissions  in  recent  years,  the  period  from 
2019  to  2022  saw  the  first  slight  decline  in 
greenhouse  gas  emissions  in  the  transport 
sector,  with  a  reduction  of  4.3%  (from  fuel 
in  CO₂  equivalent). 
combustion  measured 
However,  public  transport  remains  poorly 
coordinated  and  unattractive 
for  both 
providers  and  passengers,  with  the  lowest 
uptake in the EU. In 2022, 92.9% of passenger 
journeys  were  made  by  car (12).  Municipalities 
are 
left  to  develop  their  own  transport 
systems, leading to uneven development and a 
intermodal 
intermunicipal  and 
lack  of 
connectivity,  trip  planning,  and  other  essential 
passenger  services.  The  public  perception  is 
that  unprofitable  but  necessary  routes  are 
interurban  mobility 
being  abandoned.  The 
system  is  yet  to  be  adequately  reformed,  as 
part of the recovery and resilience plan, which 
aims to review and optimise the existing long-
the 
distance  network. 
Lithuanian  Law  on  Alternative  Fuels (13) 

In  addition,  while 

(9)  Eurostat data: env_air_gge, calculations by the 

European Commission. 

(10)  Eurostat data: road_eqs_carage, calculations by the 

European Commission. 

(11)  Source: Passenger cars in the EU - Statistics Explained. 

(12)  Eurostat data: tran_hv_psmod, coaches, buses and 

trolley buses accounted for 7.1% of passenger journeys, 
and trains for 1.1% of passenger journeys. 

(13)  Source: XIV-196 Law of the Republic of Lithuania on 

Alternative Fuels - see Article 35(7), requiring municipal 
councils to set up low-emission zones and update them 
periodically for areas of more than 50 000 inhabitants. 

12 

 
 
 
 
requires municipalities to set up zero-emission 
zones  by  1 January  2025,  only  Kaunas 
municipality  has 
introduced  an  access 
payment  scheme  in  its  Old  Town.  Vilnius  and 
Panevėžys  have  also  set  up  low-emission 
zones,  but  they  are  yet  to  collect  fees  from 
passing polluting vehicles. 

presents 

transport 

untapped 
Rail 
potential  for  decarbonising  the  transport 
sector.  In  2022,  only  1.1%  of  all  passenger 
journeys in Lithuania were by rail, which is the 
second  lowest  percentage  recorded  in  the 
EU (14).  By  contrast,  rail  accounted  for  the 
highest  percentage  of  freight  transport  in 
Lithuania in the same year (37.2% vs 5.5% in 
the  EU)(15).  As  a  result,  to  decarbonise  its 
(freight)  transport,  Lithuania  could  strongly 
railways  – 
benefit 
56.9%) (16). 
currently 
Furthermore,  the  cross-border  Rail  Baltica 
project,  which  aims  to  strengthen  connectivity 
between  the  Baltic  states  and  the  rest  of  the 
EU,  is  crucial  for  shifting  transport  from  road 
to rail  to boost sustainable mobility. However, 
its progress  has been  slow  and  would  benefit 
from  accelerating  measures  to  ensure  swift 
implementation. 

from  electrifying 

its 
(EU: 

7.9% 

at 

Reducing waste and boosting 
resource efficiency 

Lithuania  faces  challenges  transitioning 
towards  a  circular  economy.  In  2023,  the 
circular material use rate was only 3.9%, three 
times lower than the EU average (11.8%) and 
among the five lowest in the EU (17). This rate 
worsened slightly compared to 2022 (at 4.1%) 
and  has  shown  no  clear  improvement  since 

(14)  Eurostat data: tran_hv_psmod. 

(15)  Eurostat  data: 

tran_hv_ms_frmod,  although 

the 
proportion  of  transport  from  rail  in  Lithuania  averaged 
sharp 
56.1%  over  2013-2021, 
15.6 percentage-point  decrease  in  the  last  recorded 
year. 

there  was  a 

is  highly  dependent  on 
2018.  Lithuania 
imports  of  raw  materials,  but  the  sources  of 
these  materials  are  relatively  diversified  (see 
Annex  7).  Promoting  the  use  of  secondary 
materials  for  value  creation  could  help 
Lithuania’s manufacturing industries achieve a 
higher  gross  operating  surplus.  Although 
Lithuania  had  been  identified  as  one  of  the 
Member  States  at  risk  of  missing  the  2025 
targets  for  reusing  and  recycling  municipal 
and packaging waste in the June 2023 Waste 
Early Warning Report (18),  it  has since notified 
the  Commission  of  its  intention  to  delay 
meeting the 2025 target of 55% for preparing 
municipal  waste  for  reuse  and  recycling  until 
2030. At the same time, its material footprint 
of  22.7  tonnes  per  person  is  considerably 
higher  that  the  EU  average  of  14  tonnes  per 
person (Annex 7), thus warranting a transition 
to  a  more  resource-efficient  circular  model.  It 
is  estimated  that,  in  order  to  transition  to  a 
circular  economy,  which 
includes  waste 
management,  Lithuania needs total  additional 
investments  of  at  least  EUR 122  million  a 
year. 

in 

productivity 

Resource 
Lithuania 
remains  considerably  below  the  EU 
resource 
average, 
industries’ 
impacting 
efficiency  and  production  costs. 
It  may 
therefore  even hamper its  competitiveness.  In 
2023,  Lithuania  generated  EUR 1.21  per 
kilogram  of  material  consumed.  While  this  is 
an  improvement  compared  to  2020,  it  is  less 
than  half  the  EU  average  of  EUR 2.74. 
Furthermore,  Lithuania’s  industrial  production 
emitted  approximately  one 
third  more 
greenhouse  gases 
the  EU  average 
than 
(360 g/EUR  vs  270 g/EUR  in  CO₂  equivalent), 
despite  notable  improvements  over  the  past 
decade. In addition, Lithuania’s manufacturing 
capacity  across  all  net-zero 
technologies 
remains  modest,  but  the  battery  sector  has 
significant  development  potential.  Lithuania 
could  benefit  from  further 
its 
support  for  the  manufacture  of  clean  tech 
solutions. 

targeting 

(16)  Source: Leading EU regions in rail electrification - News 

articles - Eurostat. 

(17)  Eurostat data: cei_srm030. 

(18)  COM(2023) 304 final, Waste Early Warning Report - 

European Commission 

13 

 
 
 
Environmental degradation 
undermines climate resilience 

an 

have 

Two  thirds  of  Lithuania’s  protected 
habitats 
unfavourable 
conservation  status,  impacting  Lithuania’s 
climate  resilience,  as  the  loss  of  biodiversity 
impairs  the  ability  of  ecosystem  services  to 
help mitigate the effects of climate change, by 
regulating  water  cycles,  maintaining  soil 
health  and  sequestering  carbon.  Drained 
peatlands  make  up  6%  of  Lithuania’s 
agricultural  land  but  account  for  53%  of  the 
country’s  agricultural  emissions  (including  the 
land-use  change,  and  forestry 
land  use, 
sector),  significantly  higher  than  the  EU 
average  of  3%  and  25%,  respectively  (see 
Annex 9).  The  Lithuanian 
recovery  and 
resilience plan was initially set to contribute to 
the  restoration  of  8 000 ha  of  degraded 
peatlands, but this target was later reduced to 
6 000 ha.  While  this  could  have  been  a  good 
starting  point 
the  wider  peatland 
restoration  efforts  required  under  the  Nature 
Restoration  Regulation,  Lithuania  is  having 
difficulty  implementing  the  investment.  It  is 
expected that the measures outlined under the 
may 
Nature 
nevertheless  contribute 
the 
peatland restoration targets. 

Regulation 
to  achieving 

Restoration 

for 

Lithuania  achieve  a  good  ecological  status 
(20)(see  Annex  9).  Agricultural  pollution  is  also 
the  main  cause  of  nutrient  flows  contributing 
to the Baltic Sea’s eutrophication.  2022, 9.3% 
of  Lithuania’s  utilised  agricultural  areas  were 
being  farmed  organically  (2022),  which  is 
broadly  on  a  par  with  the  EU  average (21). 
However, 
to 
increase  by  half,  reaching  almost  13%  by 
2028 (Annex 9) (22). 

this  proportion 

is  expected 

on 

relies  heavily 

Lithuania’s 
biodiversity 
declining 
presents  a  growing  challenge  for  key 
economic  sectors  that  rely  on  healthy 
ecosystems.  Some  41%  of  Lithuania’s 
economy 
ecosystem 
services (23),  with  key  sectors  such  as 
agriculture,  forestry,  fisheries,  aquaculture, 
construction  and  water  utilities  particularly 
affected (see Annex 9). At the same time, the 
common  farmland  bird  index  has  dropped 
significantly,  from  61.7  in  2019  to  45.2  in 
2022–below  the  EU  average  of  68.2  and  the 
lowest among all reporting Member States (24) 
(see Annex 9). This decline suggests a notable 
reduction 
farmland 
ecosystems  and  points  to  the  impact  of 
agricultural  practices  on  biodiversity.  As 
biodiversity  loss  continues,  it  may  impact  the 
above-mentioned  key  sectors,  making 
it 
important  to  find  ways  to  support  both 
environmental  sustainability  and  economic 
stability. 

the  health  of 

in 

Lithuania  is  experiencing  more  frequent 
and 
longer-lasting  extreme  weather 
events.  In  2023,  over  32%  of  Lithuanian 
territory  was  affected  by  drought,  marking  a 
significant increase from the average of 5.1% 
over  the  period  from  2000  to  2020  (19).  As  a 
result, it is estimated that the climate-related 
losses  amounted  to  EUR 466 million  in  2023 
(see  Annex  9).  Agriculture  is  a  key  sector 
affected  and  faces  a  high 
likelihood  of 
vulnerability  and  hazard.  Lithuania  has 
experienced  a  significant  reduction  in  the 
proportion of surface water bodies with a good 
ecological  status,  mainly  as  a  result  of 
agricultural  run-off  and  urban  pollution.  Only 
36.4%  of  lakes,  rivers  and  coastal  waters  in 

(19)  Source: Drought impact on ecosystems in Europe . The 

EU average was 3.6% in 2023, and averaged 3.5% over 
the 2000-2020. 

(20)  Source: eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=SWD%3A2025%3A28%3AFIN 

(21)  Eurostat data: org_cropar, it should be noted that no 
EU-27 average is provided due to missing values for 
Austria from 2021 onwards. 

(22)  Under the Green Deal’s farm to fork strategy, the 

European Commission has set the following target: ‘at 
least 25% of the EU’s agricultural land under organic 
farming and a significant increase in organic 
aquaculture by 2030’. 

(23)  Defined  as  the  contributions  of  ecosystems  to  the 
benefits  that  are  used  in  economic  and  other  human 
activity, 
including  providing  services  (e.g.  biomass 
provision or water supply), regulation and maintenance 
services  (e.g.  soil  quality  regulation  or  pollination),  and 
cultural services (e.g. recreational activities). 

(24)  Eurostat data: env_bio2 

14 

 
 
 
Renovating the housing stock 
helps reduce energy demand 

Ensuring grid stability amid 
Lithuania’s renewable energy 
surge 

long-term 

Lithuania’s  building  renovation  efforts 
still face significant challenges to make a 
meaningful  contribution  to  the  country's 
reduction 
2030  energy  consumption 
target  for  buildings.  Despite  considerable 
efforts  in  recent  years, 
including  energy-
efficiency  renovations  and  fiscal  support  to 
curb  household  energy  prices,  Lithuania's 
energy  poverty  remains  among  the  highest  in 
the EU. Although the proportion of households 
unable  to  keep  their  homes  adequately  warm 
fell  from  26.7%  in  2019  to  20%  in  2023 
(Annex 11), this remains almost double the EU 
average  of  9.3% (25).  Furthermore,  from  a 
medium-term  perspective,  residential  final 
energy consumption increased by 1% between 
2018  and  2022.  This  trend  contrasts  with 
Lithuania’s 
renovation  strategy, 
which  aims  to  achieve  a  15%  reduction  in 
building  energy  consumption  by  2030  (see 
Annex 8). Preliminary data from 2023 indicate 
that,  despite  a  decline 
in  final  energy 
consumption in the residential sector between 
2022  and  2023,  the  overall  trend  has  not 
been reversed, and consumption is expected to 
continue  rising.  This 
is  primarily 
driven  by  demand  for  heating  and  cooling, 
which  accounts  for  80%  of  total  energy 
consumption 
(see  Annex  8).  Therefore, 
improving  the  energy  efficiency  of Lithuania’s 
housing  stock  would  play  a  crucial  role  in 
reducing  both  energy  demand  and  energy 
prices.  To  that  effect,  among  other  (EU-) 
funds,  the  recovery  and  resilience  facility  is 
subsidising  the  cost  of  the  renovations,  the 
technical assistance, and some of the interest 
repayment  to  alleviate  some  of  the  financial 
burden  borne  by  the  homeowners  and  make 
energy efficiency renovations more attractive. 

increase 

(25)  Eurostat data: ilc_mdes01. 

15 

The  large  increase  of  renewables  in 
Lithuania, while welcome, raises potential 
risks  to  grid  capacity  and  stability.  In 
2024,  Lithuania  developed  an  additional 
1 724 MW  of  generating  capacity  (+59.6%), 
mainly  driven  by  solar  (+93%)  and  wind 
(+42%)  energy. This helped Lithuania produce 
80%  of its  electricity  from  renewable  sources 
that  year  (Annex  8).  As  a  result  of  this 
increase,  the  country’s  electricity  grid  must 
keep  pace  to  enable  new  connections.  While 
Lithuania  has  made  progress  in  streamlining 
construction 
permitting 
procedures, 
remain 
timelines  for  new  grid  capacity 
significantly 
those  for  new 
generation or demand. 

longer 

than 

the 

fuels, 

before 

phase-out 

Despite  recent  efforts,  Lithuania  records 
sizeable  fossil  fuel  subsidies  without  a 
planned 
2030, 
representing  0.47%  of  GDP.  Scaling  down 
and phasing out these subsidies is in line with 
EU commitments and can contribute to easing 
limits  of  fiscal  space.  Lithuania  has  amended 
its  law  on  excise  duty,  which  has  led  to  an 
increase of standard excise duty rates for gas 
oils  and 
the 
selected  heating 
introduction of excise duty on peat for heating 
and  the  inclusion  of  a  CO2  component  in  the 
excise  rates  for  energy  products.  However, 
further  efforts  could  be  made.  Fossil  fuel 
subsidies  that  neither  address  energy  poverty 
in  a  targeted  way  nor  respond  to  genuine 
energy  security  concerns,  or  that  hinder 
electrification and are not crucial for industrial 
competitiveness  could  be  considered  as 
priorities  for  phase-out.  These  include:  (i)  a 
reduced  excise  tax  on  natural  gas  used  for 
heating  in  businesses  and  households;  (ii)  a 
reduced  excise  tax  on  gasoil  for  fishing  and 
agriculture;  and  (iii)  a  reduced  VAT  rate  for 
heating  residential  spaces  (see  Annex  8). 
Nevertheless,  it  is  noted  that,  in  Lithuania’s 
industrial  sector,  the  combination  of  national 
energy  and  carbon  taxes  and  EU  emissions 
trading  leads  to  disincentives  for  fossil  fuel 
use. 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

risks 

losing 

Lithuania 

competitiveness. 

Regional  disparities,  a  rapidly  ageing 
population  and  gaps  in  healthcare  pose 
challenges  to  Lithuania’s  labour  market 
and 
Unemployment 
remains  more  prevalent  in  rural  areas  due  to 
limited job  opportunities, while poor access to 
public  services  in  these  areas  limits  the 
attractiveness  of  the  regions.  Although  wages 
have risen significantly in recent years, labour 
productivity decreased in both 2022 and 2023 
(Annex  10).  With  wages  forecast  to  continue 
growing, 
its 
competitiveness  if  rising  labour  costs  are  not 
matched  by  a  corresponding  growth 
in 
productivity.  At  the  same  time,  Lithuania's 
working-age population (15-64) is projected to 
decline  by  42.4%  by  2070,  compared  to 
15.4%  for  the  EU.  This  is  exacerbated  by  the 
low  effectiveness  of  the  health  system  in 
decreasing preventable and treatable mortality 
the  working-age  population.  The 
among 
number  of  potential  productive  life  years  lost 
in  Lithuania  due 
to  non-communicable 
diseases  such  as  cancer  and  cardio-vascular 
diseases  is  almost  twice  the  EU  average 
(Annex  14).  Moreover,  access  to  healthcare 
varies  across  regions,  with  accessibility  to 
healthcare  centres  ranging  from  36%  of 
residents living within a 10-minute drive of the 
nearest  healthcare  centre  in  Vilnius  to  just 
19% doing so in Telšiai county (see Annex 17). 
These  factors  could  further  increase  labour 
and  skills  shortages  and  underscore  the  need 
to  make  the  education,  health  and  public 
transport systems more effective, get the non-
working  population  into  work,  and  facilitate 
employment, 
vulnerable 
groups. 

particularly 

for 

Addressing labour market 
challenges and skills mismatches 
to foster sustainable and inclusive 
growth in Lithuania 

by 

the 

rise 

possibly 

affected 

although 

in  2024 

the  unemployment 

While  the  labour  market  is  performing 
well overall, structural skills mismatches 
and  shortages  may  hamper  long-term 
growth.  The  employment  rate  increased  to 
79.2% in 2024 after a dip  to 78.5% in 2023. 
At the same time, the labour market was slow 
to absorb all new entrants to the labour force 
(more than 50 000 overall in 2023 and 2024), 
rate 
and 
deteriorated, 
only 
temporarily  (see  Section  1)  Vulnerable  groups 
such as young people and the low-skilled were 
in 
particularly 
unemployment.  More  structurally,  the  co-
existence  of 
in  certain 
sectors,  such  as  health,  public  administration, 
transport  and  finance,  with  some  persistent 
unemployment  suggests  a  lack  of  matching 
efficiency  in  the  Lithuanian  labour  market 
between firms and the skills they seek on the 
one hand and workers and the available skills 
on the other hand (see Section 1). At the same 
time, 
less  than  5%  of  people 
registered with the unemployment service took 
part in State measures to help them find work 
(active  labour  market  policy  measures) (26). 
This  was  reportedly  due  to  limited  interest 
among  the  unemployed  to  participate  in  such 
measures,  and  a  lack  of  sufficient  incentives 
(Annex 10). 

labour  shortages 

in  2023 

(26)  Based  on  the  Joint  Assessment  Framework  indicator 
on  activation  of  the  registered  unemployed,  which 
measures  the  proportion  of  people  registered  as 
unemployed  with  the  Employment  Service  and 
participating  in  a  labour  market  policy  activation 
measure (categories 2-7). See Annex 10. 

16 

 
 
 
Improving the education system at 
all levels and increasing its labour 
market relevance 

rate 

large 

The  results  of  Lithuanian  students  are 
remaining  stable,  but 
improving  or 
in 
differences 
extremely 
achievement  are  observed  between 
students  from  high  and 
low  social, 
economic,  and  cultural  contexts,  as  well 
as  between  students  from  different 
schools.  Around  25%  of  students 
lack 
minimum  basic  skills  in  mathematics,  reading 
and  science,  according  to  the  2022  PISA 
survey. 
in 
The  underachievement 
mathematics  is  significantly  higher  among 
disadvantaged  students 
(46.5%  vs  11%). 
Students  attending  urban  schools  achieve  on 
average 71 score-points more in mathematics 
than  their  peers  in  rural  areas  (EU  gap:  46 
score-points),  highlighting a  significant  urban-
rural  achievement  gap.  The  performance  gap 
is exacerbated by the fact that a high number 
of  schools  in  rural  areas  often  face  teaching 
staff  shortages  and  overall  have  weaker 
outcomes  and  higher  costs  per  student.  As 
part  of  the  recovery  and  resilience  plan,  the 
millennium school investment programme and 
school  network  consolidation  reform  aim  to 
provide  children  with  better  access  to  high-
quality  schools  regardless  of  where  they  live. 
However,  recent  changes  to  the  rules  on 
forming  classes  in  smaller  town  gymnasiums 
risk  slowing  down  the  progress  made  in 
consolidating school networks. 

teaching 

profession 

is 
Lithuania’s 
grappling  with  an  ageing  workforce  and 
persistent  shortages,  exacerbated  by  an 
inadequate  wage  structure.  As  of  2022, 
Lithuania's  proportion  of  general  education 
teachers aged 55 and over was the highest in 
the  EU,  comprising  39.8%  of  the  workforce 
(see  Annex  12).  Lithuania  is  making  efforts, 
partially  supported  by  the  Recovery  and 
Resilience 
the 
attractiveness  of  the  teaching  profession  and 
training  and 
the 
professional  growth,  to  ensure  the  entry  of 
new  teachers  into  the  education  system,  by 
implementing  projects  aimed  at  providing 

strengthen 

Facility, 

teacher 

system 

of 

to 

competencies.  While 

teachers  with  the  opportunity  to  acquire 
another  subject/specialization  or  didactic  and 
managerial 
salary 
increments aim to boost teacher retention, low 
entry  wages  and  a  lack  of  recognition  for 
previous  professional  experience  continue  to 
dissuade  young  people  and  career  switchers 
from joining the profession. 

is 

increase  the 

The  persistently 
labour  market 
low 
relevance  of  vocational  education  and 
training  and  tertiary  education  is  being 
addressed  but  the  results  will  take  time 
to  materialise.  While 
has 
Lithuania 
implemented  or 
implementing  several 
reforms  supported  by  the  Recovery  and 
labour 
Resilience  Facility  to 
market  relevance  of  vocational  education  and 
training and tertiary education, their impact is 
yet  to  be  seen.  In  the  meantime,  the  labour 
market  relevance  of  vocational  education  and 
training remains below the EU average (Annex 
12).  The  employment  rate  of  recent  tertiary 
graduates  is  relatively  high,  but  only  47%  of 
college  graduates  are  employed  in  positions 
matching their  level  of  education,  highlighting 
challenges with educational quality and labour 
in 
market 
science, 
and 
mathematics  declined  to 25.0% of all tertiary 
enrolments  in  2023,  down  from  27.3%  in 
labour  market  demand. 
2017,  despite 
However,  enrolments 
subjects 
these 
accounted 
for  50.3%  of  medium-level 
vocational  training  and  education  enrolments 
in 2022, surpassing the EU average of 36.2% 
(see  Annex 12).  Along  with  the  fragmented 
skills  forecasting  framework,  this  contributes 
to  skills  mismatches  in  the  labour  market  – 
the  macroeconomic  skills  mismatch  slightly 
increased  in  2023  (20.9%),  remaining  above 
the  EU  average (27).  The  rising  rate  of  young 
people  not 
in  employment,  education  or 
training  also  indicates  the  underperformance 
of  vocational  training  and  education  and 
tertiary  education.  This  rate  has  grown  from 
10.7% in 2022 to 14.7% in 2024, contrasting 

relevance.  Tertiary  enrolments 

engineering 

technology, 

in 

(27)  The macroeconomic skills mismatch indicator measures 
the dispersion of employment rates across skill groups 
(represented by qualification levels, with ISCED 0-2 low; 
3-4 medium and 5-7 high). Source: Commission’s own 
calculations. 

17 

 
 
with  the  overall  decrease  in  the  EU  from 
11.7% to 11% during the same period. 

Participation  in  adult  learning  is  set  to 
pick up pace, but it would be beneficial if 
the  capacity  and  effectiveness  of  the 
new  individual  learning  accounts  were 
improved. An individual learning account is a 
personalised  platform  that  enables  adults  to 
acquire  new  skills  and  manage  their  own 
learning.  Participation  in  adult  learning  has 
improved  slightly  compared  to  2016  and  has 
been  picking  up  pace  since  the  launch  of  the 
individual  learning  accounts  in  2023.  It  is  the 
first major step towards addressing the issues 
of a fragmented adult learning framework and 
low  participation  rates.  However,  concerns 
remain  about  this  new  system's  capacity  to 
meet the demand for reskilling and upskilling, 
its  targeting,  its  credit  conditions  and  the 
quality  and  labour  market  relevance  of  its 
training programmes (see Annex 12). Given its 
rising popularity, this platform could be a good 
instrument  to  boost  reskilling  and  upskilling. 
Fostering  stronger  collaboration  with  social 
partners  could  amplify  the  platform’s  impact 
on  better  addressing  skills  shortages  and 
mismatches. 

Improving quality of and access to 
healthcare to increase healthy life 
expectancy 

Lithuania’s  health  outcomes  are  among 
the  EU’s  poorest,  marked  by  high  rates  of 
treatable  and  preventable  mortality  (183  and 
309  per  100 000  population,  respectively), 
highlighting deficiencies in healthcare efficacy. 
Life  expectancy  at  birth  is  77.6  years,  below 
the  EU  average  of  81.4  years,  and  the 
working-age  mortality 
is  22.2%, 
significantly  higher  than  the  EU  average  of 
14.3%. 

rate 

system 

Lithuania’s 
is 
healthcare 
confronted  with  challenges  that  severely 
impact  the  accessibility  and  quality  of 
medical  services.  Central  to  these  issues  is 
the  nation’s  health  spending,  which  is  about 
40%  below  the  EU  average,  with  a  low  share 

Individuals 
costs 

of public spending on healthcare (5.3% of GDP 
in  2023,  compared  to  the  EU  average  of 
7.6%).  This  low  spending  limits  the  system’s 
capacity  to  provide  comprehensive  services, 
placing a disproportionate financial  burden on 
cover  31.8%  of 
individuals. 
healthcare 
out-of-pocket 
payments – more than twice the EU average – 
in 
compounding  socio-economic  disparities 
health  outcomes.  The  share  of  total  spending 
on  health  directed  at  prevention  is  also  lower 
than  the  EU  average,  which  in  turn  limits  the 
range of preventive and primary care services 
that  can  be  provided,  further  exacerbating 
health disparities (see Annex 14). 

through 

rural 

service 

hampers 

communities 

A  critical  shortage  of  health  workers 
further 
delivery, 
particularly  in  rural  areas.  While  urban 
centres  benefit  from  a  high  concentration  of 
lack 
doctors, 
sufficient  medical  staff,  resulting  in  medical 
deserts  that  delay  healthcare  delivery.  The 
situation is made worse by an ageing nursing 
workforce:  37.9%  of  nurses  are  aged  55-64, 
one  of  the  highest  rates  in  the  EU,  and  only 
10.6%  are  aged  25-34.  This  reveals  a 
threatens 
demographic 
workforce sustainability. 

imbalance 

often 

that 

The  combination  of  financial  constraints, 
health workforce shortages and high out-
of-pocket  costs  forms  a  significant 
barrier  to  improving  health  service  delivery, 
which 
and 
impedes 
improved 
competitiveness. 
financing,  implementing  strategic  workforce 
planning,  and  shifting  towards  preventive  and 
primary  care,  Lithuania  can  create  a  more 
its 
resilient  healthcare  system,  boosting 
attractiveness to investors and foreign talent. 

economic 
By 

securing 

growth 

Reducing poverty and income 
inequality to promote sustainable 
growth and inclusion 

Income  inequality  and  poverty  remain 
high, and are not significantly reduced by 
the  current  tax-benefit  system.  Gross 
incomes  in  Lithuania  are  among  the  most 

18 

 
threshold 

the  current 
income 

unequally  distributed  in  the  EU,  whereas  the 
tax-benefit 
effectiveness  of 
system  to  reduce 
inequality  and 
poverty lags behind the EU average (see Annex 
13  and  Annex  11).  This  leads  to  income 
inequality  after  tax  and  benefits  in  Lithuania 
remaining  among  the  highest  in  the  EU  in 
2023 (see Annex 11). In addition, more than a 
fifth of Lithuania’s population remained below 
the  at-risk-of-poverty 
in  2023. 
Higher  unemployment  rates  outside  the  cities 
(see  Annex  10)  translate  into  higher  poverty 
levels  in  rural  areas  (see  Annex  11).  These 
issues  are  expected  to  be  addressed  by  the 
reforms  envisaged  under  the  recovery  and 
resilience  plan  to  increase  minimum  income 
adequacy, make personal income taxation and 
social  insurance  contributions  more  effective, 
and  reduce  income  inequality  and  poverty. 
However, this will depend on the final shape of 
these  reforms,  which  are  currently  being 
prepared.  

in 

improvements 

Despite 
pension 
adequacy,  older  people  (65+)  continue  to 
face  significant  poverty 
risks,  with 
women  being  particularly  affected. 
Lithuania  has  implemented  several  measures 
in  recent  years  to  address  the  high  poverty 
level of the older population. Despite that, the 
at-risk-of-poverty  rate  for  older  people  (65+) 
rose  to  36.9%(28)  in  2024  (after  initially 
decreasing  from  39.5%  in  2022  to  36.1%  in 
2023)  and  remains  among  the  highest  in  the 
EU  (EU:  16.8%).  The  gender  gap  in  old-age 
poverty  in  2024  was  also  substantial,  with 
women's at-risk-of-poverty rate nearly double 
that  for  men  (41.9%  vs  27.5%)(29).  Low 
pension  adequacy  remains  an 
issue:  the 
average  old-age  pension  remained  below  the 
poverty threshold in 2023, while the aggregate 
replacement ratio for pensions and the median 
relative  income  of  older  people  were  among 
the  lowest  in  the  EU  (Annex  11).  A  rapidly 
ageing  population  signals  the  need  to  find 
sustainable  ways  to  further  address  pension 
adequacy in the longer term. 

of 

proportion 

substantial 

the 
A 
unemployed  and  persons  with  disabilities 
face  poverty  risks,  driven  by  gaps  in 
coverage  and  the  low  adequacy of  social 
benefits.  The  at-risk-of-poverty  rate  for  the 
unemployed (18-64) increased from 51.4% in 
2022  to  59.5%(30)  in  2024  (EU:  48.8%). 
Lowest  unemployment  insurance  benefits  as 
well  as  average  cash  social  benefits  remain 
below the poverty threshold, while only around 
half  of  the  self-employed  is  covered  by 
unemployment insurance scheme. People with 
disabilities  in  Lithuania  face  the  highest  at-
risk-of-poverty rate in the EU in 2024 (38.2% 
vs  20.7%),  which 
low 
employment  rates.  Lithuania  has  one  of  the 
highest disability employment gaps in  the EU, 
which  is  further  exacerbated  by  the  low 
adequacy of disability benefits. 

reflects 

their 

is 

Housing  quality  continues  to  be  a 
concern, while a sharp rise in prices poses 
a risk to housing affordability. The housing 
largely  composed  of  energy-
stock 
inefficient, multi-family dwellings with ongoing 
quality  issues.  In  2023,  overcrowding  rates 
remained  notably  higher  than  the  EU  average 
(26%  vs  16.8%),  and  the  proportion  of  the 
population  with  neither  a  bath  nor  shower  in 
their  dwelling  was  several  times  the  EU 
average  (Annex  11).  Although  housing  cost 
overburden  rates  in  Lithuania  remain  better 
than  the  EU  average,  in  part  due  to  the  high 
share of property ownership, there has been a 
significant  surge  in  house  prices  and  rental 
prices,  which  have  more  than  doubled  since 
2010. Along with the limited rental market and 
an  underdeveloped  social  housing  sector,  this 
could hinder housing affordability in the longer 
term, especially in the biggest cities. 

Providing adequate and 
sustainable funding for public 
services and social benefits 

Government  spending  on  public  services 
in  Lithuania 
and 

social  protection 

(28)  Eurostat provisional data for 2024 

(29)  Eurostat provisional data for 2024 

(30)  Eurostat provisional data for 2024 

19 

 
 
 
framework. 

convergence 

These  findings  are  consistent  with  the 
second-stage  analysis  in  line  with  the 
social 
This 
analysis points to challenges related to  (i) the 
increasing rates of unemployment and persons 
not  in  education,  employment  or  training;  (ii) 
high  income  inequality;  (iii)  the  number  of 
people  at  risk  of  poverty  or  social  exclusion; 
and  (iv)  the  low  rate  of  participation  in  adult 
learning. It does not, however, point to overall 
social  convergence  challenges  for  Lithuania, 
nor in  the light of the measures implemented 
or envisaged.(32) 

general 

Lithuania's 

social  protection 

remains  among  the  lowest  in  the  EU, 
limiting  timely  and  equal  access  to 
healthcare,  social  protection,  and  high-
quality  public-administration  services.  In 
government 
2023, 
expenditure on healthcare was the sixth lowest 
in  the  EU,  amounting  to  5.3%  of  GDP 
compared 
to  the  EU  average  of  7.4%. 
is  also 
Spending  on 
systematically  below  the  EU  average,  at 
14.0% of GDP in 2023, almost six percentage 
points lower than the EU average of 19.8%. In 
addition,  the  efficiency  of  social  protection 
spending,  particularly  on 
sickness  and 
disability  policies,  appears  to  be  limited.  In 
2023,  Lithuania  allocated  3.7%  of  its  GDP  to 
payments  and 
disability 
sickness  and 
measures,  the  fourth  highest  level  in  the  EU. 
However,  despite  similar  disability  prevalence 
rates (27.4% of Lithuania’s total population in 
2023  vs  26.8%  in  the  EU),  Lithuania  had  the 
second  highest  at-risk-of-poverty  rate  for 
people with disabilities in the EU in 2023 and 
the  highest  rate  in  2024(31).  Another  critically 
underfunded  area  is  general  public  services, 
which  received  the  third 
level  of 
funding  in  the  EU  in  2023  (3.4%  of  GDP, 
compared to the EU average of 5.9%).  

lowest 

Spending  pressures  on  pensions,  health 
and 
long-term  care  are  expected  to 
increase  due  to  projected  population 
decline,  which  will  lead  to  Lithuania 
having  one  of  the  highest  old-age 
dependency  ratios  in  the  EU.  Demographic 
challenges  already  have  a  visible  negative 
impact on the quality of social and healthcare 
services  in  remote  regions.  According  to  the 
2024  Ageing  Report,  age-related  public 
expenditure 
to 
increase  by  4.6  percentage  points  by  2070 
under  current  policies,  further  straining  public 
finances.  In  the  coming  years  Lithuania  will 
need  to  implement  fiscal  policies  to  keep  its 
net  expenditure  path  on  a  sustainable 
trajectory,  while  addressing  the  demographic 
challenges  and  improving  the  adequacy  of 
benefits and the quality of care. 

in  Lithuania 

is  projected 

(31)  Eurostat provisional data for 2024 

(32)  European Commission, SWD(2025)95. The analysis 

relies on all the available quantitative and qualitative 
evidence and the policy response undertaken and 
planned. 

20 

 
 
 
 
KEY FINDINGS 

To  foster  competitiveness,  sustainability  and 
social fairness, Lithuania would benefit from: 

• 

REPowerEU 

•  accelerating the implementation of the 
recovery  and  resilience  plan,  including 
swiftly 
the 
implementing  cohesion  policy, 
taking 
advantage  of  the  opportunities  under  the 
mid-term  review  and  making  optimal  use 
of EU instruments, including InvestEU and 
STEP, to improve competitiveness; 

chapter; 

•  easing 

stringent 

collateral 
bank 
requirements  while 
fostering  market 
competition,  to  improve  access  to  finance 
for  small  and  medium-sized  enterprises; 
its  capital 
and  further  developing 
markets  and  maintaining  automatic 
enrolment  to  the  second-pillar  pension 
scheme; 

•  reviewing  and  streamlining  existing 
R&D  tax  incentives  and  optimising  the 
university  network,  to  foster  business-
science linkages, private investment in R&D, 
and innovative activities; and incentivising 
science, 
tertiary 
and 
technology, 
mathematics,  thus  addressing  skills  gaps 
and supporting innovative capacity; 

engineering 

enrolments 

in 

•  strengthening 

the 

societal 

and 
economic  resilience  of  regions, 
in 
particular  considering  the  impact  of 
geopolitical  risks  across  Lithuania, 
including  by  improving  the  current  legal 
and 
to  foster 
cooperation  among  municipalities  in  the 
provision  of  public  services,  and  by 
developing local clusters; 

institutional  framework 

• 

improving 
transport 
public 
coordination  and  sustainable  mobility 
infrastructure,  and  modernising  the  car 
fleet to reduce emissions from the sector; 

21 

primary 

reduce 
and 

improving  the  energy  efficiency  of 
energy 
to 
homes, 
consumption 
poverty; 
continuing  ongoing  efforts  to  phase 
out  fossil  fuel  subsidies,  including  for 
heating;  and  supporting  anticipatory 
grid development; 

energy 

• 

• 

of 

the 

use 

circular 
increasing 
materials, including by improving recycling 
systems;  and  strengthening  biodiversity 
protection  and  water  resilience 
in 
agricultural production; 

health 

improving 
by 
strengthening  access  to  primary  care  and 
increasing the availability of health workers 
across regions; 

outcomes 

•  to support  upward  social  convergence, 
providing  adequate 
for 
healthcare,  social  protection  and  general 
public services; 

financing 

• 

improving the quality and equity of the 
general  education  system,  particularly 
by addressing the urban-rural achievement 
teaching 
gap; 
profession  more  attractive  to  address 
persistent shortages; 

and  making 

the 

•  addressing 

skills 

shortages 

and 
mismatches  by  boosting  participation  in 
active  labour  market  policy  measures  and 
by  making  adult  learning  more  accessible 
and relevant; 

•  better 

to 

social 

support 

targeting 

security 
the  most 
spending 
vulnerable,  in  particular  the  groups  most 
at risk of poverty, such as the unemployed, 
older  people,  and  persons  with  disabilities; 
and increasing the adequacy of old-age 
pensions, 
the 
while  maintaining 
sustainability of the pension system. 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Horizontal 

A15.  Sustainable development goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the medium-term plan 
Defence expenditure and the national escape clause 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
RRF – Grants 
RRF - Loans 

25 

27 

27 

34 

37 

37 

41 

46 

53 

58 

58 

63 

69 

74 

74 

78 

83 

88 

89 

92 

92 

95 

102 

28 
28 
29 
29 
29 
30 
30 
31 
31 

 
 
 
A1.10.  Projected change in age-related expenditure in 2024-2040 and 2024-2070 
A1.11.  Fiscal Governance Database Indicators 
A2.1. 
Taxation indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making Business Easier: indicators. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A8.1. 
A9.1. 
A13.1.  Social Scoreboard for Lithuania 
A14.1.  Key health indicators 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level in Lithuania 

Financial indicators 
Lithuania. Selected indicators on administrative burden reduction and simplification 
Digital Decade targets monitored through the Digital Economy and Society Index 
Key clean industry and climate mitigation indicators: Lithuania 
Key Energy Indicators 
Key indicators tracking progress on climate adaptation, resilience and environment 

LIST OF GRAPHS 

Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 

Tax revenue shares in 2023 
Tax wedge for single and second earners, % of total labour costs, 2024 
R&D investment as a percentage of GDP, 2013-2023 

A2.1. 
A2.2. 
A3.1. 
A4.1.  Making Business Easier: selected indicators. 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediaries in Lithuania 
A5.4. 
Composition of NFC funding as % of GDP 
A5.5. 
Composition of household financial assets per capita and as % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A6.3. 
Participation rate of 25-64 year olds in adult learning (%) by occupation 
A7.1. 
GHG emission intensity of manu-facturing and energy-intensive sectors, 2022 
A7.2.  Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023 
A7.3. 
A7.4.  Municipal waste treatment 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3. 
A9.1. 
A9.2. 
A10.1.  Key labour market indicators 
A10.2.  Youth labour market outcomes (15-24 years) 
A11.1.  AROPE and its components 
A12.1.  Trends in the number of students enrolled in tertiary education and in STEM fields (ISCED 5-8) 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Lithuania 
A16.1.  Distribution of RRF funding in Lithuania by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Lithuania 
A17.1.  Labour productivity per hour 
A17.2.  Access to healthcare and primary education in rural areas, 2023 

Lithuania's installed renewable capacity (left) and electricity generation mix (right) 
Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 
Investment needs and gaps in EUR million, in 2022 constant prices 

Retail energy price components for household and non-household consumers, 2024 

LIST OF MAPS 

A17.1.  GDP per head (in purchasing power standard PPS), 2023 
A17.2.  Real GDP per head growth (2014-2023) 

26 

32 
33 
34 
40 
45 
52 
54 
55 
62 
68 
73 
88 
90 
98 
99 
103 

35 
36 
38 
42 
46 
46 
47 
49 
50 
53 
53 
56 
59 
60 
60 
61 
63 
63 
65 
71 
71 
74 
75 
78 
85 
89 
89 
92 
96 
96 
104 
105 

102 
102 

 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Lithuania, 
including  how  Lithuania  is  responding  to  Council  recommendations  to  be  issued  under  the  reformed 
Economic Governance Framework. 

The  reformed  framework,  which  entered  into  force  on  30  April  2024(33),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term.  This  commitment  is  defined  in  terms  of  net  expenditure  growth,  which  is  the  single  operational 
indicator for fiscal surveillance.  

Lithuania submitted its plan on 30 April 2025. The plan covers the period until 2029, presenting a fiscal 
adjustment  over  four  years.  The  Commission  has  assessed  the  MTP  of  Lithuania  and  on  4  June  2025 
recommended  to  the  Council  to  adopt  a  recommendation  setting  the  net  expenditure  growth  ceilings 
contained in the plan(34).  

The  assessment  of  the  fiscal  situation  of  Lithuania  considers  the  Commission  Recommendation  for  a 
Council Recommendation endorsing Lithuania’s plan and is carried out on the basis of outturn data from 
Eurostat and the Commission Spring 2025 Forecast, and taking into account the Annual Progress Report 
(APR)  that Lithuania submitted on 30 April  2025. Furthermore, given Lithuania’s request  to activate the 
National  Escape  Clause(35)  following  the  Commission  Communication  of  19  March  2025(36),  the 
assessment  also  considers,  as  appropriate,  the  projected  increase  in  defence  expenditure  based  on  the 
Commission Spring 2025 Forecast.  

The Annex is organised as follows. First, developments in  government deficit and debt are presented 
based on the figures reported in Table  A1.1. Then, the assessment of the fiscal situation of Lithuania 
follows, considering the Commission Recommendation for a Council Recommendation endorsing the plan, 
based on the relevant figures presented in Tables A1.2 to A1.9, including data on defence expenditure. 

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024.(37) 

Developments in government deficit and debt  

Lithuania’s government deficit amounted to 1.3% of GDP in 2024. Based on the Commission Spring 2025 
Forecast, it is projected to increase to 2.3% of GDP in 2025 while the Annual Progress Report projects an 
increase to 2.8% of GDP. The government debt-to-GDP ratio amounted to 38.2% at the end of 2024, and, 
according  to  the  Commission,  is  projected  to  increase  to  41.2%  at  end-2025.  According  to  the  Annual 

(33)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies 
and  on  multilateral  budgetary  surveillance,  along  with  the  amended  Regulation  (EC)  No  1467/97  on  the  implementation  of  the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(34)  COM(2025) 616 of 4.6.2025, final. 

(35)  On 2 May 2025, Lithuania requested to the Commission and to the Council the activation of the National Escape Clause. On this 

basis, the Commission adopted a Recommendation for a Council Recommendation allowing Lithuania to deviate from, and exceed, 
the net expenditure path set by the Council, COM(2025)609. 

(36) Communication from the Commission accommodating increased defence expenditure within the Stability and Growth Pact of 19 

March 2025, C(2025) 2000 final. 

(37)  European Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

27 

 
 
 
 
 
Progress  Report,  it  will  increase  to  42.4%.  The  difference  between  the  general  government  balance 
projected by the Commission and Lithuania is due to lower projected general government expenditure on 
intermediate consumption and investment in the Commission Spring 2025 Forecast. The Annual Progress 
Report does not include budgetary projections beyond 2025. 

Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Developments in net expenditure  

The  net  expenditure(38)  growth  of  Lithuania  in  2025  is  forecast  by  the  Commission(39)  to  be  above  the 
recommended maximum, corresponding to a deviation of 1.0% of GDP. In Lithuania’s APR net expenditure 
growth  is  projected  at  9.9%  in  2025,  compared  to  the  Commission’s  forecast  of  9.0%.  The  difference 
between  the  Commission’s  and  Lithuania’s  projections  are  mainly  driven  by  different  assumptions 
regarding the general government expenditure plans on investment and intermediate consumption. Based 
on  the  long-term  historical  patterns,  the  Commission  does  not  project  full  implementation  of  these 
expenditure plans, which slightly reduces overall net expenditure growth. 

Table A1.2:  Net expenditure growth 

* The cumulative growth rates in the APR are calculated by reference to the base year of 2023. The COM figures are calculated by 
reference to 2024. 
Source: Medium-term fiscal structural plan of Lithuania (MTP), Annual Progress Report (APR) and Commission's calculation based 
on Commission Spring 2025 Forecast (COM) 

The  assessment  of  net  expenditure  growth  and  in  particular  its  comparison  with  the  recommended  net 
expenditure path considers that Lithuania has requested the activation of the national  escape  clause to 
facilitate transitioning to a higher level of defence expenditure. General government defence expenditure 
in  Lithuania  amounted  to  1.8%  of  GDP  in  2021,  2.1%  of  GDP  in  2022  and  2.5%  of  GDP  in  2023(40). 
According to the Commission Spring 2025 Forecast, expenditure on defence is projected at 2.8% of GDP in 
2024 and 3.2% of GDP in 2025. Based on current projections for defence spending, the deviation that is 
projected for Lithuania is within the flexibility provided by the national escape clause.  

(38)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(39)  Commission Spring 2025 Forecast, European Economy-Institutional paper 318, May 2025. 

(40)  Eurostat, government expenditure by classification of functions of government (COFOG). 

28 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-1.3-2.8-2.3n.a.-2.32General government gross debt% GDP38.242.441.2n.a.43.9Variables20252026MTPAPRCOMMTPAPRCOM2024n.a.10.5%10.7%n.a.n.a.n.a.20256.1%9.9%9.0%6.1%21.5%9.0%20265.2%n.a.5.8%11.6%n.a.15.3%AnnualCumulative*Growth rates 
 
                                 
 
 
                                 
 
 
 
Table A1.3:  Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the 
medium-term plan 

* The medium-term plan was positively assessed by the Commission and is now pending the endorsement by the Council.  
Source: Commission Spring 2025 Forecast and Commission's calculation 

Table A1.4:  Defence expenditure and the national escape clause 

Source:  Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation 

29 

2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC27.631.034.736.92Interest expenditurebn NAC0.40.60.81.03Cyclical unemployment expenditurebn NAC0.00.00.00.04Expenditure funded by transfers from the EUbn NAC0.81.01.81.75National co-financing of EU programmesbn NAC0.10.10.20.26One-off expenditure (levels, excl. EU funded)bn NAC0.00.00.00.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC26.329.231.933.98Change in net nationally financed primary expenditure (before DRM)bn NAC2.92.72.09DRM (excl. one-off revenue, incremental impact)bn NAC0.10.10.210=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC2.82.61.811Outturn / forecast net expenditure growth% change10.69%9.0%5.8%12Net expenditure growth as reported in the medium-term plan*% changen.a.6.1%5.2%13=(11-12) x 7Annual deviationbn NACn.a.0.90.214 (cumulated from 13)Cumulated deviationbn NACn.a.0.91.015=13/17Annual balance% GDPn.a.1.00.216=14/17Cumulated balance% GDPn.a.1.01.217p.m. Nominal GDP  bn NAC73.878.483.588.1Variables2021202220232024202520261Total defence expenditure% GDP1.82.12.52.83.23.62of which: gross fixed capital formation% GDP0.40.70.91.21.51.83Flexibility from increases in defence expenditure% GDP1.41.54Cumulated balance after flexibility% GDP-0.3-0.3 
 
 
                                        
 
 
 
      
 
 
Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

30 

2024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change2.82.82.8n.a.3.12Private consumption% change3.53.64.2n.a.4.03Government consumption expenditure% change1.40.10.3n.a.0.24Gross fixed capital formation% change-1.35.23.5n.a.4.05Exports of goods and services% change2.13.53.0n.a.3.36Imports of goods and services% change2.44.33.9n.a.3.7Contributions to real GDP growth 7- Final domestic demandpps1.93.23.2n.a.3.28- Change in inventoriespps1.00.00.0n.a.0.09- Net exportspps-0.2-0.4-0.4n.a.-0.110Output gap% pot GDP-1.7-1.8-1.8n.a.-0.911Employment % change1.70.30.4n.a.0.312Unemployment rate%7.17.06.8n.a.6.613Labour productivity% change1.02.52.4n.a.2.814HICP % change0.93.32.6n.a.1.215GDP deflator% change3.43.43.6n.a.2.416Compensation of employees per head% change9.18.47.6n.a.7.217Net lending/borrowing vis-à-vis the rest of the world% GDP4.2n.a.3.7n.a.3.720252026Variables2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue38.239.639.3n.a.39.5of which:2- Taxes on production and imports11.611.911.9n.a.12.03- Current taxes on income, wealth, etc.10.711.010.9n.a.11.14- Social contributions11.111.511.3n.a.11.65- Other (residual)4.85.25.2n.a.4.88=9+16Expenditure 39.542.441.6n.a.41.9of which:9- Primary expenditure38.741.440.6n.a.40.7of which:10- Compensation of employees 11.611.811.7n.a.11.711- Intermediate consumption4.45.14.7n.a.4.712- Social payments15.416.416.3n.a.16.713- Subsidies0.30.30.3n.a.0.314- Gross fixed capital formation4.25.24.9n.a.4.615- Other2.82.62.6n.a.2.716- Interest expenditure0.81.01.0n.a.1.218=1-8General government balance-1.3-2.8-2.3n.a.-2.319=1-9Primary balance-0.5-1.8-1.3n.a.-1.220Cyclically adjusted balance-0.6n.a.-1.6n.a.-2.021One-offs0.00.00.0n.a.0.022=20-21Structural balance-0.6-2.1-1.6n.a.-2.023=22+16Structural primary balance0.2-1.1-0.6n.a.-0.8Variables (% GDP)20252026 
 
                                 
 
 
 
                                 
 
 
 
Table A1.7:  Debt developments 

* End of period. 
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects. 
Source: Commission Spring 2025 Forecast and Commission's calculation (COM), Annual Progress Report (APR) 

Table A1.8:  RRF – Grants 

Source: Annual Progress Report 

31 

2024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)38.242.441.2n.a.43.92=3+4+8Change in the ratio (pps. of GDP)0.94.03.0n.a.2.7Contributions**3Primary balance0.51.81.3n.a.1.24≈5+6+7'Snow-ball' effect-1.4-1.3-1.3n.a.-1.0of which:5- Interest expenditure0.81.01.0n.a.1.26- Real growth effect-1.0-1.0-1.0n.a.-1.27- Inflation effect-1.2-1.3-1.3n.a.-0.98'Stock-flow' adjustment1.83.53.0n.a.2.520252026VariablesRevenue from RRF grants (% of GDP)20202021202220232024202520261RRF grants as included in the revenue projectionsn.a.0.00.10.30.51.10.62Cash disbursements of RRF grants from EUn.a.0.50.00.80.20.90.620202021202220232024202520263Total current expendituren.a.0.00.00.10.10.20.24Gross fixed capital formationn.a.0.00.10.20.40.90.55Capital transfersn.a.0.00.00.00.00.00.06=4+5Total capital expendituren.a.0.00.10.20.40.90.520202021202220232024202520267Reduction in tax revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.8Other costs with impact on revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.9Financial transactionsn.a.n.a.n.a.n.a.n.a.n.a.n.a.Expenditure financed by RRF grants (% of GDP)Other costs financed by RRF grants (% of GDP) 
 
                                   
 
 
 
                                 
 
 
Table A1.9:  RRF - Loans 

Source: Annual Progress Report 

Cost of ageing  

Total age-related spending in Lithuania is projected to rise from about 16% of GDP in 2024 to 
18%  in  2040  and  29%  in  2070  (see  Table  A1.10).  This  increase  results  from  the  projected  rise  in 
pension spending and, to a more limited extent, healthcare and long-term care spending.  

The  rise  in  public  pension  spending  is  concentrated  in  the  medium  term,  with  a  projected 
increase of 2.3 pps of GDP by 2040. The increase by 2040 is the second largest of all Member States 
over this period. Still, at 9.3% and 9.7% of GDP in 2040 and 2070, respectively, pension spending would 
remain notably below the EU average of 12.1% and 11.8%. 

Public healthcare (41) expenditure is projected at 4.3% of GDP in 2024 (below the EU average 
of 6.6%) and is expected to increase by 0.4 pps by 2040 and by a further 0.4 pp by 2070.  

Public  expenditure  on  long-term  care (42)  is  projected  at  1%  of  GDP  in  2024  (below  the  EU 
average  of  1.7%)  and  is  expected  to  increase  by  0.3 pps  of  GDP  by  2040  and  by  a  further 
0.6 pps of GDP by 2070.  

Table A1.10:Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report (EC/EPC). 

(41)  Key performance characteristics, recent reforms and investments are discussed in Annex 11 ‘Health and health systems’.   

(42)  The quality and the accessibility of the long-term care system are covered in Annex 9 ‘Social policies’. 

32 

Cash flow from RRF loans projected in the Plan (% of GDP)20202021202220232024202520261Disbursements of RRF loans from EUn.a.n.a.n.a.0.10.80.00.92Repayments of RRF loans to EUn.a.n.a.n.a.0.00.00.00.020202021202220232024202520263Total current expendituren.a.n.a.n.a.0.00.00.30.44Gross fixed capital formationn.a.n.a.n.a.0.00.00.30.35Capital transfersn.a.n.a.n.a.0.00.00.00.06=4+5Total capital expendituren.a.n.a.n.a.0.00.00.30.320202021202220232024202520267Reduction in tax revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.8Other costs with impact on revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.9Financial transactionsn.a.n.a.n.a.n.a.n.a.n.a.n.a.Expenditure financed by RRF loans (% of GDP)Other costs financed by RRF loans (% of GDP)LT15.42.30.40.3-0.32.718.0LTEU24.30.50.30.4-0.30.925.2EULT15.42.70.80.9-0.34.019.4LTEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal 
 
                                   
 
 
      
 
 
National fiscal framework 

The  Independent  Fiscal  Institution  of  Lithuania,  the  Budget  Monitoring  Department  of  the 
National Audit Office of Lithuania  (NAOL-BMD), has a relatively wide mandate and reports a 
need for more resources. It uses its own internal forecast model to assess the government forecasts 
before  endorsement decisions.  It  considers  its  current  staff  level  sufficient  but  has  reported  a  need  for 
more budgetary resources to maintain capacity. Despite having a legal right to access to information and 
despite  having  MoUs,  the  NAOL-BMD  has  experienced  some  access  to  information  issues  with  the 
government.  The  embedded  nature  of  the  Lithuanian  IFI  allows  the  institution  to  rely  on  supporting 
functions of the mother organisation but may make it more difficult to build “brand recognition”. 

A  high-level  vision  guides  public  investment  plans  in  Lithuania,  while  good  practices  for  the 
appraisal  and  selection  of  investments  are  in  place.  “Lithuania  2050”  outlines  a  long-term 
development  vision  rooted  in  spatial  planning  and  is  complemented  by  an  integrated  national  progress 
plan which presents 10-year financial ceilings detailed by source of financing (i.e., national, EU, other) and 
main  users  (43).  The  Ministry  of  Finance  plays  a  key  role  in  coordinating  the  preparation  and 
implementation of the National Progress Plan, which ensures fiscal realism and affordability of the plan, 
as well as in managing development programmes. All public investment projects, including public-private 
partnerships, exceeding EUR 1 million are prepared and appraised following the methodological standards 
established by the Ministry of Finance and maintained by the Central Project Management Agency (CPMA). 
Life-cycle costs are available for all projects. Standard methodology for estimating routine maintenance 
needs and costs is available and used in the estimation of life-cycle costs, though not yet in the decision-
making process. Finally, while central asset registers could (1) inform decision-makers on the condition of 
the existing asset and its maintenance needs and (2) support the decision on developing new assets, they 
are not in place in Lithuania. 

Table A1.11:Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governance Database 

(43)  The 2021-2030 National Progress Plan was approved by Resolution No 998 of the Government of the Republic of Lithuania of 9 

September 2020 on the Approval of the 2021-2030 National Progress Plan. 

33 

2023LithuaniaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)21.8014.52Medium-Term Budgetary Framework Index (MTBFI)0.730.73 
 
      
 
 
 
 
ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Lithuania’s tax system. It includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  and  (iii) 
tax collection and compliance. 

Lithuania’s  tax  revenues  are  relatively  low. 
Table A2.1 shows that Lithuania’s tax revenues as 
a percentage of GDP remained considerably below 
the  EU  aggregate  in  2023,  despite  increasing  by 
0.4 pps year on year following a dip in 2022. Just 
over  half  of  Lithuania’s  tax  revenues  come  from 
labour taxes. This proportion is in line with the EU 
average  (see  Graph  A2.1),  but  as  it  is  the  same 
share  of  a  lower  total  tax  take,  it  still  leaves 
Lithuania’s labour-tax revenue as a percentage of 
GDP  significantly  lower  than  the  EU  aggregate. 
Taxes  on  capital  as  a  share  of  GDP  are  only 
around  half  of  the  EU  aggregate.  Revenues  from 
consumption  taxes  and  environmental  taxes  were 
close  to the  EU  aggregate  as  a  share  of  GDP  but 
higher as a share of total taxation.  

revenue 

Lithuania  has  scope  to  mobilise  additional 
to  address  fiscal 
sources  of 
pressures.  Lithuania’s  tax  system  offers  tax-
arbitrage  opportunities,  for  example  between  the 
highly  differentiated  treatment  of  income  from 
employment, self-employment, and some forms of 
incorporated  business.  The  income  of  the  self-
Table A2.1:  Taxation indicators 

employed  and  of micro  firms is  taxed  particularly 
lightly.  Revenues  from  recurrent  property  taxes, 
which  are  among  the  taxes  least  detrimental  to 
growth,  are  currently  very 
low.  Lithuania’s 
environmental  tax  revenues  are  also  modest,  and 
the  effective  carbon-tax  rate  was  EUR  61.80  per 
tonne  of  CO2  equivalent  in  2023,  well  below  the 
EU  average.  At  the  same  time,  public  spending  is 
set  to  continue  rising  as  a  share  of  GDP.  This  is 
being  driven  by  population  ageing  and  the  new 
government’s 
significantly 
increase defence spending. 

commitment 

to 

growth;  and 

Lithuania’s  commitments  in its recovery and 
resilience  plan  (RRP)  include:  (i)  broadening 
the tax base with sources less detrimental to 
(ii)  abolishing 
economic 
inefficient  or  environmentally  unfriendly tax 
exemptions  and  special  tax  regimes.  The 
measures  already  adopted  include  a  gradual 
increase in excise duties and the introduction of a 
CO2  tax  component  that  will  gradually  increase 
budget  revenues,  with  the  yield  set  to  reach  the 
equivalent  of  0.6%  of  GDP  by  2028.  The  new 
coalition government has developed tax reforms to 
fund  spending  pressures  that  are  relevant  to 
Lithuania’s  outstanding  RRP  milestones.  The 
Lithuanian  Ministry  of  Finance  has  put  forward  a 
comprehensive  tax  package  that  would  have  a 

(1) Forward-looking effective tax rate (KPMG). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2023. For more details on the VAT gap, see European Commission, Directorate-General for Taxation and 
Customs Union, VAT gap in the EU - 2024 report, https://data.europa.eu/doi/10.2778/2476549 
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, OECD 

34 

LTMedian (EU-27)2010202120222023202420102021202220232024Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)28.832.031.732.137.840.239.739.0Taxes on labour (% of GDP)14.316.015.916.419.820.520.120.0of which, social security contributions (SSC, % of GDP)11.810.19.810.212.913.012.712.7Taxes on consumption (% of GDP)11.511.811.410.810.911.210.910.5of which, value added taxes (VAT, % of GDP)7.98.38.48.06.87.37.47.1Taxes on capital (% of GDP)3.04.34.44.97.18.58.78.5Personal income taxes (PIT, % of GDP)3.67.47.67.78.69.69.49.3Corporate income taxes (CIT, % of GDP)1.02.02.32.72.22.93.23.2Total property taxes (% of GDP)0.80.40.40.41.92.22.11.9Recurrent taxes on immovable property (% of GDP)0.40.30.30.31.11.11.00.9Environmental taxes (% of GDP)1.92.01.61.62.52.42.12.0Effective carbon rate in EUR per tonne of CO2 equivalentsNA72.7NA61.8NA86.0NA84.8Tax wedge at 50% of average wage (single person) (*)36.931.029.729.428.333.931.831.531.531.8Tax wedge at 100% of average wage (single person) (*)40.637.638.439.039.340.939.939.940.240.3Corporate income tax - effective average tax rates (1) (*)12.412.412.412.421.319.319.118.9Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)6.27.47.77.78.68.27.97.7Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)8.24.535.532.6VAT gap (% of VAT total tax liability, VTTL) (**)15.714.617.86.67.0LithuaniaEU-27Progressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
 
 
  
 
1.0% of GDP in 2010. Lithuania’s top statutory CIT 
rate  increased  from  15%  to  16%  at  the  start  of 
2025,  but  this  is  still  the  joint-fifth  lowest  in  the 
EU  (the  EU-27  average  top  statutory  CIT  rate  is 
around  21%).  The  country’s 
forward-looking 
effective CIT  rate (EATR)  was  12.4%  in  2023, the 
fifth  lowest  in  the  EU  (the  EU-27  average  was 
around 19%). While the top statutory CIT rate has 
decreased  from  29%  in  1995,  Lithuania’s  EATR 
was  the  same  in  2023  as  in  2002.  A  special 
favourable  regime  with  a  6%  tax  rate  exists  for 
some  of  the  smallest  companies  with  fewer  than 
10  employees,  which  can  act  as  a  distortive 
disincentive to the growth of firms (see Annex 2). 
Lithuania  also  has  special  economic  zones,  where 
it offers firms a tax holiday for the first 10 years 
in  which  they  conduct  business  and  a  50%  tax 
exemption  in  the  following  six  years.  Lithuania’s 
relatively low CIT yield is now driven more by the 
statutory  CIT  rate  than  by  tax  expenditures. 
Lithuania  has  chosen  to  delay  the  application  of 
some aspects of the EU’s Pillar 2 Directive, which 
implements  the  OECD’s  initiative  on  a  global 
minimum tax. 

as 

life 

sectors 

Lithuania  has  a  range  of  innovation-related 
tax  schemes  in  place,  but  the  take-up  and 
impact  of  these  schemes  is  patchy.  Lithuania 
was among the bottom third of EU Member States 
in  2023  for  total  R&D  expenditure,  business  R&D 
expenditure  and  public  support  for  R&D  (all 
expressed  as  a  percentage  of  GDP)  (see  the 
‘Innovation  to  Business’  annex  for  more  detail). 
This is despite Lithuania’s strengths in knowledge-
intensive 
sciences, 
such 
photovoltaics, and information and communication 
technologies.  The  country  has  a  range  of  tax 
provisions  to  support  research  and  innovation, 
including  an  R&D  cost  allowance,  an  ‘IP  box’  and 
accelerated depreciation, but these provisions may 
not be especially effective. Take-up of the various 
R&D tax incentives is low, especially among small, 
innovative  start-ups  that  are  helping  to  drive  the 
catch-up  of  Lithuania’s  economy  with  its  more 
developed peers. In Lithuania, general tax rules are 
beneficial for venture-capital and other investment 
entities. The income, including dividends and other 
taxable  profits,  of  collective  investment  vehicles, 
venture-capital 
private-equity 
vehicles is exempt from CIT (unless the income is 
received from entities registered in tax havens, or 
is derived from investments in tax havens). 

vehicles 

and 

fiscal impact of EUR 542 million once fully coming 
into force. The package includes measures to unify 
the  personal  income  tax  rates  across  different 
sources  of  income,  to  raise  the  corporate  income 
tax  (CIT)  rate  by  a  further  1  pp,  to  broaden  the 
increase  the 
recurrent  property  tax  base,  to 
reduced  value-added  tax  rate  from  9%  to  12% 
and  cease  applying  a  reduced  rate  to  central 
heating and firewood, and to introduce new taxes 
on  non‐life 
insurance  premiums  and  sugary 
beverages. 

is 
Lithuania’s  business-taxation  system 
viewed  as  attractive  for 
investment  by 
various  international  rankings.  According  to 
the IMD World Competitiveness Ranking for 2023, 
Lithuania  ranks  32nd,  a  slight  drop  (i.e.  a  slight 
decline  in  competitiveness)  from  29th  in  the 
previous year. However, Lithuania ranks second in 
the Tax Complexity Index (TCI) (i.e. Lithuania has a 
relatively simple tax system for businesses), which 
comprehensively  measures  the  complexity  of 
countries’  CIT  systems  faced  by  multinational 
corporations.  Tax-compliance  costs  for  SMEs  in 
Lithuania  are  less  than  the  EU  average.  As 
discussed  in  the  ‘Making  Business  Easier’  annex, 
these low compliance costs are part of Lithuania’s 
generally 
regulatory 
environment.  Estimated  overall  tax-compliance 
costs  are  below  the  EU  average,  as  are  CIT 
compliance  costs,  although  VAT  compliance  costs 
are slightly above the EU average. 

business-friendly 

quite 

Graph A2.1: Tax revenue shares in 2023 

Source: Taxation Trends Data, DG TAXUD 

Lithuania raises relatively little CIT revenue, 
although  this  is  slowly  increasing.  In  2023, 
Lithuania’s  CIT  revenues  were  equivalent  to  2.7% 
of GDP. While this remains below the EU average, 
it was an increase of 0.4 pps compared with 2022, 
and  well  above  an  exceptionally  low  CIT  yield  of 

35 

51.226.921.951.133.715.3Tax revenue shares in 2023, Lithuania (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital 
     
(ii) 

These 

actions 

include: 

receipts; 

administration. 
(i) 
digitalisation  projects;  (ii)  improving  IT  tools  such 
as  taxpayer  risk-profile  assessment; 
(iii)  the 
automatic  collection  of  data  on  transactions;  and 
(iv)  training  to  improve  the  skills  of  tax  and 
customs  specialists.  Lithuania  is  well  advanced  in 
the  automated  pre-filling  of  tax  returns  for 
personal-income-tax  and  CIT  returns  by  using  a 
national  electronic  declaration  system.  A  number 
of steps have been taken to reduce the size of the 
shadow  economy  and  make  tax  administration 
more efficient. These steps include measures to: (i) 
limit  cash 
introduce  electronic 
transactions; 
(iii)  regulate  the  sale  of  used 
vehicles;  and  (iv)  track  alcohol  sales.  Tax  arrears 
continued to decline in 2022, falling by 3.7 pps to 
the equivalent of 4.5% of total net revenue. This is 
significantly  below  the  EU-27  average  of  32.6%, 
although that EU average is distorted by very large 
values  in  a  few  Member  States.  Lithuania’s  VAT 
gap  (the  gap  between  revenues  actually  collected 
and  the  theoretical  tax  liability)  fell  sharply  in 
recent years to 14.6% in 2022, though that is still 
more than double the EU average. VAT compliance 
appears  to  have  improved  most  in  the  sectors  of 
the  country’s  economy  where  it  was  previously 
weakest.  The  preliminary  forecast  for  the  2023 
VAT  gap  suggests  a  deterioration  to  17.8%,  but 
this is based on partial information and should be 
interpreted with caution. Lithuania has a relatively 
low  number  of  mutual-agreement-procedure 
cases,  indicating  that  the  Lithuanian  tax  system 
does not have major issues in this respect. 

Lithuania  has  reduced  the 
labour  tax 
wedge(44) in recent years, especially at lower 
earnings  levels.  Graph  A2.2  shows  that  the 
labour-tax wedge for Lithuania in 2023 was lower 
than  the  EU  average  for  all  earnings  levels.  In 
particular,  the  tax  wedge  for  single  workers 
earning 50% of the average wage decreased from 
36.9%  in  2010  to  28.3%  in  2024,  below  the  EU 
average  of  31.8%  (see  also  Table  xx).  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 
people  at  the  same  wage  level).  In  recent  years, 
the  ability  of  the  Lithuanian  tax-and-benefit 
system to reduce the high level of market-income 
inequality (as measured by the system’s ability to 
reduce  the  Gini  coefficient)  has  been  increasing 
and  was  at  the  EU  average  in  2023  (see  Table 
A13.1). All dividend income in Lithuania is taxed at 
15%,  which  is  slightly  below  the  top  rate  of 
capital-gains  tax  of  20%  and  well  below  the  top 
income-tax  rate  of  32%.  Average  effective  tax 
rates  for  labour  are  somewhat  higher  than  those 
for capital.  

Graph A2.2: Tax wedge for single and second 
earners, % of total labour costs, 2024 

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

Lithuania  is  making  progress  in  increasing 
tax  compliance  and  the  effectiveness  of  its 
tax  administration.  Through  its  RRP,  Lithuania 
has taken a range of actions to strengthen its tax 

(44)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
social-security 
taxes  and  employee  and  employer 
contributions  net  of  family  allowances,  expressed  as  a 
percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

36 

28.333.939.340.633.92025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - LTSingle earner - EU averageSecond earner -  LTSecond earner -  EU average 
     
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

the  moderate 

Lithuania  is  a  moderate  innovator  with  fast 
innovation  growth,  but  R&D  investment  has 
stagnated, and the public research system is 
fragmented. Over the last  decade, Lithuania has 
seen  its  position  in  the  European  Innovation 
Scoreboard 
itself  as  a 
improve,  establishing 
moderate  innovator.  While  its  performance  has 
increased  by  more  than  the  EU  average  since 
2017  (+16.3%  vs  +10%) (45),  it  is  still  below  the 
average  of 
innovator  group. 
Lithuania’s  R&D  intensity  remained  unchanged 
from  2022  to  2023  (at  1.05%  of  GDP),  falling 
short of its own target of 1.5% of GDP for 2024. 
Together 
the 
fragmentation of the public science base locks the 
country  in  lower  scientific  performance  stratum 
and low levels of science-business linkages. While 
the  start-up  ecosystem 
is  rapidly  expanding, 
Lithuania  shows  only  limited  dynamism  when  it 
comes  to  the  digitalisation  of  SMEs  and  the 
adoption  of  advanced  technologies  by  enterprises 
in general. 

underfinancing, 

with 

its 

Science and innovative ecosystems 

for 

for 

base 

smart 

public 

research 

Lithuania’s 
is 
underfunded  and  fragmented,  hampering  its 
performance. In 2023 public expenditure on R&D, 
at  0.61%  of  GDP,  increased  slightly  from  its 
historical low of 0.52% in 2022. For 15 years, R&D 
expenditure  fluctuated  around  similar  values 
proportional  to  the  absorption  of  cohesion  funds. 
Allocations 
research  and 
strengthening 
innovation,  digitisation,  SME  competitiveness  and 
skills 
to 
EUR 884 million  in  total  for  2021-2027.    These 
investments,  however,  are  not  maintained  with 
stable  national  funding.  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.  Allocating  a  substantial  part  of 
the 
additional  resources  to  the  public  science  base 
would  help  tackle  the  issue  of  underfunding. 
Furthermore,  inadequate  funding  combined  with 
structural  inefficiencies  leads  to  a  low  quality  of 

specialisation  amount 

scientific production, as measured by the share of 
scientific  publications  within  the  top  10%  most 
cited  publications  worldwide  as  a  percentage  of 
total publications. Even if Lithuania’s score on this 
indicator  has  increased  nearly  threefold  over  the 
last  decade,  it  is  still  well  below  the  EU  average 
(6.4% vs 9.6%). 

The  network  of  universities  and  colleges 
lacks  critical  mass  to  reach  excellence. 
Lithuania  saw  a  first,  largely  successful  wave  of 
voluntary  university  consolidation  from  2010  to 
2021.  Further  consolidation  of  the  university 
network is needed to improve its performance, i.e. 
raise  the  quality  of  scientific  production  and 
increase  its  contributions  to  the  economy.  Given 
Lithuania’s  geography  and  small  size,  it  has  been 
recommended  to  continue  scaling  down  the 
number  of  universities  and  colleges,  with  smaller 
ones  potentially  being  regrouped  under  a  joint 
leadership  or  becoming  subsidiaries  of  larger 
institutions (46).  In  2023,  in  line  with  its  recovery 
and resilience plan (RRP), Lithuania set  up  a legal 
framework 
higher-education 
institutions  calling  for  voluntary  reorganisation 
and  mergers  amongst  universities,  however, 
without allocated funding for this process. To date 
no  universities  have  announced  any  intention  to 
merge.  Another  RRP  scheme  which  provides 
funding for the reorganisation of colleges is being 
implemented  and  its  impact  remains  to  be  seen 
(see Annex on education and skills). 

for  merging 

Business innovation 

Business  innovation  strengthened  over  the 
past  decade  but  seems  to  have  stalled  in 
recent  years  and  remains  very  low.  Business 
expenditure on R&D as a percentage of GDP more 
than  doubled  between  2013  and  2020,  but  then 
stagnated.  In  2023  it  even  decreased,  falling  to 
0.43%,  more  than  three  times  lower  than  the  EU 
average. In terms of increasing innovation output, 
Lithuania  improved  the  most  among  EU  Member 
States  over  the  last  decade  (from  one  of  the 
lowest  levels  in  2012)  as  measured  by  the 

(45)  European Innovation Scoreboard (EIS), country profile 

Lithuania. 

(46)  OECD Economic Surveys: Lithuania, 2020, p. 94. 

37 

 
 
 
 
 
 
innovation output indicator (47), but still scores well 
below the EU average on this composite indicator. 
Lithuania  performs  particularly  poorly  in  terms  of 
patent  applications (48).  The  new  government  has 
set  itself  a  goal  of  increasing  business  R&D 
investment to 1% of GDP by 2030. 

Graph A3.1: R&D investment as a percentage of 
GDP, 2013-2023 

Source: Eurostat 

Business-science  linkages  are  weak  overall, 
hampered  by  fragmentation  of  the  public 
science  base.  Over  the  past  decade  the  rate  of 
public-private  scientific  co-publications,  as  a 
percentage  of  the  total  number  of  publications, 
has  remained  largely  stable,  at  one  of the  lowest 
levels  in  the  EU (49).  Most  collaboration  projects 
happen in the established sectors of life sciences, 
photovoltaics  and 
ICT.  The  national  missions 
aiming  to  foster  breakthrough  innovation  have 
been launched under the RRP, and three consortia 
are  implementing  ambitious  plans  to  develop 
frontier  science  and  technologies  and  to  create 
start-ups  and  unique  products.  However,  these 
missions  fail  to  exploit  a  large  part  of  the 
Lithuanian  scientific  potential  as,  due  to  the 
fragmented  science  base,  many  universities  are 
not part of the selected consortia. Consolidation of 
the  way  for  better 
universities  could  pave 
exploiting  the  country’s  scientific  potential  for 
science-business  cooperation  and  breakthrough 
innovation.  Cohesion  funds  support  public-private 
innovation 
strengthen 
cooperation 

the 

to 

(47)  JRC, Tracking country innovation performance: The Innovation 

Output Indicator 2023 (IOI), p. 7. 

(48)  Eurostat, Patent applications filed under PCT per billion GDP 
(in PPS €) 0.6 in 2021 vs 3.4 EU average, places 22nd in EU-
27. 

ecosystem,  but  Lithuania  does  not  have  a 
dedicated national cluster policy (50). 

(RCL)  and 

long  delays 

Lithuania’s  research  and  innovation  support 
system  has  improved  significantly  but  still 
suffers  from  shortcomings.  Several  agencies 
and  institutions  under  the  Innovation  Agency  (IA) 
and  the  national  promotion  bank  ILTE  have  been 
successfully  consolidated.  However,  parts  of  the 
support  system, including the  Research Council  of 
Lithuania 
the  Central  Project 
Management  Agency  (CPMA),  is  still  fragmented 
and has inefficiencies. In particular, RCL applicants 
report  experiencing 
for  some 
programmes  and  not  receiving  services  of  the 
same  quality  as  those  provided  by  the  IA.  This  is 
because  the  RCL  lacks  administrative  and  expert 
capacity and shares responsibilities with the CPMA 
throughout  the  funding  cycle,  from  call  design  to 
project selection and funding. If the IA and the RCL 
are  to  become  fully  functional  and  efficient  one-
stop shops, delivering high-quality support to both 
businesses and researchers, it would be beneficial 
to strengthen administrative and expert capacity in 
the RCL in the short term, and to further adjust the 
institutional set-up post-2027 to allow the reform 
process  to  be  completed.  Furthermore,  there  is  a 
shortage  of  independent  monitoring  and  analysis 
of  research  and  innovation  policy,  which  impedes 
evidence-based  policymaking.  The  Ministry  of 
Education,  Science  and  Sports  (MoESS)  is  in  the 
process  of  establishing  its  own  unit  for  policy 
monitoring  and  analysis,  as  the  RCL 
is  not 
performing  this  function,  and  the  Strata  agency 
has  paused 
research  and 
its  analytics  on 
innovation. 

and 

innovations 

Lithuania  promotes  the  development  of 
defence 
dual-use 
technologies. Swift and efficient interinstitutional 
cooperation  between 
the  Ministries  and  the 
Lithuanian Armed Forces has created a favourable 
environment  for  defence  innovation  companies. 
Besides  having  access  to  NATO  instruments  such 
as  the  defence  innovation  accelerator  DIANA  and 
the NATO Innovation Fund, Lithuania has set up a 
multitude  of  national  initiatives,  including  the 
‘Miltech  Lab’  and  ‘Miltech  Sand  Box’  for  problem-
solving and testing of services; defence innovation 
vouchers to promote the development of advanced 
refine 
creative  workshops 
technologies; 

to 

(49)  Eurostat, value 5.8 in 2023, places 25th in the EU. EU 

(50)  European Cluster Collaboration Platform, 

average is 7.7. 

ECCPfactsheet_Lithuania_2023_Final.pdf, p. 19. 

38 

00.20.40.60.811.21.41.62013201520192020202120222023LT public R&D %GDPLT business R&D %GDPEU average public R&D % GDPEU average business R&D %GDP 
          
 
 
the  military, 

challenges  and  identify  unmet  needs;  and  the 
‘Miltech Academy’ to boost the defence innovation 
capacity  of 
law  enforcement, 
businesses  and  scientists.  The  MILInvest  fund 
continues  to  implement  acceleration  programmes 
for  military  and  dual-use  technology  start-ups. 
Lithuania  also  supports  the  development  of 
strategic  defence  and  security 
technologies 
through  2021-2027  cohesion  funding,  under  the 
new  priority  ‘strategic  technologies  for  Europe 
platform (STEP)’. 

Despite  showing  some  potential,  Lithuania 
still lags behind on the digitalisation of SMEs 
and the take-up of advanced technologies by 
enterprises 
in  general.  Only  66.3%  of 
Lithuanian  SMEs  have  at  least  a  basic  level  of 
digital  intensity,  well  below  the  EU  average  of 
72.9%.  Although  the  proportion  of  Lithuanian 
companies having adopted AI has almost doubled, 
from  4.9%  in  2023  to  8.8%  in  2024,  this  is  still 
well  below  the  European  average  of  13.5%.  The 
adoption  of  data  analytics  and  advanced  cloud 
services  are  also  far  from  the Digital Decade  EU-
level  target  of  75%  adoption  by  2030.  National 
measures  and  investment  under  the  RRP  aim  to 
promote  the  adoption  and  development  of  digital 
technologies, 
involving  three  European  Digital 
Innovation  Hubs  (one  of which, the  EDIH  VILNIUS, 
specialises 
computing). 
in  high-performance 
Moreover, a EUR 15 million initiative was launched 
in  2023  to  fund  start-ups  and  spin-offs  in  the 
Vilnius  region,  focusing  on  artificial  intelligence, 
blockchain 
robotics  process 
automation. 

technology,  and 

Financing innovation 

The start-up ecosystem continues to expand, 
but  many  SMEs  struggle  to  access  finance, 
hampering their ability to innovate and grow. 
Lithuania  has  created  a  favourable  environment 
for  start-ups.  In  2023  it  recorded  the  fastest 
growth  in  the  Baltic  region,  catching  up  with 
regional  leader  Estonia.  The  combined  business 
value  of  Lithuanian  start-ups  grew  sevenfold 
between  2018  and  2023,  reaching  double  the 
average of the wider Baltic region and Central and 
Eastern  Europe  (CEE) (51).  An  adjusted  R&D  tax 

scheme, 

incentive 
talent  development  and 
improved  access  to  finance  could  ensure  further 
growth.  Lithuanian  SMEs  report  difficulties  in 
accessing  finance  twice  more  often  than  the  EU 
average,  hampering  their  ability  to  innovate  and 
scale  up.  This  problem  is  particularly  acute  for 
young 
innovative  SMEs  with  a  high  growth 
potential (52). (See the annex on access to finance). 

is 

The  availability  of  local  private  equity  and 
venture  capital 
improving  as  capital 
funding  sources  diversify,  reducing  reliance 
on  government  funding.  In  the  period  from 
2018 to 2023 government funding still accounted 
for  28%  of  capital  raised,  but  by  2023  the  rate 
had  decreased  to  20%.  In  the  same  year,  Baltic 
private equity and venture capital funds invested a 
total  of  EUR 111 million  in  Lithuanian  companies, 
by means of 104 transactions. 

Innovative talent 

Lithuania  experiences  a  shortage  of  talent 
and  has  taken  broad  initiatives  to  address 
this  issue.  Lithuania  is  still  among  the  leading 
countries  in  the  EU  as  regards  the  share  of 
population aged 25-34 with tertiary education, but 
the  rate  of  new  graduates 
in  science  and 
engineering  keeps  diminishing.  At  the  same  time, 
however,  the  number  of  graduates  increased  in 
the  field  of  computing.  Talent  shortage 
is 
identified  as  a  key  impediment  across  the  board, 
from  start-ups  to  large  companies.  Lithuania 
addresses  this  by  carrying  out  broad  talent 
development  programmes,  from  digital  and  AI 
entrepreneurship  programmes 
to 
scholarships  and  business  development  labs  for 
university students and young adults. Recently, the 
MoESS started implementing an ambitious reform 
on  researchers’  careers,  which  is  already  showing 
the  salary  of 
positive  quantitative  metrics: 
researchers has increased to 150% of the national 
median,  reaching  a  government  goal  set in  2021, 
the career path has been adapted in line with the 
EU  framework  for  research  careers,  and  efforts 
are underway to create  a favourable environment 
for  PhD  students,  aimed  at 
increasing  their 
numbers by 10%. 

in  schools 

(51)  The Lithuanian startup ecosystem 2023 review | 

Dealroom.co. 

(52)  OECD, Economic Policy Reforms 2023: Going for Growth, 

p. 150. 

39 

 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source: Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

is  put  on 

Public  Financial  Education  Action  Plan,  further 
focus 
improving  entrepreneurship 
education,  which  includes  developing  a  common 
university  course  on 
literacy  and 
entrepreneurship  and  developing  methodological 
tools for teachers. 

financial 

Entrepreneurship  education  has 
improved 
significantly,  and  notable  efforts  have  been 
made to continue its development. Since 2008, 
entrepreneurship  education  has  been  integrated 
more  extensively  into  the  educational  framework 
with  the  introduction  of  the  “Economics  and 
Entrepreneurship”  class  and  with  successful 
revisions  of 
curricula.  Entrepreneurship 
education  score  has  improved  from  3.33  in  2011 
to 4.7 in 2023 (53). Additionally, in the 2024–2028 

the 

(53)  World Bank (2025). GEM National Expert Survey: Basic school 

entrepreneurial education and training. 

40 

R&D intensity (gross domestic expenditure on R&D as % of GDP)0.90.91.121.11.051.05:2.243.45Public expenditure on R&D as % of GDP0.660.570.60.560.520.61:0.720.64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 2.44.75.76.4:::9.612.3Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population4.74.45.15.45.34.9:4.2:International co-publications as % of total number of publications34.945.949.651.248.751.4:55.939.3Business enterprise expenditure on R&D (BERD) as % of GDP0.240.330.530.540.530.43:1.492.7Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.150.270.470.460.41::0.40.3Researchers employed by business per thousand active population0.91.82.12.42.72.2:5.7:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)0.80.50.50.60.4::2.8:Employment share of high-growth enterprises measured in employment (%)19.619.5416.11::::12.51:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::63.7:66.2772.91:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%):::::40.53:33.17:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%):::27.69:33.6:38.86:Artificial intelligence adoption% enterprises (EU Digital Decade target by 2030: 75%):::4.45:4.868.7613.48:Public-private scientific co-publications as % of total number of publications4.35.55.75.65.15.8:7.78.9Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0890.0510.0430.0560.036::0.050.02Total public sector support for BERD as % of GDP0.0920.0650.1710.2210.171::0.2040.251 R&D tax incentives: foregone revenues as % of GDP0.0160.0230.0370.050.0510.039:0.1020.141BERD financed by the public sector (national and abroad) as % of GDP0.080.0420.1340.1710.120::0.1000.110Venture capital (market statistics) as % of GDP, total (calculated as a 3-year moving average)0.0090.0110.0150.0410.0740.074:0.078:Seed stage funding share (% of total venture capital)17.814.944.629.713.714.7:7.3:Start-up stage funding share (% of total venture capital)56.380.136.851.932.939.9:44.0:Later stage funding share (% of total venture capital)25.9518.518.453.445.4:48.7:New graduates in science and engineering per thousand population aged 25-3425.217.314.913.711.9::17.6:2023EU average (1)USA2024Headline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesPublic support for business innovationInnovation outputsDigitalisation of businessesAcademia-business collaborationFinancing innovationInnovative talent20222021Lithuania201220172020 
 
 
          
 
ANNEX 4: MAKING BUSINESS EASIER 

environment 

Lithuania  has  made  progress  in  creating  a 
but 
business-friendly 
addressing  skills  mismatches  and  financial 
constraints remain key challenges. Investment 
and business activities continue to be constrained 
by  difficulties  in  accessing  finance,  despite  the 
easing monetary policy environment. Lithuania has 
a  high-quality 
for 
regulatory 
entrepreneurs,  but  entrepreneurial  activity  has 
recently  declined  due  to  a  decreasing  share  of 
adult  entrepreneurs.  Participation 
in  the  EU’s 
unitary  patent  system  and  public  procurement 
reforms are opportunities for further growth. 

environment 

Economic framework conditions 

its  economy,  but 

inflation  have  weighed  on 

Lithuania’s  business  landscape  has  been 
in  recent 
challenged  by  several  factors 
years,  but  investment  conditions  developed 
more  favourably  in  2024.  Lithuania’s  services 
and  manufacturing  sector  have  been  hit  hard  by 
the consequences of the COVID-19 pandemic and 
Russia’s  full-scale  invasion  of  Ukraine.  Supply-
chain  disruptions,  sluggish  external  demand  and 
very  high 
the 
recent 
competitiveness  of 
developments  point  towards  a  strong  recovery.  
High  nominal  wage  growth,  accompanied  by  a 
strong decline of inflation, is leading to an increase 
in  domestic  demand.  External  developments  have 
supported an upswing in exports of manufactured 
goods  and  services  in  the  transport  and  logistics 
sector (54),  except  for  certain  sub-sectors  such  as 
rail  freight  transport  and  tourism,  where  negative 
trends  persist.  The  share  of  firms  reporting  that 
their perceived competitiveness outside the EU has 
improved rose from 4.3% in Q1 2023 to 10.4% in 
Q4 2024 (55).  According  to  survey  data,  firms  in 
Lithuania’s 
a 
significant increase in both perceived and expected 
demand in 2024. Moreover, coming from very low 
levels, the manufacturing sector reported a strong 
increase in expected demand since 2023 (56). 

experienced 

services 

sector 

Despite  these  positive  developments,  the 
non-availability  of  skilled  staff  and  skills 
investment. 
mismatches  are  hampering 
in 
increase 
Unemployment  has  continued  to 

Lithuania,  rising  from  6.9%  in  2023  to  7.5%  in 
2024  (see  the  Labour  Market  Annex).  This  was 
accompanied  by  an  increase  in  the  vacancy  rate 
(measured as the ratio of job vacancies to overall 
available  jobs),  which  is  now  close  to  its  all-time 
high (1.9%). The vacancy rate is still below the EU 
average  (2.3%)  but  has  considerably  increased 
since  2020 (when  it  was 1.3%) (57).  This  points  to 
skills  mismatches  and  skills  shortages  which  are 
of  concern  for  Lithuanian  firms.  According  to  the 
EIB  Investment  Survey,  76%  of  firms  report  the 
non-availability  of  rightly  skilled  staff  as  an 
impediment  to  long-term  investment.  It  is  below 
the  EU  average  of  77%  but  has  stagnated  at  a 
high level (72% in 2023, 75% in 2022). It can also 
be  seen  in  industry,  and  especially  in  some  key 
sectors  such  as  furniture  manufacturing,  food 
processing  and  telecommunications  where  the 
labour market has tightened considerably in recent 
years  with  31.7%,  28.4%  and  25%  of  firms 
reporting  in  2024  that  a  lack  of  labour  was 
limiting  their  production  (in  2023: 8.2%,  18.5% 
and 12%) (58). 

impediment 

resources  as  an 

Investment  and  business  activity  remain 
constrained  by  difficulties 
in  accessing 
finance.  The  monetary  policy  environment  is 
easing,  but  Lithuanian  firms  remain  financially 
constrained  and  51%  of  firms  cite  a  lack  of 
financial 
to 
investment  (see  the  Access  to  Finance  Annex). 
22%  of  Lithuanian  enterprises  reported  that  the 
general  availability  of  finance  had  deteriorated, 
but the share of financially constrained firms was 
among  the  highest  in  the  EU  (SAFE  2024).  This 
affects  key  sectors  of  the  economy,  such  as  the 
transport and logistics sector. Companies from the 
land 
storage/warehousing 
subsectors  are  suffering  particularly  heavily  from 
financial  constraints.  In  Lithuania,  37%  and  16% 
of  these  firms  reported  that  lack  of  financing  is 
limiting  their  business  activities  (the  EU  averages 
were  13%  and  16%  respectively).  Manufacturing 
industries  such  as  food  products;  computer, 
electronic  and  optical  products;  and  rubber  and 
plastic  products  stated  that  financial  constraints 
were  limiting  production  (15%,  14%  and  18% 
respectively;  the  EU  averages  were  5%,  5%  and 
4%) (59). 

transport 

and 

(54)  European Commission, Autumn Forecast, 2024. 
(55) ECFIN Business and Consumer Survey. 
(56) ECFIN Business and Consumer Survey. 

(57) Eurostat. 
(58) ECFIN Business and Consumer Survey. 
(59) ECFIN Business and Consumer Survey. 

41 

 
 
 
 
 
is 

its 

Lithuania 
digital 
developing 
infrastructure  to  meet  EU  European  targets, 
but  regional  disparities  are  hampering  this. 
According to the EIB Investment Survey, only 34% 
of businesses mention digital infrastructure as an 
obstacle to long-term investment (the EU average 
is  41%).  Lithuania  excels  in  5G  deployment  but 
needs to enhance fibre broadband coverage, which 
is  currently  being  implemented  under  the  RRP 
Lithuania should particularly increase its efforts to 
roll out gigabit connectivity in rural areas in order 
to  meet  EU  targets  by  2030.  Cybersecurity 
awareness  in  enterprises  has  improved,  and  the 
National  Cybersecurity  Development  Programme 
has been approved in order to combat cybercrime 
and enhance education, cooperation and resilience. 

Graph A4.1: Making Business Easier: selected 
indicators. 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
Sources: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

Regulatory and administrative 
barriers 

Lithuania  is  building  up  its  competitiveness 
in 
regulatory 
environment, but increased monitoring would 

business-friendly 

a 

in 

boost enforcement efficiency. According to the 
OECD’s 2024 edition of the economy-wide Product 
Market  Regulation  indicator,  Lithuania  is  the  best 
performer  among  OECD  countries.  Lithuania 
performs  particularly  well 
the  areas  of 
administrative  and  regulatory  burden  for  limited 
liability  companies  and  the  obtaining  of  licences 
and permits (ranking 5th and 1st respectively) (60). 
However,  the  real  situation  on  the  ground  might 
differ from the legal situation which is analysed in 
the  PMR.  According  to  the  EIB  Investment  Survey, 
business and labour regulation in Lithuania is less 
favourable  for  companies  than  in  previous  years. 
62%  and  58%  of  firms  report  these  fields  as  an 
impediment  to  investment  (the  EU  averages  are 
66%  and  62%  respectively).  The  percentage  of 
regulation  as  an 
firms 
impediment  to  investment  is  still  below  the  EU 
average but has increased by 6 percentage points. 
The  respective  share  of  firms  reporting  labour 
regulation  as  an  impediment  to  investment  has 
increased  by  15%.  This  could 
indicate  a 
discrepancy between the legal situation in principle 
and actual enforcement on the ground, so further 
investigation may be required.  

reporting  business 

reduce 

shocks 

that 
in 

According  to  the  Global  Entrepreneurship 
Monitor,  Lithuania  has  a  high-quality 
regulatory  environment  for  entrepreneurs, 
but  entrepreneurial  activity  has  recently 
dropped.  With  11  out  of  13  Entrepreneurial 
Framework Condition scores increasing from 2022 
to  2023,  Lithuania  has  a  strong  support  system 
for entrepreneurs and a business support package 
is 
to 
energy  price 
its 
complemented  by  ambitious  measures 
(RRP) (61).  Some 
recovery  and  resilience  plan 
challenges  remain,  however,  including  unequal 
access  to  resources  for  women  entrepreneurs,  a 
decline  in  entrepreneurial  activity  in  2023  and  a 
significant drop in male entrepreneurship. The ratio 
of male entrepreneurs to the total male population 
decreased  from  16.6%  to  6.1%  in  2023 (62). 
Lithuania  also  performs  poorly  when  it  comes  to 
the  availability  of  and  access  to  entrepreneurial 
finance  (see  the  Innovation  to  Business  Annex). 
Another  weak  spot  is  a  lack  of  entrepreneurial 
education in schools (see the Education and Skills 
Annex).  Lithuania  nevertheless  still  ranks  4th  out 
of  49  economies  in  the  National  Entrepreneurial 

(60) OECD PMR 2024. 
(61) Entrepreneurship in Lithuania - GEM Global Entrepreneurship 

Monitor. 

(62) GEM Global Entrepreneurship Monitor. 

42 

52.215.36.650.521.947.916.61041.624.50102030405060from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27LT 
     
 
Context 
supportive environment for entrepreneurs. 

Index,  which 

indicates  a  generally 

Tax  compliance  costs  are  close  to  the  EU 
average,  but  corporate  income  taxes  might 
discourage  the  smallest  businesses  from 
investing.  The  estimated  average  total 
enterprise  tax  compliance  cost  is  between 
EUR 10 000  and  EUR 15 000,  which  amounts 
to 
roughly  1.5%-3%  of  turnover.  The 
administrative  burden  of  tax  compliance  for 
Lithuanian  SMEs  is  slightly  below  the  EU  average 
(see the  Taxation  Annex) (63).  However, Lithuania's 
tax  system  might  negatively  affect  the  corporate 
sector (particularly SMEs) by creating incentives to 
report  revenue  below  EUR  300 000  to  avoid  a 
higher  tax  rate,  thereby  reducing  not  only  tax 
revenue  but  also  business  growth (64)  (see  the 
Taxation Annex). 

Single market 

Lithuania  is  well  integrated  into  the  single 
market  and  is  compliant  in  transposing  EU 
Single  Market  directives 
into  national 
legislation. Trade integration in Lithuania is high 
and  amounts  to  roughly  half  of  GDP.  Lithuania 
performs  well  when  it  comes  to  transposing  EU 
single  market  directives,  having  a  deficit  of  only 
0.3%  and  being  among  the  best  performing 
Member  States  for  this  indicator  (the  EU  average 
is 0.8%). It also ranks 4th on conformity with only 
0.4%  of  single  market  directives  being  wrongly 
transposed (the EU average is 0.9%). Lithuania has 
a moderate number of single market infringement 
cases and their average duration is close to the EU 
average.  In  2024,  Lithuania  managed  to  resolve 
100%  of  the  SOLVIT  cases  (6)  it  handled  as  the 
lead  centre,  which  was  above  the  EU  average  of 
84.9%.  

Fewer  professional  services  are  subject  to 
stricter  regulation  than  in  other  EU  Member 
States. According to the OECD, regulatory barriers 
for  lawyers  and  architects  are  higher  in  Lithuania 
than  in  comparable  countries.  The  barriers  which 

are  in  place  range  from very  strict incompatibility 
rules  and multidisciplinary  restrictions (e.g. a total 
ban  on  multidisciplinary  activities  for  lawyers)  to 
multiple 
for 
architects (65).  Overall,  Lithuania  applies  a  more 
competition-friendly  approach  when  it  comes  to 
entering the Lithuanian service sector (66). 

requirements 

certification 

Public procurement  

require 

Since  2023,  Lithuania  has  followed  an 
ambitious  public  procurement  strategy  that 
will 
close  monitoring  because 
competition  on  the  market  can  be  improved. 
In  2023,  37%  of  contracts  were  awarded  after 
receiving  only  a  single  bid.  This  was  higher  than 
the  EU  average  of  29%.  6%  of  contracts  were 
awarded  without  public  tender  (the  EU  average 
was  8%) (67).  Lithuania 
is  making  efforts  to 
address  the  issue  and  has  implemented  several 
measures to improve competition and attract new 
(82%  of  public 
suppliers,  especially  SMEs 
procurement  contracts  were  awarded  to  SMEs  in 
2023 (68).  Lithuania  has  initiated  a  procurement 
centralisation reform that requires procurement to 
the  Central  Purchasing 
through 
take  place 
Organisation 
(CPO)  e-catalogue,  which  covers 
health  sector  contracts  and  other  central 
government  contracts.  By  mid-2023,  centralised 
public  procurement  amounted  to  34.6%  of  the 
overall  procurement  volume,  a  sharp  increase 
in  2020 (69).  Lithuania  has  also 
from  10% 
established  a  national  certification  framework, 
introduced  new  training materials  and launched  a 
to 
public  procurement  master’s  programme 
enhance 
public 
procurers. Moreover, Lithuania has made progress 
in  Socially  Responsible  Public  Procurement, 
including  the  publication  in  2023  of  National 
Guidelines  on  the  subject,  and  the  launch  of  the 
Social  Procurement  Monitoring  Report  tool  in 
November  2024,  which  allows  for  tracking  the 
inclusion  of  social  criteria  in  public  procurement 
contracts. 

professionalisation 

the 

of 

(63) Tax  compliance  costs  for  SMEs  -  Publications  Office  of  the 

content/EN/TXT/PDF/?uri=CELEX:52021DC0385&rid=1 

EU. 

(64)  Scot,  Thiago;  Garriga  Pablo:  Corporate  Responses  to  Soze-
Based  Tax  Rates  in  Lithuania.  World  Bank  Policy  Research 
Working Paper, 2023. 

(66) Lithuania_PMR country note. 
(67) Single Market Scoreboard 2024. 
(68) Procurement Monitoring Report template. 
(69) OECD Public Procurement in Lithuania, 2024. 

(65) eur-lex.europa.eu/legal-

43 

 
 
 
implementation  needs 

 These  reforms  are  ambitious  and  promising,  but 
closely 
their 
monitored.  Lithuania  will  benefit  from  a  well-
functioning CPO, but it will be crucial to provide it 
with sufficient resources and capacity.  

to  be 

44 

 
Table A4.1:  Making Business Easier: indicators. 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**The 2024 data on single bids is provisional and subject to revision. Please note that approximately 18% of the total data is 
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of 
direct awards data is calculated without Romania. 
Sources: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports, (5) Intrum Payment Report, (6) SAFE survey, 
(7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space (PPDS). 

45 

POLICY AREA20202021202220232024EU-27 average8.821.226.99.96.610.011.721.925.814.217.820.21.32.01.92.01.92.35.97.66.15.612.313.4-78.278.078.1-78.8-78.278.078.1-64.0-33.390.198.9-89.3Regulatory environment21.122.420.313.521.924.515.711.912.313.4-15.617.810.617.318.7-15.1from public or private entities in the last 6 months52.252.850.659.2-from private entities in the previous or current quarter----52.247.9from public entities in the previous or current quarter----15.316.645.051.257.951.950.541.60.0360.0360.0360.0350.0380.0500.81.70.30.30.30.81.11.01.00.70.40.9100100-10010084.917.016.015.015.012.024.42830343744-1066657.0LithuaniaINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
 
 
 
      
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

The  Lithuanian  financial  sector  is  relatively 
small  compared  to  other  EU  countries  and 
concentration 
is  high.  Nevertheless,  most 
performance  indicators  of  banks  operating  in 
Lithuania  are  among  the  best  across  the  EU. 
Moreover,  the  persistently  low  savings  rate  of 
Lithuanian  households  reduces  the  availability  of 
funding  for  investment.  Local  businesses  tend  to 
use only a limited amount of external funding and 
for  this  they  rely  mainly  on  bank  intermediation 
rather  than  on  stock  and  bond  markets.  The 
local 
underdeveloped  capital  markets 
from 
investment  opportunities  and 
institutional and retail investors. However, with its 
numerous  policies  to  attract  foreign  investment 
and  nurture  homegrown  start-ups,  Lithuania  is 
the  most  start-up-friendly 
currently  among 
in  the  world.  The  participation  of 
countries 
domestic 
in  providing 
investors 
institutional 
funding 
for  start-ups  and  venture  capital 
investment  is  increasing  and  helps  to  diversify 
corporate  financing.  Recent  policy  initiatives  also 
aim to boost the degree of retail participation.  

reduce 
interest 

Availability and use of domestic 
savings 

The Lithuanian economy invests a part of its 
relatively high net savings abroad.  In the last 
decade,  the  private  savings  ratio,  net  of  fixed 
capital  consumption,  fluctuated  around  its  ten-
year  average  of  9.7%  of  GDP,  reaching  a 
maximum of 15.3% in 2020 (see Graph A5.1). The 
net  private  investment  ratio,  which  measures  the 
net  contribution  of  the  private  sector  to  capital 
accumulation  in  the  country,  was  a  bit  more 
volatile,  exhibited  a  ten-year  average  of  6.1%  of 
GDP  and  reached  a  maximum  of  13.2%  in  2022. 
At  the  same  time,  during  the  same  period  the 
government  budget  was  in  regular  deficit  that 
averaged  1%  of  GDP.  Thus,  the  positive  balance 
between net domestic savings and net investment, 
together  with  the  government  deficits,  resulted in 
net  lending  by  Lithuania  to  the  rest  of  the  world 
that  averaged  2.6%  of GDP,  with  a  peak  of  8.9% 
in 2020. The swing in 2022 to net borrowing from 
the rest of the world is expected to be temporary, 
as  it  was  driven  by  a  massive  increase  in  net 
imports  and  elevated  energy  prices. 
energy 
Lithuania experienced strong capital inflows during 
2022  which  largely  occurred  through  accelerated 
FDI and portfolio investments. 

46 

Graph A5.1: Net savings-investment balance 

Source: AMECO. 

in 

The  net  international  investment  position 
turned  positive  in  2024.  Between  2009  and 
2023,  the  net  international  investment  position 
(NIIP)  has  strengthened  almost  every  year, 
reflecting  an 
international 
improvement 
competitiveness.  As  of  Q3  2024,  total  assets  on 
foreigners reached 119.2% of GDP, while liabilities 
to foreigners stood at 117.9% of GDP, resulting in 
a NIIP equivalent to 1.3% of GDP (see Graph A5.2). 
The  accumulated  net  portfolio  investment,  which 
reached 14% of GDP as of Q3 2024, together with 
net other investments of 14.3% and accumulated 
foreign reserves of 7% of GDP counterbalanced a 
negative 
direct 
investment balance of 33%.  

accumulated 

foreign 

net 

Graph A5.2: International investment position 

Source: ECB. 

Structure of the capital markets and 
size of the financial sector 

Lithuanian  capital markets  remain relatively 
illiquid.  The  equity 
shallow, 
market 
terms  of 
capitalisation (5.9 % of GDP vs an EU  average of 

inactive  and 

is  extremely 

small 

in 

-15-10-50510152025302017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate saving, netPrivate saving, grossBorrowing from the rest of the world-200-100010020020172018201920202021202220232024-Q3% of GDPOther investment, LiabilitiesPortfolio Investment, LiabilitiesForeign Direct Investment, LiabilitiesOfficial reserve assetsOther investment, AssetsPortfolio Investment, AssetsForeign Direct Investment, AssetsNIIP 
 
  
  
 
 
69.3%  as  of  end  Q3-2024)  and  volumes  traded. 
The  liquidity  of  securities  traded  on  Nasdaq 
Vilnius,  AB  is  limited  while  the  debt  markets  in 
Lithuania are dominated by government securities. 
Local businesses tend to rely for external funding 
on  bank  intermediation  rather  than  attracting 
funding  through  stock  and  bond  issues  or  from 
alternative  sources.  This  results  in  few  local 
investment  opportunities, 
from 
institutional and retail investors, and therefore few 
local  opportunities to raise share capital. The lack 
of  market  activity  by 
investors 
reduces  demand  for  corporate  stocks  and  bonds. 
In  terms  of  the  international  market,  projects 
developed in Lithuania are of relatively small size, 
which makes  them  less  attractive to  international 
investors. 

institutional 

interest 

low 

development 

In  May  2022  the  Bank  of  Lithuania  set  out 
capital  market 
action 
guidelines  to  help  the  capital  markets  to 
grow.  They  set  out  concrete  measures  and 
recommendations  that  aim  to  make  the  capital 
markets more  attractive  for  domestic  and  foreign 
investors,  and  to  encourage  businesses  to  obtain 
alternative  financing  by  issuing  securities  and 
allowing  more  securities  to  be  listed  on  the  stock 
exchange.  There  is  also  a  need  to  tap  into  the 
unused  potential  of  pension  funds  (currently  90% 
of assets are invested abroad), e.g. by providing a 
wider  range  of  financial  market 
instruments 
traded  on  the  capital  markets.  Certain  key 
measures  have  already  been  adopted  but  not  all 
have fully matured yet. The Capital Market Council 
was  established 
in  January  2023,  bringing 
together  representatives  of  both  the  market  and 
the public sector.  

Lithuania’s monetary financial sector is very 
small  compared  with  the  EU  average  and 
concentration  is  high.  At  the  end  of  Q3-2024, 
banks’  total  assets  were  equivalent  to  88%  of 
GDP, significantly below the EU average of 248%. 
There  is  an  ongoing  concern  about  the  lack  of 
competition  in Lithuania’s banking  sector.  The top 
five MFIs represent more than 90% the sector, vs. 
an  EU  average  of  54%.  The  banking  sector  of 
Lithuania  is  dominated  by  subsidiaries  of  large 
Scandinavian  banks.  The  two 
largest  banks, 
Swedbank  AB  (70)  and  SEB  Bankas  (representing 

(70)  In October 2021, the ownership of the subsidiary banks in Estonia, 
Latvia and Lithuania was placed in the holding company Swedbank 
Baltics AS which is wholly owned by Swedbank AB, and which is 
under the supervision of the European Central Bank. 

47 

35%  resp.  26%  of  the  total  banking  sector),  are 
owned by their parent banks in Sweden. Revolut is 
the  third  largest  bank  with  18%  of  system-wide 
assets.  The  banks’  rapid  expansion  since  2019, 
together  with  its  business  model  based  almost 
exclusively  on  non-resident  EU  depositors  made 
the ECB assume direct supervision of Revolut Bank 
in  early  2024.  Another  stake  of  16%  belongs  to 
Luminor  Bank  with  a  headquarter  in  Estonia, 
owned  by  a  US  private  equity  fund  and  a 
Norwegian  bank.  Due  to  its  integration  with  the 
Nordic  and  Baltic  banking  systems,  the  financial 
on 
sector 
developments  in  parent  banks  and  their  strategic 
decisions.  Banks  and  other  monetary  financial 
institutions  continue  to  account  for  the  largest 
share (76%)  of the Lithuanian financial  market, a 
share  that  has  remained  largely  stable  over  the 
last couple of years. 

Lithuania 

depends 

partly 

of 

Graph A5.3: Capital markets and financial 
intermediaries in Lithuania 

Source: ECB, EIOPA, AMECO. 

is  still  considerably 

The  role  of  the  non-bank  financial  sector  in 
less 
the  economy 
important  as  compared  to  other  euro  area 
countries.  Total  assets  of  pension 
funds 
amounted to 11.5% of GDP at the end of 2024, vs. 
an  EU  average  of  23.4%  of  GDP.  The  Lithuanian 
insurance sector is also very small, with a share of 
total  assets  in  GDP  of  2.5%  as  of  Q3-2024  (vs. 
54.8% for the EU on average). In 2023, assets of 
institutions 
all 
increased,  especially  of  pension  and  investment 
funds. Assets managed by pension funds grew by 
27%.  This  increase  was  driven  by  favourable 
conditions  on  the  financial  markets.  Although  the 
number  of  registered  crypto-asset  companies  in 
Lithuania is  relatively  high  compared to  European 
peers, only few of them are profitable. 

types  of  non-bank 

financial 

Non-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIs​Insurance corporationsInvestment funds0102030405060708090100     Listed equity                           Bonds                        Assets by sector% of GDP 
 
   
Resilience of the banking sector 

Lithuania’s  small  banking  sector  remains 
resilient,  with  most  performance  indicators 
among  the  best  across  the  EU.  Lithuania’s 
banking  sector  has  coped  relatively  well  with  the 
multiple shocks in recent years, from the pandemic 
crisis  to  Russia’s  aggression  against  Ukraine  and 
the  energy  crisis.  The  sector’s  resilience 
is 
bolstered  by  strong  capitalisation  and  asset-
quality  metrics,  with  a  capital  adequacy  ratio  of 
21.3%  in  Q3-2024,  above  the  EU  average  of 
20.1%  (see  Table  A5.1).  This  ratio  comes  with  a 
good  level  of  high-quality  loss-absorption  capital, 
as the CET1 ratio amounted to 19.9% in Q3-2024, 
well  above  the  EU  average  of  16.6%.  Stress  test 
results of the Bank of Lithuania show that, overall, 
the  banking  and  central  credit  union  sectors  are 
well  capitalised  and  resilient  to  potential  shocks, 
although  the  three  significant  institutions  (SEB 
Bankas,  AB  Šiaulių  bankas,  Swedbank  AB)  had 
better  capital  results  compared  to  less  significant 
institutions,  which  could  face  the  need  for 
additional  capital  in  the  event  of  an  adverse 
scenario.  

liquidity  and  profitability  ratios  of 
The 
Lithuanian  banks  are  high,  while  funding 
risks remain very low. The loan-to-deposit ratio 
is  the  lowest  of  the  EU  (43.5%  in  Q3-2024  vs 
106.7%  on  average  for  the  EU)  as  domestic 
deposits  exceed  issued  loans  significantly.  Thanks 
to  the  strong  and  stable  domestic  customer-
deposit  base,  credit  institutions  do  not  need  to 
draw on additional funding from financial markets 
nor  do  they  rely  heavily  on  their  cross-border 
parent banking groups. The liquidity coverage ratio 
amounted to 372.1% in Q3-2024, according to the 
EBA  Risk  dashboard,  one  of  the  highest  levels 
across the EU. The accumulated significant excess 
liquidity  and  predominant  share  of  loans  with 
variable  rates  in  the  wake  of  higher  key  interest 
rates  led  to  increasing  profits  for  the  banking 
sector,  leading  to  a  return-on-equity  ratio  of 
19.8%  at  the  end  of  Q3-2024,  twice  as  high  as 
the EU average. Moreover, with respect to total net 
operating income both the net fee and commission 
income as well as the net interest income are the 
highest of the EU (74.8%, resp. 99.8%).  The cost-
to-income  ratio  for  banks  operating  in  Lithuania 
was  47.8%  in  2023,  somewhat  below  the  EU 
average  of  52.6%.  As  most  banks  are  profitable 
and  their  profits  have  been  growing,  the  bank  of 

Lithuania decided end of 2022 that it was time for 
credit  institutions  to  build  up  additional  capital 
buffers. The 1% counter-cyclical buffer rate came 
into effect on 1 October 2023, bringing it back to 
pre-pandemic  levels.  In  addition,  the  1%  capital 
requirement imposed on Revolut Bank UAB due to 
its increasing systemic importance was doubled to 
2%  and  took  effect  on  1  July  2024.  To  address 
risks  from  the  real  estate  market,  the  Bank  of 
Lithuania  introduced  a  sectoral  systemic  risk 
buffer  of  2%  of  the  amount  of  an  institution’s 
risk-weighted  domestic  exposures  secured  by 
residential real estate, effective from July 2022. 

Given the high profitability of the banks, the 
authorities  have  extended  the  temporary 
windfall levy on banks. The temporary levy has 
applied in 2023 and 2024 and been extended until 
2025.  The  so-called  “solidarity  contribution”  of 
60%  is  applied  on  the  net  interest  income  that 
exceeds the average of the previous four years by 
more than 50%. It applies to all credit institutions 
and  existing  loans—new  loans  are  excluded  The 
funds  of  the  temporary  solidarity  contribution  are 
earmarked to finance Lithuania’s military mobility 
and army transport infrastructure projects. 

Banks’  balance  sheets  show  improved  asset 
quality.  As  businesses  have  low  leverage  and 
households have accumulated liquidity buffers, the 
share of non-performing loans in banks remained 
low, despite the environment of high interest rates, 
and even fell to its lowest level since 2008 (0.7% 
at  the  end  of  Q3-2024),  and  well  below  the  EU 
average  of  1.9.  With  inflation  easing  sharply  and 
real  wage  growth  remaining  strong,  households' 
financial  situation  is  gradually  improving.  Yet, 
banks’  aggregate  coverage  ratio  of  NPLs  by 
existing  provisions  remains  short  of  the  EU 
average  by  8  percentage  points,  even  though  it 
increased  from  30.2%  in  2021  to  33.9  %  in  Q3-
2024, improving the resilience of credit institutions 
in  the  event  of  a  potential  deterioration  in  loan 
quality.  

Sources of business funding and the 
role of banks 

Firms  in  Lithuania  rely  less  than  the  EU 
average  on  funding  from  banks  or  capital 
markets.  At  the  end  of  2022,  bank  finance 
through  loans  constituted  only  21.9%  of  all 

48 

 
funding  sources  for  Lithuanian  non-financial 
corporations (NFCs), while listed shares and bonds 
represented  only  6.5%  of  funding  sources.  The 
equivalent  figures  for  the  EU  average  are  27.2% 
and  23.8%,  with  the  overall  levels  for  Lithuania 
also substantially lower as a share of GDP (as the 
overall  level  of  NFC  funding  was  167.4%  in 
Lithuania and 230.3% of GDP for the EU average, 
see Graph 3.4). The market funding ratio (71) as of 
end  2023  was  only  31.5%,  compared  to  an  EU 
average  of  49.6%.  According  to  the  2024  EIB 
Investment  Survey,  69%  of  investment  needs  of 
Lithuanian  firms  are  covered  by  internal  funding, 
compared to an EU average of 66%. Only 54% of 
all Lithuanian firms use external  finance that rely 
on bank finance, the lowest  share in the EU (with 
the EU average at 81%. Moreover, the country has 
a high share of finance-constrained firms (13.7%).   

Graph A5.4: Composition of NFC funding as % of 
GDP 

(NFCs).  Demand 

financial  corporations 
from 
borrowers  declined  as  a  result  of  higher  interest 
rates  and  heightened  uncertainty,  while  the 
lending  capacity  of  banks  was  not  overly 
constrained.  Over  2024  credit  growth  recovered, 
as  lending  standards  eased  on  the  back  of 
expectations  of  monetary  policy  easing.  For 
households, the adjusted annual credit growth rate 
for loans gradually edged up from 6.5% in March 
2024  to  8.8%  in  November  2024.  For  NFCs, 
annual  credit  growth  recovered  from  2.8%  in 
August  2024  to  reach  12.3%  in  November  2024. 
The  recovery  is  expected  to  continue  in  2025. 
Moreover,  the  bank  lending  survey  conducted  by 
the Lithuanian National Bank showed that, for the 
first  time  since  mid-2022,  corporate  demand  for 
loans  rose  in  Q3-2024.  Demand  from  companies 
was  positively  influenced  by  capital  investments 
and  declining  interest  rates.  All  banks  expect 
demand  for  new  loans  to  continue  to  grow  in  all 
segments of corporate lending in the next quarter 
or to at least remain stable. 

However,  the  ratio  of  bank  loans  to  GDP  is 
among  the  lowest  in  the  euro  area.  The 
combined  ratio  of  bank  loans  to  households  and 
businesses  relative  to  GDP  has  been  below  its 
long-term  trend  in  recent  years  (33.5%  vs  EU 
average  of  74.5%).  Overall,  the  indebtedness  of 
businesses  and  households  remained  stable,  as 
indicated by the 61.6% debt-to-GDP ratio.  

The sum of NFC liabilities only reflects the total for the NFC 
liabilities considered. Reference period 2023. 
Source: Eurostat and FISMA E2 calculations. 

Capital markets and the participation 
of retail investors 

that 

their 

At  the  same  time,  26%  of  all  Lithuanian 
firms  believed 
investment 
activities over the last three years were not 
sufficient.  This  is  –  together  with  the  other  two 
Baltic  countries  –  one  of  the  highest  levels  of 
underinvestment  in  the  EU  (EU  average  of  14%), 
suggesting that there is a financing gap relative to 
investment demand, especially for SMEs. 

Credit  growth  recovered  recently  both  for 
households  and  corporates.  Credit  growth  has 
been  on  a  general  downward  path  since 
September  2022,  both  for  households  and  non-

SMEs  find  it  difficult  to  access  and  take 
advantage  of  Lithuania’s  capital  markets.  In 
the  2024  SAFE  survey,  38%  of  SMEs  indicated 
that  internal  funds  (retained  earnings  or  sale  of 
assets) were relevant for them, compared to an EU 
average of 30% (72). While the Nasdaq First North 
Market  offers  a  trading  facility  with  reduced 
reporting requirements, targeting primarily smaller 
cap  issuances,  SMEs  and  start-ups  seeking  to  list 
on  it  face  a  significant  challenge  due  to  the 
their  financial 
mandatory  biannual  audit  of 
statements.  Moreover,  Lithuania  cannot 
take 
advantage  of  this  SME  market  because  there  are 

(71)  i.e. the volume of corporate bonds and listed shares of NFCs 
relative to the volume of those two and bank loans to NFCs. 

(72)  Data  and  surveys  -  SAFE  -  European  Commission,  2024, 

Results by country, T20. 

49 

050100150200250LTEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
   
 
 
no  established  SME  growth  markets  in  Lithuania, 
nor in the other Baltic states. Work recently started 
on  setting  up  an  SME  initial  public  offering  (IPO) 
fund in the Baltic states, with the help of ALTUM in 
Latvia and ILTE in Lithuania.  

for 

low 

saving 

reduces 

rate  of 
The  persistently 
the 
households 
Lithuanian 
enterprise 
credit 
of 
availability 
investments  and  suggests  that  the  economy 
relies more on foreign savings.  Moreover, two-
thirds  of  the  population’s  savings  are  held  in 
demand  deposit  bank  accounts.  Lithuanian 
households have relatively few financial assets, in 
particular  regarding  investment,  insurance  and 
pension  funds.  By  contrast,  they  hold  more 
EU 
compared 
unlisted 
countries. The  share  of  households’  financial 
assets  held  in  pension  and  insurance  funds  or 
directly in financial investment instruments in total 
financial  assets has risen from 13.5% in 2015 to 
19.3% in 2023, but still falls substantially short of 
the EU average of 45.4%. 

shares 

other 

to 

Graph A5.5: Composition of household financial 
assets per capita and as % of GDP 

The sum of household assets only reflects the total for the 
household assets considered. Reference period 2023. 
Source: Eurostat and FISMA E2 calculations. 

Recent  policy 
initiatives  are  aimed  at 
promoting  the  level  of  retail  participation. 
The  Ministry  of  Finance  recently  approved  a 
(2024-2028)  with 
financial  education  plan 
particular  attention  dedicated  to  challenges  for 
consumers  and  retail  investors  and  also  covering 
SMEs.  Moreover,  in  an  effort  to  boost  household 
long-term 
in  capital  markets,  a 
investment 
investment product has been operational since the 
beginning of this year that offers an alternative to 
other  tax-supported  long-term  savings  products 

50 

the 

income 

intended 

investment 

(i.e.  pension  funds  and  life  insurance  products). 
investment  and  savings  account  allows 
This 
Lithuanian residents to invest more conveniently in 
different financial products that will be  subject to 
tax  only  on  the  profits  withdrawn,  rather  than  on 
for 
all 
reinvestment.  The  initiatives  also  provide  for  a 
gradual  phase-out  of  tax  incentives  related  to 
long-term  life  insurance  and  third-pillar  pension 
contributions,  which  will  be  applied  over  the  next 
10 years, and to contracts concluded by the end of 
2024.  Encouraging  the  build-up  of  universal 
funded  supplementary  pension  schemes  would 
positively  contribute  to  (i)  the  sustainability  and 
adequacy  of  pension  benefits;  (ii)  investment  in 
equity;  (iii)  access  to  finance;  (iv)  growth;  and  (v) 
innovation.  

The role of domestic institutional 
investors 

investment  portfolio  of  Lithuanian 
The 
insurers is rather conservative. The Lithuanian 
insurance  sector,  which  is  small  by  EU  standards 
(2.5%  of  assets-to-GDP  vs  an  EU  average  of 
54.8%),  mainly  invests  in  bonds,  at  60%  of  total 
assets by end Q3-2024 (compared to 19% for the 
European  Economic  Area  as  a  whole)  (73),  with 
another  6.6%  held  in  cash  and  deposits.  The  bulk 
investments  consists  of  government  debt 
of 
securities,  with  nearly  95%  of  them  being  issued 
by  EEA  countries.  The  second-largest  investment 
group,  investments  in  bonds  of  other  companies, 
decreased  by  2.7  percentage  points  to  16.6%  of 
proprietary  assets 
three 
quarters  of  them  invested  in  bonds  of  EEA 
countries.  The  share  of  investments  in  equity 
securities, 
in  collective 
investment undertakings dropped to 8.9%. 

investments,  with 

investments 

including 

The  domestic  pension  fund  industry  has  a 
less  conservative  investment  profile,  with  a 
greater focus on investment fund shares. The 
assets  of  third-pillar  pension  funds  equated  to 
15.5%  of  GDP  and  investment  funds  shares/units 
accounted for 82.6% of them as of end Q3-2024. 
Debt  securities  are  the  second  largest  investment 
asset  held  by  pension  funds,  at  12.6%,  of  which 

(73)  Source: Bank of Lithuania, Review of Lithuania's insurance 

market (2024/Q1–Q3); EIOPA Insurance Statistics. 

0501001502002500102030405060708090LTEULTEUper capita (000 EUR) (lhs)% of GDP GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
   
 
half is domestic, while equities represent only 2%. 
According  to  statistics,  only  25%  of  Lithuanian 
pension assets under management are invested in 
Lithuania  and  only  around  1%  of  that  amount  is 
invested in equity markets.  

The  participation  of  domestic  institutional 
investors  in  providing  funding  for  start-ups 
and venture capital investment is increasing. 
Funds  raised  from  pension  funds  have  increased 
considerably,  while  capital  is  also  being  raised 
from  less  traditional  sources  such  as  general 
partners’  commitments  and  endowment  funds. 
Recent data show that pension funds in Lithuania 
accounted  on  average  for  14%  of  private  equity 
and  venture  capital  funds  raised  over  2023,  a 
figure that is in line with that for the other Baltic 
states and close to 20% shares for Nordic Member 
States (74).  

The depth of venture and growth 
capital  

Lithuania has implemented numerous policies 
to  attract  foreign  investment  and  nurture 
homegrown  start-ups.  These  policies  include 
streamlined  business  registration  processes  and 
financial  support  for 
innovative  projects.  The 
Lithuanian  government  also  offers  various  grant 
programmes  and  venture  capital  opportunities  to 
regulatory 
support 
environment 
innovation  and 
entrepreneurship. The government has taken steps 
to 
reduce 
bureaucracy  and  create  a  business-friendly 
atmosphere.  This  approach  makes  it  easier  for 
regulatory 
start-ups 
requirements.   

is  conducive  to 

to  navigate 

procedures, 

legal  and 

Lithuania’s 

start-ups. 

licensing 

simplify 

The  start-up  ecosystem  has  driven  venture 
capital  and  private  equity  funding  levels. 
Lithuania  has  maintained  its  position  as  the 
fastest-growing  start-up  ecosystem  in  the  Baltic 
region: 
combined  enterprise  value  of 
times  bigger 
Lithuanian  start-ups  grew  7.1 
between  2018  and  2023,  against  a  Baltic growth 
average  of  2.7  times  and  a  European  average  of 
into  Lithuanian 
2.9.  Most 

investment  went 

the 

companies  operating  in  the  consumer  services 
sector, including  fintech,  ICT,  games  development, 
biotech  and  laser  tech  (75).  Lithuanian  start-ups 
raised  EUR 292  million 
in  2023,  which  was 
predominantly  driven  by  early-stage  ventures. 
According  to  the  capital  markets  union  (CMU) 
dashboard,  Lithuania  hovers  around 
the  EU 
average 
in  terms  of  annual  venture  capital 
investments  relative  to  GDP,  with  0.23%  over 
In  terms  of  annual  private  equity 
2021-23. 
investments  relative  to  GDP  the  country  lags 
behind  the  EU  average  (0.3%  in  2023,  vs  the  EU 
average  of  0.6%)  (see  Innovation  to  Business 
Annex).  

in  the  fintech 

A  significant  proportion  of  the  start-ups 
industry,  whose 
operate 
importance  in  Lithuania’s  financial  system 
continues  to  grow.  The  Lithuanian  fintech 
sector’s  strength  runs  across  lending,  payments 
and digital banking. Lithuania ranks first in the EU 
for  the  number  of  fintech  licences  issued;  more 
than half of market participants hold a licence for 
an  electronic  money 
institution,  a  payment 
institution or a specialised banking licence (76). The 
majority  of  the  market  participants  can  offer 
digital  wallets  or  issue  prepaid  cards  on  top  of 
money  transfers.  In  addition,  there  has  been  a 
significant  increase  in  financial  software  service 
providers  (payment  software,  lending  software). 
Crowdfunding  and  peer-to-peer 
lending 
platform  operators  are  also  actively  entering  the 
market, rapidly increasing the volume of financing 
provided to businesses and households.  

(P2P) 

Financing the green transition  

Sustainable finance in Lithuania is still in the 
initial  stages  of  development.  The  average 
issuance  over  2021-2023  of  bonds  with 
environmental,  social,  and  governance  objectives 
as a share of total bond issuance in Lithuania was 
the  lowest  of  all  EU  Member  States,  after  Malta 
and  Bulgaria,  where  it  was  non-existent  (77). 
recent  positive 
However, 

there  have  been 

(75)  The Lithuania startup ecosystem 2023, Dealroom, Feb 2024. 

(76)  Bank of Lithuania data for EMI, PI, SPB, CF, FB licences as of 

the end of 2023. 

(74)  Source: Closing the gaping hole in the capital market for EU 

(77)  Source: AFME CMU Key Performance Indicators, Seventh 

start-ups – the role of pension funds – CEPS.  

Edition, November 2024. 

51 

 
 
 
Table A5.1:  Financial indicators 

Source: ECB, ESTAT, EIOPA, DG FISMA CMU Dashboard, AMECO. 

investors 

examples  of  Lithuanian  companies  managing  to 
offer 
sustainable  and  attractive 
investment  projects,  e.g.  the  Ignitis  Group,  which 
pays  great  attention  to  the  development  of 
renewable  energy  and  the  decarbonisation  of 
energy.  Since  2018,  the  public  sector  has  also 
attempted  to  offer  investors  green  investment 
products.  In  2019,  Lithuania  launched  a  project 
with  the  European  Commission  and  the  European 
Bank of Reconstruction and Development (EBRD) in 
the  field  of  sustainable  finance.  It  resulted  in, 
among other things, the Lithuanian Green Finance 
Action Plan for 2023-2026 and the establishment 
of the Green Finance Institute in 2023. 

Financial literacy  

Financial literacy is getting nearer to the EU 
average,  thanks  to  initiatives  to  promote 
financial  education.  Financial  literacy  is  crucial 
to  promote  retail-investor  participation  in  capital 
markets  but  also  to  familiarise  SMEs  with 
alternatives to bank financing. Financial education 
has  been  included  in  elementary  schools  since 
2008  but  the  level  of  financial  literacy  still 

remains somewhat lower than the EU average. The 
2023  Eurobarometer  survey  (78)  shows  that  only 
16%  of  Lithuanian  citizens  have  a  high  level  of 
financial  literacy,  65%  a  medium  level,  and  the 
remaining  19%  a  low  level,  compared  to  the  EU 
average  of  18%  for  high  literacy,  64%  for 
medium, and 18% for low.  

It 

The  Lithuanian  Ministry  of  Finance  recently 
approved  a  public  financial  education  plan 
in  particular  on 
focuses 
(2024-2028). 
challenges  for  consumers  and  retail  investors 
caused  by 
rapid  market  development  and 
digitalisation.  The  plan  is  therefore  aimed  at 
improving  digital  financial  literacy  levels  and 
resilience  against  financial  fraudsters.  Educating 
children  about  finance  at  a  young  age  creates  a 
culture of understanding risk. The plan also covers 
SMEs,  to  increase  their  awareness  of  finance 
options in the capital markets as an alternative to 
bank  financing,  which  is  currently  the  dominant 
choice for SMEs.  

(78)  Source: Monitoring the level of financial literacy in the EU - 

July 2023 - Eurobarometer survey. 

52 

20172018201920202021202220232024-Q3EUTotal assets of MFIs (% of GDP)67.565.465.478.878.385.186.288.0248.4Common Equity Tier 1 ratio18.818.419.521.523.220.218.619.916.6Total capital adequacy ratio19.118.619.921.923.520.419.921.320.1Overall NPL ratio (% of all loans)3.22.61.72.21.20.90.80.71.9NPL (% loans to NFC-Non financial corporations)5.04.12.93.51.71.51.41.33.5NPL (% loans to HH-Households)3.73.02.11.81.00.81.21.22.2NPL-Non performing loans coverage ratio30.826.130.731.730.235.835.533.942.1Return on Equity19.112.314.510.010.413.521.219.810.0Loans to NFCs (% of GDP)19.618.717.414.815.415.214.514.830.0Loans to HHs (% of GDP)21.121.021.122.021.620.219.719.844.5NFC credit annual % growth5.54.7-0.8-12.711.718.54.610.80.8HH credit annual % growth7.68.67.26.510.711.36.67.80.7Stock market capitalisation (% of GDP)9.27.37.59.09.17.16.25.969.3Initial public offerings (% of GDP)0.040.190.033.300.000.000.00-0.05Market funding ratio18.021.722.336.736.233.231.5-49.6Private equity (% of GDP)0.010.150.670.140.640.370.31-0.41Venture capital (% of GDP)0.010.010.010.030.080.110.04-0.05Financial literacy (composite)------43.5-45.5Bonds (as % of HH financial assets)0.90.91.01.10.50.81.2-2.7Listed shares (as % of HH financial assets)2.11.61.61.72.21.91.9-4.8Investment funds (as % of HH financial assets)1.91.71.71.72.32.22.1-10.0Insurance/pension funds (as % of HH financial assets)12.312.013.012.914.013.014.0-27.8Total assets of all insurers (% of GDP)3.13.02.53.02.72.42.42.554.8Pension funds assets (% of GDP)--8.29.310.88.710.111.523.41-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States.1 Annualized data.Credit growth and pension funds EU data refers to the EA average.Banking sectorNon-banks sector 
 
 
 
 
   
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

Lithuania’s 
framework 
institutional 
influences  its  competitiveness.  Lithuania  has 
improving  the  quality  of 
in 
made  progress 
legislation  and 
regulatory 
its 
in  simplifying 
framework through reforms to introduce the ‘one-
in,  one-out’  principle  and  to  improve  the  e-citizen 
portal. While Lithuania ranks highly in digital public 
services,  there  is  scope  to  improve  mobile  app 
availability  and  5G  coverage.  Moreover,  structural 
challenges in public service efficiency remain, such 
as 
regional  disparities  and  cross-ministerial 
bottlenecks.  The  civil  service  has  made  progress 
with  initiatives  such  as  the  Leadership  Academy 
but  lags  behind  in  terms  of  lifelong  learning.  The 
justice system continues to perform efficiently.  

Public perceptions 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

has improved in both of Lithuania’s regions and is 
now  in  line  with  the  EU  average  (80).  Regional 
disparities in resource allocation however can lead 
to  slower  service  delivery,  particularly  in  smaller 
municipalities. 

Quality of legislation and regulatory 
simplification 

Performance  in  developing  and  evaluating 
legislation  is  above  the  EU  average  and  has 
improved  visibly  since  2021.  The  use  of 
regulatory  tools  like  ex  ante  impact  assessments, 
public  consultations  and  reviews  of  existing 
regulations  is  stronger  for  primary  laws  than  for 
subordinate  regulations.  However,  there  is  scope 
for strengthening oversight and quality controls of 
regulatory  impact  assessments,  as  well  as  for 
systematic  adoption  of  ex  post  evaluations  of 
subordinate  regulations  (Graph  A6.2).  Lithuania 
still  needs  to  address  bottlenecks 
in  cross-
ministerial  processes  that  slow  down  decision-
making (81). 

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

(1) EU27 from 2019; EU28 before 
Source: Standard Eurobarometer surveys 

in 

its 

improvement.  Trust 

Trust  in  public  institutions  has  shown  a 
justice 
modest 
institutions  (55%,  around  the  EU  average)  and 
regional/local  authorities  (58%,  just  below  the  EU 
average)  surpasses  trust  in  central  government 
which  remains  above  the  EU  average  of  33% 
(Graph  A6.1).  According 
to  citizens,  greater 
transparency  and  lower  bureaucracy  are  key  to 
further improving trust in the public administration 
(79). The perceived quality of public administration 

(79)  Understanding Europeans’ views on reform needs - April 
2023 - - Eurobarometer survey, Country Fact Sheet. 

53 

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

(80)  Inforegio - European Quality of Government Index 

(81)  Enabling Inter-Municipal Shared Service Provision in 

Lithuania | OECD 

00.10.20.30.40.50.60.7AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system LTRegional or local public authorities EU27Regional or local public authorities LTGovernment  EU27Government  LT0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsLT_StakeholderengagementLT_Regulatory ImpactAssessmentLT_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27 
 
      
 
      
 
 
 
 
 
Table A6.1:  Lithuania. Selected indicators on administrative burden reduction and simplification 

(1) This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming). 

in 

the  administrative  burden 

There  is  room  to  further  strengthen  its 
mechanisms  for  simplifying  regulation.  The 
Government´s  report  on  administrative  burden 
indicates  a 
and  regulatory  costs  for  2024 
reduction 
for 
companies  of  EUR  6.26 million  but  an increase in 
compliance  costs  of  EUR  68.84  million,  albeit 
stemming  from  a  single  legal  act  (82).  Further 
efforts  to  simplify  procedures,  such  as  the  digital 
transformation of public services, are ongoing but 
require  greater  coordination  between  ministries. 
Moreoever, while ex post evaluations of legislation 
are  required  to  evaluate  administrative  burdens 
this 
and 
requirement applies to some (and not all) primary 
laws.  Other  practices,  like  conducting  in  depth 
reviews  of  specific  regulatory  areas  and  public 
stocktakes  of  legislation,  could  further  enhance 
the  abovementioned  simplification  mechanisms 
(Table A6.1). 

substantive 

compliance 

costs, 

(82) Ministry of Economy and Innovation, Monitoring Administrative 

Burden and Compliance Costs, 2024, available at: link 

54 

Social dialogue 

Social  partners  in  Lithuania  have  a  formal 
in  policy  discussions,  but  poor 
role 
information  sharing  limits  their  impact.  The 
tripartite  social  dialogue  system  in  Lithuania  is 
relatively  well  established,  with  the  Tripartite 
Council  as  its  main  institution,  operating  in  the 
areas  of  labour,  social,  and  economic  policies. 
Social  partners are typically given the opportunity 
to  participate 
in 
legislation  or 
discussions  on  proposed  new 
amendments  to  existing  laws.  However,  they 
frequently express concerns about the poor quality 
of  shared  information  and  the  often  extremely 
tight  deadlines  for  submitting  comments.  This 
limits  their  ability  to  contribute  meaningfully, 
particularly  when  consultations  cover  a  broad 
scope (83). 

in  other  forums,  engaging 

(83)  For  an  analysis  of  the  involvement  of  Lithuania’s  social 
partners at national level in the European Semester and the 
Recovery  and  Resilience  Facility,  see  Eurofound  (2025), 
National-level  social  governance  of  the  European  Semester 
and the Recovery and Resilience Facility. 

Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are required to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
 
 
 
     
 
 
 
Table A6.2:  Digital Decade targets monitored through the Digital Economy and Society Index 

Source: Digital Economy and Society Index 

is 

strengthening 

collective 
Lithuania 
bargaining agreements in the private sector. 
Collective  bargaining  coverage 
in  Lithuania 
remains relatively low, standing at 26.6% in 2021 
(84). A significant gap exists between the public and 
private  sectors,  with  the  latter  largely  comprising 
small  and  micro-enterprises  without  trade  unions. 
The  ESF+  supports  capacity  building  for  social 
partners,  allocating  over  EUR  1.65  million  in  the 
2021–2027 programming period, with a particular 
focus on expanding collective agreement coverage 
in the private sector. 

Digital public services 

Lithuania performs well on the digitalisation 
of its public services (Table A6.2). It ranks above 
the  EU  average  in  terms of  digital  public  services 
for  citizens  (86.6%)  and  businesses  (95.9%). 
Lithuania  also  have  made  improvement  in  the 
access  to  e-health  records  in  the  past  years.  The 
country  had  an  overall e-health maturity  score  of 
95.4 in 2023, which is also above the EU average 
(79.1).  

The proportion of e-government users is high 
(80.7%,  EU  average:  75.0%).  Furthermore,  66.8% 
of  the  Lithuanians  used  eID  for  private  purposes 
during 2023, while 60.4% used it to access public 
services.  Both  figures  stand  well  above  the  EU 
average  (41.1%  and  35.7%,  respectively)  (85), 
reflecting  the  effort  of  the  national  authorities  to 

(84)  Source: OECD Data 

(86).  This  means 

implement  electronic  identification  in  various  use 
cases.  Lithuania  has  not  yet  set  up  and  notified 
eID  schemes  for  legal  persons  under  the  eIDAS 
Regulation 
that  Lithuanian 
businesses  cannot  authenticate  themselves  to 
access  public  services  provided  by  other  Member 
States,  including  those  enabled  by  the  Once-Only 
Technical  System,  part  of  the  EU  Single  Digital 
Gateway (87). 

Lithuania  is  advancing  towards  seamless, 
automated exchange of authentic documents 
and  data  across  the  EU.  It  has  developed  the 
necessary  infrastructure  and  is  beginning  the 
process  of  connecting  the  first  authorities  to  the 
Once-Only Technical System (88). 

by 

already 

late  2024 

Under 
its  recovery  and  resilience  plan, 
Lithuania  has  set  up  a  National  Data  Lake, 
which 
contained 
637 datasets  (including  238  high-value  datasets) 
from  189 organisations  via  the  Lithuanian  Open 
Data  Portal.  As  a  result,  public  sector  data 
management  has  become  less  fragmented (89). 
Other notable reforms include the digitalisation of 
public procurement systems and improvements to 
citizen-oriented  platforms  such  as  the  e-citizen 
portal. 

(86)  European Commission, eIDAS Dashboard. 

(87)  European Commission, The Once Only Principle System: A 

breakthrough for the EU’s Digital Single Market 

(88)  European Commission, Once-Only Technical System 

Acceleratormeter 

(89)  Open Data Portal, Duomenų rinkinių būsenos, 2025, 

(85)  European Commission. Digital Decade 2024: Country reports 

available at: link  

55 

Digital Decadetarget by 20302022202320242024EU-27Digitalisation of public services182848779100Score (0 to 100)20212022202320232030293949685100Score (0 to 100)202120222023202320303na929579100Score (0 to 100)20212022202320232030LithuaniaEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
 
 
 
  
 
AI  principles  for  the  public  sector  were 
adopted  by  parliament  in  2024.  They  provide 
for transparency,  accountability, and fairness, and 
lay  down  the  basis  for  AI  uptake  by  the  public 
sector (90). 

Graph A6.3: Participation rate of 25-64 year olds 
in adult learning (%) by occupation 

Source: European Commission, based on the Labour Force 
Survey 

Civil service  

Lithuania  continues  to  have  a  well-educated 
civil  service.  The  share  of  public  administration 
employees  with  higher  education  qualifications 
(79.8%)  and  of  those  pursuing  adult  learning 
(21.8% points to a relatively high-skilled workforce 
(Graph  A6.3). 
In  2024,  70%  of  government 
employees  were  under  the  age  of  50.  This 
indicates a relatively young civil service within the 
EU. The proportion of women in senior civil service 
posts  was  60.4%  (above  the  EU-27  average) (91), 
with  the  overall  trend  pointing  to  a  slight 
narrowing  of  the  gender  gap.  In  2024,  70%  of 
government employees were under the age of 50. 
This indicates a relatively young civil service. 

and 

skills 

improve 

Lithuania  has 
initiated  significant  civil 
service  reforms  to  modernise  structures, 
further 
address 
demographic  challenges.  In  2024,  with  the 
support  of  the  Recovery  and  Resilience  Facility,  it 
established the Leadership Academy, a centralised 
skills development system for civil service leaders 
with  an  e-learning  platform  and  18-modules.  To 
comply with the milestones laid down by the plan, 
Lithuania  will  need  to  ensure  uptake  and  a broad 
roll-out.  

Integrity 

Businesses  consider  corruption  to  be  a 
problem  when  doing  businesses.  In  Lithuania, 
62%  of  companies  consider  that  corruption  is 
widespread  (but  below  the  EU  average  of  64%), 
while  28%  consider  that  corruption  is  a  problem 
(EU  average  36%) (92). 
when  doing  business 
Moreover,  39%  of  companies  believe  that  people 
and businesses caught for bribing a senior official 
are  appropriately  punished  (EU  average  31%) (93). 
Overall,  the  investigations  and  prosecutions  in 
relation  to  corruption  offences  are  conducted 
efficiently, including in high-level  corruption cases 
(94).  However,  the  OECD  has 
issued  several 
recommendations  regarding  the  investigation  and 
prosecution of foreign bribery cases (95), which are 
currently  being  addressed  by  the  authorities 
through a dedicated action plan.  

Public  procurement  continues  to  be  an  area 
at  high  risk  of  corruption  in  Lithuania,  and 
efforts  continue  to  address 
it.  34%  of 
companies (EU average 27%) think that corruption 
has prevented them from winning a public tender 
or a public procurement contract in practice in the 
last 
the  Public 
Procurement  Office  implemented  a  project  on 
increasing  the  number  of  suppliers  in  public 

three  years 

In  2023, 

(96). 

(92)  Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024).   

(93)  Ibid. 

(90)  https://e-

seimas.lrs.lt/portal/legalAct/lt/TAP/b2d05cc006bd11ef8e4be
9fad87afa59 

(94)  See the 2024 country-specific chapter for Lithuania of the 

Rule of Law Report, pp. 13-14. 

(95)  Ibid., pp. 13-14. 

(91)  European Institute for Gender Equality (EIGE), ‘Gender 

(96)  Flash Eurobarometer 543 on businesses’ attitudes towards 

Statistics Database’, available at: link  

corruption in the EU (2024).   

56 

0510152025LTEU-27LTEU-27LTEU-27LTEU-272021202220232024Public administration and defence; compulsory social securityHigh-skilled occupationsMedium-skilled occupationsUnskilled occupationsArmed forcesTotal economy 
     
 
 
procurement,  focusing  on  training  for  suppliers 
strengthening their competences. Healthcare, local 
government,  environmental  protection,  territorial 
planning, and construction supervision also remain 
high-risk areas for corruption in Lithuania (97). 

Lithuania  has  made  good  progress  with  the 
implementation  of  its  public  register  for 
lobbyists.  Like  most  Member  States,  Lithuania 
has  a  lobby  register  in  place.  Since  the  Law  on 
lobbying  activities  was  amended  in  2021,  the 
number  of  registered  lobbyists  has  nearly  tripled 
—  from  122  lobbyists  in  December 2020  to  330 
lobbyists in August 2023. The majority of declared 
lobbying activities relate to the Law on Pharmacy 
and  legislation  related  to  trade  in  marketplaces, 
the 
lotteries,  electronic  communications,  and 
regulation on tobacco products (98).  The continued 
implementation of the register can help to ensure 
a level playing field between companies in access 
to policymakers. 

Justice 

The  justice  system  is  continuing  to  perform 
efficiently.  In  2023,  the  disposition  time  in  civil 
and  commercial  cases  at  first  instance  was  the 
lowest in the EU (120 days), while it decreased at 
second instance (from 72 days in 2022 to 71 days 
in  2023)  and  at  third  instance  (from  451 days  in 
2022  to  329 days  in  2023).  The  disposition  time 
of administrative cases was also the lowest in the 
EU,  having  further  decreased  (from  79 days  in 
2022 to 64 days in 2023). The use of digital tools 
in  the  justice  system  is  widespread.  Moreover, 
there  has  been  significant  progress  in  providing 
adequate 
justice  system, 
including as regards the level of remuneration for 
prosecutors and court staff, while the expenditure 
on  law  courts  in Lithuania  continues  to be  one  of 
judicial 
the  EU.  As 
the 
independence, no systemic deficiencies have been 
reported (99). 

resources  for 

regards 

lowest 

the 

in 

(97)  See the 2024 country-specific chapter for Lithuania of the 

Rule of Law Report, p. 18. 

(98)  Ibid., pp. 17-18. 

(99)  For more detailed analysis of the performance of the justice 
system  in  Lithuania,  see  the  upcoming  2025  EU  Justice 
Scoreboard and the 2024 Rule of Law Report. 

57 

 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

faces 

significant 

Lithuania 
challenges 
regarding  its  clean  industry  transition  and 
climate mitigation: The country has modest net-
zero  technology  manufacturing  and  is  heavily 
reliant  on  imported  critical  raw  materials.  Energy 
efficiency  and  circular  material  use  rates  remain 
below EU averages, and there is an urgent need to 
address  rising  greenhouse  gas  emissions  from 
road  transport  and  buildings.  This  annex  reviews 
the areas in need of urgent attention in Lithuania’s 
clean  industry  transition  and  climate  mitigation, 
looking at different dimensions. 

Strategic autonomy and technology 
for the green transition  

Net zero industry 

Lithuania’s  manufacturing  across  all  Net-
Zero  technologies  remains  modest  but  with 
important  development  potential 
in  the 
batterie  sector (100).  Lithuania’s  manufacturing 
capacity  amounts  to  between  450  and  500 
MW/year (2-3% of EU capacity) for solar PV. 

Lithuania’s regulatory framework is focusing 
on high-level policy, such as the National Energy 
Independence  Strategy  (NENS)  and  its  National 
Energy and Climate Action Plan. Related measures 
within  the  NENS  Implementation  Plan  notably 
include  supporting  the  production  of  electricity 
storage 
technologies  as  well  as  attracting 
investors in the production of electric car batteries. 
Additionally,  an  ambitious  green  procurement 
policy and the existence of relevant sandboxes can 
foster 
zero 
technologies.  

innovative  net 

scale  of 

the 

Incentives  schemes  supporting  investment 
and skills in Net-Zero technologies have been 
put in place. Through the RRF funded “Billion for 
business  scheme”  (EUR  850  million),  SMEs  and 
large  companies  can  apply  to  receive  loans  for 
projects  that  support  investments  in  Net-Zero 
are 
skill 
technologies. 

programmes 

Two 

(100) European Commission: Directorate-General for Energy, The 
net-zero manufacturing industry landscape across the 
Member 2025, https://data.europa.eu/doi/10.2833/2181110   

58 

implemented, 
apprenticeship 
providing 
vocational training for the green transition. 

and 

Transformation of the car industry  

The  demand  for  EVs  could  be  improved  by 
continuing  to  expand  the  charging  grid.  In 
2024  around  8%  of  newly  registered  passenger 
cars  were  battery  electric  vehicles.  While  this 
roughly  constitutes  a  twelve-fold  increase  since 
2019 (101), it still represents a value below the EU 
average  of  14.5%.  While  catch-up  speed 
is 
remarkable, it is essential  

that  the  expansion  of  the  charging  grid  keeps  up. 
Overall,  however,  with  27,000  newly  registered 
passenger  cars  in  2024  the  market  is  relatively 
small in Lithuania (102). 

Critical raw materials  

The  country  is  dependent  on  the  import  of 
critical  raw  materials,  but  diversification  is 
sufficient  and  market  size  low.  Lithuania  has 
no  extraction  sites  of  critical  raw  materials  in  its 
territory. Hence, industrial sectors which are using 
them  have  to  rely  solely  on  imports.  Lithuanian 
industries  import  phosphorous  products  mainly 
from  South  Africa,  Algeria  and  Senegal,  Platinum 
products from Kazakhstan and Copper from South 
Africa. Due to a high diversification of countries of 
origin,  Lithuanian  imports  of  raw  materials  show 
to  be  less  concentrated  than  the  rest  of  the  EU 
(103).  With  a  yearly  gross  operating  surplus  of 
around  EUR  90  million, 
the  manufacturing 
industries  which  are  using  raw  materials  are 
comparably  small  (relative  to  an  overall  gross 
operating surplus of the economy of above EUR 2 
billion)(104). 

The  reuse  and  recycling  rate  for  end-of-life 
vehicles  is  above  the  EU  average  (94.5 %  vs. 
88.1% in 2021). 

(101) Eurostat. 

(102) Newly registered electric cars by country | European 

Environment Agency's home page. 

(103) Economic resilience | Single Market Scoreboard. 

(104) Source: Eurostat. 

 
 
 
 
 
 
 
Climate mitigation 

Industry decarbonisation 

sector 

Lithuania’s  manufacturing 
is 
relatively  GHG  emissions  intensive,  with  a 
major  share  of  emissions  coming  from 
industry  processes  and  product  use.  With 
18 %,  the  share  of  industry  in  Lithuania’s  total 
greenhouse  gas  emissions 
is  below  the  EU 
average of 21 % (105). With 360 g CO2eq per euro 
of GVA, the greenhouse gas emissions intensity of 
Lithuania’s  manufacturing  production  is  about  a 
third  higher  than  the  EU  total  (270  g/€).  Since 
Lithuania’s 
the  GHG 
2017, 
manufacturing  production 
improved  by  36 %, 
much more than the EU on average (20 %). Nearly 
two  thirds  of  Lithuania’s  manufacturing  GHG 
emissions – 65 % in 2023 – come from industrial 
processes  and  product  use,  the  remainder  being 
energy related. In the EU as a whole, these shares 
are 42:58. 

intensity 

of 

Recent years saw major improvements in the 
GHG emissions intensity of manufacturing in 
Lithuania,  related  to  processes  and  product 
use in particular (106). Between 2017 and 2022, 
the  intensity  of  manufacturing  in  Lithuania  with 
regard to industry process and product use related 
GHG emissions declined by 45 %, the third highest 
improvement  in  the  EU  and  much  above  the 
average  of  23  %.  In  the  same  period,  the  GHG 
emissions  intensity  of  manufacturing  production 

(105) In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section,  unless 
indicated  otherwise,  data  on  manufacturing  refer  to  the 
divisions  of  the  NACE  section  C  excluding  division  C19 
(manufacture  of  coke  and  refined  petroleum  products),  and 
the  year  2022.  The  source  of  all  data  in  this  section  is 
Eurostat;  data  following  the  UNFCCC  Common  Reporting 
Framework (CRF) are from the European Environment Agency 
(EEA), republished by Eurostat.  

(106) For the GHG emissions intensity of GVA related to energy use 
and  industrial  processes  and  product  use  respectively,  GHG 
emissions  are  from  inventory  data  in  line  with  the  UNFCCC 
Common  Reporting  Format  (CRF),  notably  referring  to  the 
source sectors CRF1.A.2 –  fuel combustion in manufacturing 
industries  and  construction  and  CRF2  –  industrial  processes 
and  product  use.  The  CRF1.A.2  data  broadly  correspond  to 
the NACE C and E sectors, excluding C-19. GVA data (in the 
denominator  for  both  intensities)  are  aligned  with  this 
sectoral  coverage.  Therefore,  they  are  not  fully  consistent 
with the data referred to in other part of this section. 

related  to  energy  use  improved  by  19 %,  slightly 
above the EU average (16 %). Between 2017 and 
2022,  the  share  of  electricity  and  renewables  in 
the  final  energy  consumption  of  Lithuania’s 
manufacturing  sector  increased  by  8  percentage 
points, to 46.6 %, the fourth largest increase in the 
EU.  The  energy 
intensity  of  manufacturing 
production  declined  by  nearly  one  third,  from  1.7 
GWh per euro of gross value added in 2017 to 1.2 
GWh/€.  

Graph A7.1: GHG emission intensity of manu-
facturing and energy-intensive sectors, 2022 

Source: Eurostat. 

intensive. 

Lithuania’s 
energy-intensive 
Among 
industries, 
the  manufacture  of  paper 
chemicals  is  particularly  greenhouse  gas 
Energy-intensive 
emissions 
industries (107)  account  for  17 %  of  Lithuania’s 
manufacturing  gross  value  added  (2022).  Among 
these, the manufacture of chemicals and chemical 
products has  a very  high  GHG  emissions intensity 
in  EU  comparison,  11 kg  CO2eq  per  euro  of  GVA. 
The  manufacture  of  paper  and  paper  products  in 
Lithuania  has  elevated  levels  of  GHG  emissions 
intensity  too.  After  a  peak  in  2022,  production  in 
several  energy-intensive  sectors  has  declined  in 
2023  more  than  in  manufacturing  overall  (see 
graph A5.2).  

(107) Notably,  the  manufacture  of  paper  and  paper  products 
(NACE  division  C17),  of  chemicals  and  chemical  products 
(C20),  “other”  non-metallic  mineral  products  (C23;  this 
division includes manufacturing activities related to a single 
substance of mineral origin, such as glass, ceramic products, 
tiles,  and  cement  and  plaster),  and  basic  metals  (C24).  To 
date,  these  industries  are  energy-intensive  –  i.e.  consuming 
much  energy  both  on  site  and/or  in  the  form  of  purchased 
electricity  –  and  greenhouse  gas  emissions  intensive,  in 
various combinations. 

59 

00.511.522.533.544.55C-C19C17C20C23C24KG CO2eq / €LithuaniaEU-27 
 
  
 
Graph A7.2: Manufacturing industry production: 
total and selected sectors, index (2021 = 100), 
2017-2023 

the  EU  overall.  From  buildings,  they decreased by 
3 %,  much  less  than  the  33 %  seen  in  the  EU 
overall.  Speeding  up  climate  mitigation  in  these 
sectors would help protect households, businesses 
and  transport  users  in  Lithuania  from  the  impact 
of carbon pricing.  

Graph A7.3: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

Source: Eurostat 

Reduction  of  emissions  in  the  effort  sharing 
sectors 

Lithuania  is  projected  to  reach  its  effort 
sharing  target  if  it  adopts  and  implements 
the  planned  additional  climate  mitigation 
measures  (108).  In  2023,  GHG  emissions  from 
Lithuania’s  effort  sharing  sectors  are  expected  to 
have  been  3.8 %  above  those  of  2005.  By  2030, 
current  policies  are  projected  to  reduce  them  by 
17.5 %  relative  to  2005  levels;  additional  policies 
considered  in  Lithuania’s  final  updated  NECP  are 
projected  to  imply  reductions  by  a  further  3.8 
percentage points. Hence Lithuania is projected to 
overachieve its effort sharing target, -21 %, by 0.3 
and 
percentage 
implementation of those measures (109).  

adoption 

points 

upon 

Swift  action  on  decarbonising  transport  and 
in 
buildings  appears  particularly  exigent 
Lithuania.  Between  2005  and  2023,  greenhouse 
gas  emissions  from  road  transport  increased  by 
47 % in Lithuania, while they decreased by 5 % in 

in  Regulation 

(108) The national greenhouse gas emission reduction target is set 
out 
(the  Effort  Sharing 
(EU)  2023/857 
Regulation).  It  applies  jointly  to  buildings  (heating  and 
cooling); road transport, agriculture; waste; and small industry 
(known as the effort sharing sectors). 

(109) The  effort  sharing  emissions  for  2023  are  based  on 
inventory  data.  The  final  data  will  be 
approximated 
review. 
established 
Projections  on  the  impact  of  current  policies  (“with  existing 
measures”,  WEM)  and  additional  policies  (“with  additional 
measures”, WAM) as per Lithuania’s final updated NECP. 

in  2027  after  a  comprehensive 

60 

Source: European Environment Agency. 

Sustainable industry 

Circular economy transition 

transitioning 
Lithuania  faces  challenges 
towards a circular economy, needing to boost 
its  low  circular  material  use  rate,  fully 
implement 
its  circular  economy  policy 
framework,  and  adopt  upstream  circularity 
measures. With 3.9% in 2023, Lithuania’s circular 
material  use  was  three  times  below  the  EU 
average  and  among  five  lowest  rates  in  the  EU. 
Resource productivity, too, was considerably below 
the  EU  average  in  2023, with  EUR  1.21  per  kg  of 
material  consumed,  despite  slightly  improving 
since  2020.  Lithuania  adopted  the  Guidelines  for 
Lithuania's  transition  to  a  circular  economy  by 
2035  as  one  of  the  reforms  in  the  Recovery  and 
Resilience  Plan.  Green  public  procurement 
is 
mandatory  and  minimum  environmental  criteria 
have been laid down for 32 product groups. There 
is  a  need  to  promote  the  use  of  reusable, 
environmentally  friendly  materials  in  production. 
"safe  by  design" 
This 
technological  solutions,  implementing  eco-design 
principles,  developing  innovative  circular  business 
models and promoting industrial symbiosis. 

includes  adopting 

4050607080901001101201301402017201820192020202120222023ManufacturingManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of other non-metallic mineral productsManufacture of basic metals024681012141620052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
      
 
      
While  Lithuania  has  made  progress  with  its 
waste management system, a lot remains to 
be  done  to  reduce  higher  material  footprint 
per capita compared to the EU average. With 
446 kg in 2023, Lithuania produces less waste per 
capita  than  the  EU-27  average,  511  kg.  At  the 
same  time,  with  a  recycling  rate  of  48.4 %  in 
2022.  Lithuania  is  at  risk  of  missing  the  2025 
targets  for  the  preparing  for  re-use  and  the 
recycling  of  municipal  waste  (55%)  and  for  the 
recycling  of  all  packaging  waste.  In  2022,  with 
44 %,  its  recycling  rate  for  plastic  packaging 
although  showing  a  downward  trend  was  above 
the  EU  average  of  41%.  In  2022,  81.3 %  of 
construction  and  demolition  waste  was  recycled, 
excluding  backfilling,  above  the  EU  average  of 
79.8%. At the same time, the material footprint of 
23  tonnes  per  capita  is  considerably  higher  that 
the EU-27 average of 14 tonnes per person. 

Graph A7.4: Municipal waste treatment 

proposed  under  the  amendment  of  the  Waste 
Framework  Directive,  and  EUR  73  million 
constitutes  further  investment  need  to  unlock 
Lithuania’s circular economy potential (110). 

Zero pollution industry 

Lithuania  matches  the  EU  average 
in 
industrial  air  emission  intensity  but  faces 
challenges  with  air  pollutant  reductions.  In 
2022,  air  emission  intensity  from  industry  in 
Lithuania was on par with the EU average at 0.06 
grams  per  euro.  Lithuania  struggles  with  fulfilling 
its  air  pollutant  emission  reduction  commitments. 
According  to  the  inventories  submitted  in  2024, 
there  were  exceedances  for  3 pollutants:  nitrogen 
oxides,  non-methane  volatile  organic  compounds 
and ammonia. The costs of industrial air emissions 
are estimated at EUR 1.4 million (111). In Lithuania, 
environmental  noise  is  a  new  cause  of  concern 
stroke, 
causing 
interrupted sleep, cognitive impairment and stress. 
To meet pollution prevention and control objective 
and  address  related  health  and  economic  costs, 
Lithuania  requires  an  additional  EUR  378  million 
per  year  (0.57%  of  GDP),  primarily  for  clean  air 
and noise (112). 

ischaemic 

disease, 

heart 

Source: Eurostat 

investments 

Current 
into  the  circularity 
transition  have  been  insufficient.  Lithuania  is 
estimated  to  need  total  additional  investments 
worth  at  least  EUR  122  million  per  year  for  the 
circular  economy 
including  waste 
transition, 
management.  Of  the  circular  economy  gap,  EUR 
26 million relates to recent initiatives, such as the 
eco-design  for  sustainable  products,  packaging 
and  packaging  waste,  labelling  and  digital  tools, 
critical  raw  materials  recycling,  and  measures 

(110) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

(111) 2019 value according to the value of statistical life 

methodology; source: EEA, 2024, The costs to health and the 
environment from industrial air pollution in Europe – 2024 
update, Link. 

(112) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

61 

469480479465446010020030040050060020192020202120222023Kg per capitaMaterial recyclingComposting and digestionLandfill/disposalTotal incineration (incl. energy recovery)Waste treatment unspecifiedEU-27 total waste per capita 
      
 
Table A7.1:  Key clean industry and climate mitigation indicators: Lithuania 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

62 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW50 (c), 400-450 (m)- Electrolyzer, MW-- Wind (b: blade, t: turbine, n: nacelle), MW-- battery, MWh-Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %480509533557574578589539561New zero-emission vehicles, electricity motor, %0.230.650.681.174.536.258.231.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %41.440.536.737.936.834.224.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€0.570.510.520.520.450.36 0.340.27Share of energy-related emissions in industrial GHG emissions72.773.769.670.571.168.565.444.842.5Energy-related GHG emissions intensity of manufacturing119.0119.0117.2106.0104.996.8-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption38.838.839.544.242.746.649.043.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€1.681.661.611.451.421.151.131.291.09Share of energy-intensive industries in manufacturing production16.47.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)0.320.270.260.180.170.14--0.730.68- chemicals and chemical products (NACE C20)4.543.473.482.611.961.59--1.251.26- other non-metallic mineral products (NACE C23)3.393.623.923.653.824.55--2.532.24- basic metals (NACE C24)0.200.220.330.070.030.03--2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % 9.06.23.8- domestic road transport44.849.946.446.143.546.51.45.2- buildings11.76.50.313.411.7-2.721.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %13.114.213.913.6-21.0-3.50.3Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person20.120.421.723.222.223.014.715.0Circular material use rate, %4.3        3.9        4.0        4.1        4.0        3.9        11.611.1Resource productivity, €/kg0.9        0.9        0.9        1.0        1.2        1.2        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants783      727      532      734      742      -702571Air pollution damage cost intensity, per thousand € of GVA    19.0          27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    0.0   0.9LithuaniaEU-27LithuaniaEU-27LithuaniaEU-27 
 
 
 
 
  
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  competitiveness  and  affordability, 
while advancing the transition to net zero.  It 
examines  the  measures  and  targets  proposed  in 
the  final  (draft)  updates  to  the  national  energy 
and climate plans (NECPs) for 2030. 

is  showing  considerable  progress 
Lithuania 
renewables,  speeding  up 
towards  deploying 
permitting 
electricity 
and 
interconnectivity.  Challenges  remain  significant 
vis-à-vis energy prices, renovation of buildings and 
energy efficiency as a whole.  

ensuring 

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

Lithuania’s  retail  energy  prices  dropped  in 
2024 and remained well below EU average. In 
2024,  the  price  structure  of  Lithuania  followed  a 
reallocation.  The  energy  and  supply 
major 
component of household prices, which were 22.5% 
lower  than  the  EU  average  in  2024,  represents 
only 18.1% of the retail price, compared to 59.7% 
in  2023.  At  the  same  time,  the  network  cost 
component  surged,  as  it  represented  in  2024 
64.5% of the electricity retail price, against 26% in 
2023.  Gas 
for  non-household 
consumers  in  Lithuania  dropped  59.5%  between 
2024  and  2023,  and  are  the  lowest  in  the  EU, 
47% below the EU average. 

retail  prices 

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) Baltics and CWE respectively provide average prices in the 
Baltic market (Estonia, Latvia, and Lithuania) and central-
western European market (Belgium, France, Germany, 
Luxembourg, the Netherlands, and Austria). 
Source: S&P Platts and ENTSO-E 

In 2024, average wholesale electricity prices 
in  Lithuania  stood  at  87.34 EUR/MWh(113),  on 
a  par  with  the  other  Baltic  states  and 
slightly  above  the  EU  average  of  84.7 
EUR/MWh).  While  prices  in  Lithuania  declined 
early  in  the  year  amid  falling  natural  gas  costs, 
they  surged  during  the  spring/summer,  diverging 
from  Central  Western  European  (CWE)  markets. 
Prolonged  and  warmer  summer  heatwaves  in  the 
region  led  to  higher  consumption  (+6%  in  June-
August  2024  vs  same  period  in  2023),  while  a 
strained  net  importing  position  and  limited  non-
fossil  flexibility  exacerbated  the  supply-demand 
gap.  Though  this  gap  was  partially  covered  by 
increased  hydro  pumped  storage  and  wind 
generation  (respectively  +37%(114)  and  +19%  in 
June-August 2024 vs same period in 2023), costly 
natural  gas-fired  generation  was  ramped  up 
(+13%)  during  peak  demand  hours  to  cover  the 
remaining needs. Consequently, and more so than 
in 2023, these conditions drove concentrated price 
spikes in the evening hours (18h-21h), when solar 
output  declined  and  demand  remained  high, 
especially  in  the  summer.  On  the  other  hand, 
average daytime hourly prices throughout the year 
were lower compared to 2023, likely owing to the 

(113) Fraunhofer (ENTSO-E data). 

(114) ENTSO-E. 

63 

 
 
 
 
 
 
 
uptake  of  solar  output  in  Lithuania  (+104%  in 
2024) and in neighbouring markets. 

Prices  in  the  Baltics  then  stabilised  in  the  winter, 
supported  by  stronger  wind  generation  compared 
to 2023, particularly from Lithuania, while Central 
Western  European  markets  faced  strong  price 
spikes  due  to  considerable  fluctuations  in  the 
generation of low renewables. 

Flexibility and electricity grids 

requirement,  with 

The  Baltic  states,  including  Lithuania,  have 
successfully,  as  of  9 February  2025, 
connected to the Central Europe synchronous 
area  and  desynchronised  from  the  BRELL 
system.  With  39.21%  in  2024,  Lithuania  has 
surpassed  the  EU-wide  interconnectivity  target  of 
15%.  Lithuania  is  part  of  the  Baltic(115)  capacity 
calculation  region  (CCR).  Member  States  should 
ensure that a minimum of 70% of technical cross-
border  capacity  is  available  for  trading.  The 
general  trend  in  this  CCR  is  that  direct  current 
bidding  zone  borders  generally  meet  the  70% 
capacity 
reductions  only 
occurring  during  maintenance  of  individual  direct 
current 
increase  cross-border  trade 
capacity,  Lithuania  is  planning  to  reinforce  the 
internal  electricity  grid. 
Individual  figures  on 
Lithuanian  cross-border  capacity  made  available 
the 
for 
available 
synchronisation.  Desynchronisation 
the 
Russian  and  Belarussian  system,  where  the 
electricity  frequency  was  centrally  controlled  by 
Russia,  enables  better 
transmission  system 
interconnectivity  and  market  integration  in  the 
region,  allowing  Baltic  electricity  systems  to 
operate under common and transparent European 
rules. 

after 
from 

trade  will 

links.  To 

be 

Another  important  step  is  fostering  the 
in 
development  of 
renewable  energy 
for 
Lithuania. 
the 
installed 
synchronisation  will 
the  ability  of 
transmission  grids  to  support  a  higher  share  of 
renewable sources in overall electricity generation. 

Infrastructure 

improve 

Finalising  the  Harmony  Link  project(116)  and 
strengthening  the  existing  interconnectivity  levels 
with  Latvia  are  essential  aspects  of  developing 
Lithuania’s renewable energy potential. 

In  the  first  Union  list  of  projects  of  common 
interest and projects of mutual interest, Lithuania 
has one hydrogen project (currently known as the 
Nordic-Baltic  Hydrogen  Corridor)  and  one  CO2 
(currently  known  as  the  CCS  Baltic 
project 
Consortium),  which 
be 
commissioned  by  the  end  of  2029  and  2030, 
respectively. 

planned 

are 

to 

In  2024  Lithuania  purchased  the  floating 
storage  regasification  unit  at  the  Klaipeda 
lease  contract 
LNG  terminal  after  the 
expired  that  year.  This  infrastructure  has  been 
crucial in ensuring security of supply in the Baltics 
amid a full ban on Russian energy imports. 

Lithuania’s permitting process functions well 
and  balances  regulatory  requirements  with 
practical implementation. The efficiency of the 
permitting  process  has  resulted  in  successful 
implementation  of  energy  projects  that  have  led 
Lithuania  to  desynchronise  from  the  post-Soviet 
energy  system.  Even  though  there  is  no  specific 
legislation governing the permitting procedures for 
projects  of  common  interest  and  projects  of 
mutual  interest,  the  Ministry  of  Energy  engages 
to  streamline 
early  with  project  promoters 
coordination  and  make  sure  that  the  projects 
benefit  from  a  special  status  (project  of  national 
significance  or  project  of  special  national 
significance).  This  shortens  specific  stages  of  the 
permitting procedure. 

The  estimated  time  range  to  connect  a 
utility-scale photovoltaic system, as reported 
by  the  industry,  ranges  between  9  and  36 
months,  which  is  less  than  the  EU  average 
(around four years).  However, the current plans 
for developing the network of transmission system 
operators suggest that grid development is not yet 
aligned  with  the  national  policy  targets  for  wind 
and solar energy. 

(115) Finland, Sweden, Estonia, Latvia, Lithuania and Poland are 
part of the Baltic CCR. A CCR is a group of countries which 
calculate cross-border electricity flows together. 

(116) The Harmony Link project aims to complement the existing 
LitPol Link and expand the capacity between the Baltic 
electrical grids and the Continental Europe Synchronous Area. 

64 

 
 
 
 
 
 
In  2023,  electricity  accounted  for  16.5%  of 
Lithuania’s  final  energy  consumption,  below 
the EU average of 22.9%, and this share has 
remained largely stagnant in the last decade. 
When it comes to households, electricity  accounts 
for  17.7%  of  final  energy  consumption,  while  in 
industry  it  represents  32.3%  (see  also  Annex  7). 
For  the  transport  sector,  this  share  remains 
in 
negligible 
electrification  across  sectors  is  required  for  cost 
effectively  decarbonising 
the  economy  and 
bringing  the  benefits  of  affordable  renewable 
generation to consumers. 

at  0.4%. 

progress 

Further 

Renewables and long-term contracts 

In  2024,  Lithuania 
installed  renewables 
capacity strikingly increased. Lithuania has set 
ambitious  targets  for  renewables  in  its  final 
updated  NECP,  including  trajectories  for  capacity 
additions in the next few years. The installations in 
2024  are  in  line  with  this  trajectory.  Lithuania’s 
total installed capacity  surged from 2 894 MW in 
2023, to 4 618 MW in 2024, an increase of 60%. 
Lithuania  installed  544  MW  of  wind  energy  and 
1243  MW  of  solar  photovoltaics,  an  increase  of 
42%  and  93%  respectively  compared  to  total 
installed capacity in 2023. 

Graph A8.3: Lithuania's installed renewable 
capacity (left) and electricity generation mix 
(right) 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

In 2024, the proportion of renewable energy 
in  Lithuanian  electricity  generation  reached 
80%  (mostly  supplied  by  wind),  marking  a  slight 
decrease  from  84%  in  2023(117).  In  the  EU,  RES 

in 

Lithuania  has  taken  steps  to  support  non-
fossil  flexibility.  The  operational  electricity 
storage  capacity  reported  is  around  200 MW, 
which  was  funded  under  the  Lithuanian  recovery 
and  resilience  plan.  Lithuania  has  taken  steps  to 
promote electricity storage, with further measures 
set  to  increase  balancing  capacity  to  55%  of 
renewable  energy  sources 
(RES)  by  2030. 
Additionally,  it  is  building  the  fifth  synchronous 
unit  of  the  Kruonis  pumped  storage  power  plant, 
due to be completed by 2026. This is in order to be 
able to participate effectively, with a potential of 1 
the  ancillary  services  market. 
010  MW, 
Lithuania’s  regulatory  framework  does  not  pose 
barriers  to  the  development  of  flexible  resources, 
as  it  allows  new  stakeholders  and  distributed 
to  access  day-ahead  and 
energy 
intraday  markets.  However, 
the  Lithuanian 
National  Regulatory  Agency  lacks  information  on 
aggregation models, and the 80% target for smart 
metering devices for consumers has not yet been 
reached,  despite  encouraging  progress.  58%  of 
household  consumers  had  smart  meters  in  2023, 
which  marks  significant  progress  from  12.3%  in 
2022.  All  households  consuming  more  than 
1 000 kWh of electricity per year will be equipped 
with smart meters by the end of 2026. 

resources 

Consumer  empowerment  in  the  electricity 
market  is  significant,  with  a  continuously 
growing  number  of  prosumers,  and  more 
energy communities finding their place in the 
energy  system.  Due  to  a  favourable  regulatory 
framework, the number of prosumers continues to 
grow.  In  2024  it  reached  124 000  (40%  increase 
compared to 2023), with a total generation power 
of 1.4 GW. Household consumers in Lithuania have 
access to dynamic-price contracts, but their uptake 
remains  low  (less  than  2%  of  all  contracts).  The 
predominant  contract  types  are  ‘market-based 
fixed  price,  fixed  term’  (60%)  contracts  and 
regulated-price 
indicating  a 
(28%)  contracts, 
strong consumer preference for stable pricing. 

the 

Lithuania 
legal 
further  developed 
framework  for  energy  communities  by 
updating  definitions,  making  comprehensive 
recommendations  for  renewable  and  citizen 
energy  communities,  and  putting  in  place 
dedicated  support  and  investment  schemes. 
As  a  result,  the  number  of  registered  energy 
communities  has  increased  significantly,  with  18 
registered  in  2024,  up  from  just  3  the  previous 
year. 

65 

 
 
 
 
 
accounted  for  47%  of  the  overall  electricity 
generated in 2024. This level of renewable energy 
brings  Lithuania  into  the  group  of  leading  EU 
countries 
renewable  energy 
penetration.  From  2026  to  2030,  3 816 MW  of 
new wind and 936 MW of new solar capacities are 
expected to be deployed. 

terms  of 

in 

Lithuania  has  made  some  progress  to  speed 
up RES permitting but further steps would be 
beneficial.  The  government  has 
introduced 
measures  to  align  the  national  with  the  EU 
impact  assessment 
framework.  Environmental 
requirements  for  renewable  energy  projects  are 
streamlined  and  integrated  into  a  joint procedure, 
hence cutting red tape for developers. 

However,  permitting  procedures  are  still  split 
between different administrative bodies and, while 
authorities  help  to  guide  developers  to  the 
necessary institutions with their queries, this does 
not  reflect  the  one-stop-shop  approach  that  is 
promoted  as  a  best  practice  across  EU  Member 
States.  Investments  in  administrative  and  human 
resources  as  well  as  new  technologies  (e.g. 
geospatial  data  management)  would  also  be 
useful to limit future bottlenecks. 

In  2023,  Lithuania  obtained  State  aid  approval  to 
support  the  development  of  700 MW  of  offshore 
wind  capacity  with  a  15-year  contract  for 
difference  financed  by  EUR 193  million  of  public 
support.  The  related  tender  was  published  in 
November 2024. However, by the end of 2024, no 
new  schedule  on  the  expected  allocation  of 
support  for  renewables  had  been  released  on  the 
Union renewables development platform. 

is  growing  but 

Interest  in  power  purchase  agreements  (PPAs)  in 
the  number  of 
Lithuania 
transactions  remains  limited.  In  2023,  two  PPA 
transactions  were  concluded:  one  PPA  between 
Aquila  Clean  Energy  and  Eesti  Energia  covering 
1.8 TWh  from  a  new  wind  farm,  and  one  PPA 
between  Svyturys-Utenos  Alus  (SUA,  part  of  the 
Carlsberg  Group)  and  Green  Genius  covering  two 
solar-plus-storage power plants that will meet the 
energy  requirements  of  Svyturys-Utenos  (first 
hybrid PPA in Lithuania). In 2024, Centrica Energy, 
Taaleri  Energia,  and  Lords  LB  Asset  Management 
announced  the  signing  of  a  PPA  for  two  wind 
farms with a total installed capacity of 136 MW. 

(117) Yearly electricity data, Ember. 

Energy efficiency 

Lithuania  has  made  some  progress  towards 
reaching  the  2030  EU  energy  efficiency 
targets. This progress concerns FEC, but not PEC: 
in 2023, its primary energy consumption (PEC) was 
6.34 Mtoe, a 0.5% increase compared to 2022; in 
2023,  its  final  energy  consumption  (FEC)  was  5.3 
Mtoe,  a  1.4%  decrease  compared  to  2022.  Also, 
compared  to  2022,  FEC  decreased  in  industry  by 
5.8%,  in  the  residential  sector  by  2.8%  and  in 
services  by  2.3%,  but  increased  in  transport  by 
2.0%. Under the recast Energy Efficiency Directive 
(Directive (EU)  2023/1791),  it  would  be  beneficial 
if Lithuania tried to reach a PEC of 5.4 Mtoe and a 
FEC of 4.4 Mtoe by 2030. 

According  to  the  national  energy  and  climate 
(NECPR)  for  2023,  Lithuania 
progress  report 
achieved  new  annual  energy  savings  of  177 
ktoe/year.  The  top  four  measures  were  higher 
excise  duties  and  taxes  on  fuel  consumption, 
agreements  with  energy  suppliers  on  consumer 
education  and  consulting,  SPI  (services  in  the 
public interest) relief for industrial enterprises and 
replacing boilers with more efficient technologies. 

Lithuania  has  not  notified  the  Commission  of  its 
comprehensive  heating  and  cooling  assessment 
identifying  potential  for  the  application  of  high-
efficiency  cogeneration  and  efficient  district 
heating and cooling in line with Article 25(1) of the 
Energy  Efficiency  Directive.  There  is  no  estimated 
completion date for this. 

target  for  buildings.  Although 

Lithuania’s efforts in building renovation still 
face  significant  challenges 
in  contributing 
meaningfully  to  its  2030  energy  consumption 
the 
reduction 
residential  sector’s  final  energy  consumption  fell 
between  2022  and  2023,  from  a  medium-term 
perspective, between 2018 and 2022, residential 
final  energy  consumption  (FEC)  rose  by  1%. 
This 
long-term 
renovation  strategy  goal  of  achieving  a  15% 
reduction in building energy consumption by 2030. 
Preliminary data from 2023 suggest that the trend 
has  not  been  corrected  and  this  figure  will 
continue to increase. 

contrasts  with 

Lithuania’s 

In  2022,  heating  and  cooling  continued  to 
dominate  residential  FEC,  accounting  for  80%  of 
the  total.  Sales  of  heat  pumps  reached  28 950 

66 

 
 
before  2030  represented  0.47%(119)  of 
Lithuania’s GDP(120) (EU weighted average of 
0.49%).  Tax  measures  accounted  for  99.9%  of 
this volume, while direct grants represented 0.1%. 
Fossil  fuel  subsidies  without  a  planned  phase-out 
before 2030 and which do not specifically address, 
in  a  targeted  way,  energy  poverty  nor  genuine 
energy security concerns included a reduced excise 
tax  on natural gas used for heating  in businesses 
and  households,  an  reduced  excise  tax  on  gasoil 
for fishing and agriculture and a reduced VAT rate 
for  heating 
residential  spaces.  Additionally, 
Lithuania’s  2023  Effective  Carbon  Rate(121) 
averaged EUR 61.8 per tonne of CO₂, below the EU 
weighted mean of EUR 84.80(122). 

units in 2023, a 15% increase compared to 2022, 
when  25 130  units  were  sold.  Electricity  in 
Lithuania was 3.4 times more expensive than 
gas in the first half of 2024, which means that 
end users save energy but pay more if they chose 
a heat pump for heating. 

national 

financing 

Lithuania’s 
framework 
mobilising  investments  in  energy  efficiency  is 
mostly composed of grants and subsidies. In 2024, 
Lithuania  continued  to  implement  the  planned 
energy  efficiency  financing  schemes,  especially 
under  the  Recovery  and  Resilience  Fund,  the 
Modernisation  Fund,  the  Cohesion  Fund  and  also 
provided  technical  support  for  the  modernisation 
of  apartment  buildings.  Lithuania  established  a 
national  energy  efficiency  fund  as  laid  down  in 
Article 30  of  Directive  (EU)  2023/1791.  This  will 
help  Lithuania  to  deliver  the  energy-efficiency 
national  contributions  to  the  EU  target,  by 
including  the  use  of  financial  instruments  within 
the fund. 

Security of supply and diversification 

Lithuania  banned  imports  and  purchases  of 
Russian natural gas back in 2022. Natural gas 
demand  in  the  country  was  reduced  by  30% 
between  August  2022  and  July  2024,  well  above 
the  15%  EU  target.  Security  of  supply  is  still  well 
ensured by gas and electricity infrastructure. 

Between  2022  and  2023,  Lithuania’s  energy  mix 
saw a rise in the share of renewables from 28.5% 
to  30.2%.  Oil  and  petroleum  products  remained 
the  dominant  source,  increasing  from  46.9%  to 
47.8%.  Natural  gas  consumption  decreased 
slightly  from  20.3%  to  19.1%.  Solid  fossil  fuels, 
non-renewable  waste  and  peat  continued  to  fall, 
with solid fossil fuels dropping from 2.5% to 1.5%, 
non-renewable  waste  from  1.4%  to  1.1%,  and 
peat from 0.4% to 0.2%. 

Fossil fuel subsidies 

In  2023,  environmentally  harmful(118)  fossil 
fuel  subsidies  without  a  planned  phase-out 

(118) Direct fossil fuel subsidies that incentivise maintaining or 
increasing in the availability of fossil fuels and/or use of 
fossil fuels. 

(119) Numerator is based on volumes disclosed by the Lithuanian 
authorities via the 2025 NECPR reporting. For all Member 
States, it includes public R&D expenditures for fossil fuels as 
reported by the IEA (Energy Technology RD&D Budgets) and 
excludes, for methodological consistency, excise tax 
exemption on kerosene consumed in intra-EU27 air traffic. 

(120) 2023 Gross Domestic Product at market prices, Eurostat. 

(121) The Effective Carbon Rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(122) OECD (2024), Pricing Greenhouse Gas Emissions 2024 

67 

 
 
 
Table A8.1:  Key Energy Indicators 

Source: Eurostat, ENTSO-E, S&P Platts 

68 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0.1405          0.1957              0.2362              0.2229          0.2314              0.2649          0.2877          0.2879          Energy & supply [%]35.9%54.2%59.7%18.1%36.6%54.3%55.6%47.8%Network costs39.6%27.5%26.0%64.5%26.7%25.3%24.8%27.2%Taxes and levies including VAT24.4%18.2%14.4%17.4%36.7%20.3%19.6%25.0%VAT17.3%17.4%17.4%17.4%14.5%13.4%13.8%14.6%Household consumer - Gas retail price0.0341          0.0868              0.1687              0.0682          0.0684              0.0948          0.1121          0.1128          Energy & supply50.4%70.5%73.9%61.0%43.7%61.0%64.5%53.9%Network costs24.3%10.4%8.7%19.5%22.5%17.3%17.1%18.3%Taxes and levies including VAT25.2%19.1%17.4%19.5%33.8%21.7%18.4%27.8%VAT16.4%17.3%17.4%17.3%15.5%11.6%10.2%13.6%Non-household consumer - Electricity retail price0.1105          0.2020              0.1484              0.1435          0.1242              0.1895          0.1971          0.1661          Energy & supply50.3%66.9%68.1%57.7%43.0%66.5%63.0%55.8%Network costs24.3%14.9%17.2%24.5%15.8%10.7%11.9%15.5%Taxes and levies excluding VAT9.7%1.3%-3.1%0.6%30.4%9.9%11.2%15.4%Non-household consumer - Gas retail price0.0434          0.0975              0.0677              0.0274          0.0328              0.0722          0.0672          0.0517          Energy & supply70.7%79.5%71.9%67.2%66.2%77.3%77.3%68.7%Network costs8.4%2.4%9.5%12.7%7.7%3.8%5.3%7.1%Taxes and levies excluding VAT4.4%0.9%1.5%3.3%12.5%6.1%7.3%11.6%Wholesale electrity price (EUR/MWh)90.2229.294.687.1111.0233.299.184.7Dutch TTF (EUR/MWh)n/an/an/an/a46.9123.140.534.420172018201920202021202220232024Gross Electricity Production (GWh)4,187             3,511                3,972                5,518             5,079                4,783             5,979             -Combustible Fuels1,324         1,089             1,210             2,550         2,240            1,845         1,741         -Nuclear-              -                 -                 -              -                 -              -              -Hydro1,181         960                948                1,080         1,094            1,021         989             -Wind1,364         1,144             1,499             1,552         1,362            1,512         2,536         -Solar68               87                  91                  129             191                342             688             -Geothermal-              -                 -                 -              -                 -              -              -Other Sources250             232                223                207             193                63               24               Gross Electricity Production [%]Combustible Fuels31.6%31.0%30.5%46.2%44.1%38.6%29.1%-Nuclear0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Hydro28.2%27.3%23.9%19.6%21.5%21.3%16.5%-Wind32.6%32.6%37.8%28.1%26.8%31.6%42.4%-Solar1.6%2.5%2.3%2.3%3.8%7.2%11.5%-Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Other Sources6.0%6.6%5.6%3.7%3.8%1.3%0.4%-Net Imports of Electricity (GWh)8,6779,6339,3447,9099,0448,5686,930-As a % of electricity available for final consumption 79.2%85.4%81.9%70.9%75.7%74.8%62.6%-Electricity Interconnection [%]88.3%80.9%86.5%77.0%81.4%69.2%72.4%41.0%Share of renewable energy consumption - by sector [%]Electricity18.3%18.4%18.8%20.2%21.3%26.5%36.5%-Heating and cooling46.5%46.0%47.4%50.4%48.6%51.5%53.6%-Transport4.3%4.3%4.0%5.5%6.5%6.7%7.2%-Overall26.0%24.7%25.5%26.8%28.2%29.6%31.9%-20202021202220232020202120222023Import Dependency [%] 74.9%73.3%72.4%68.0%57.5%55.5%62.5%58.3%of Solid fossil fuels 87.9%91.9%127.8%89.9%35.8%37.2%45.9%40.8%of Oil and petroleum products 102.7%101.7%98.8%96.2%96.8%91.7%97.8%94.5%of Natural Gas 98.9%100.8%101.2%96.0%83.6%83.6%97.6%90.0%Dependency from Russian Fossil Fuels [%]of Natural Gas 41.8%36.6%7.9%0.0%41.0%40.9%20.7%9.3%of Crude Oil72.6%79.9%17.3%0.0%25.7%25.2%18.4%3.0%of Hard Coal100.0%100.0%72.8%0.0%49.1%47.4%21.5%1.0%2017201820192020202120222023Gas Consumption (in bcm)2.3                 2.1                     2.2                     2.4                 2.3                    1.5                 1.5                 Gas Consumption year-on-year change [%]5.0%-7.5%4.4%6.1%-4.2%-32.4%-3.1%Gas Imports - by type (in bcm)2.5                 2.3                     2.7                     2.9                 2.4                    3.5                 3.3                 Gas imports - pipeline1.3                 1.3                     1.2                     1.2                 0.9                    0.3                 0.1                 Gas imports - LNG1.21.01.61.71.53.33.2Gas Imports - by main source supplier [%]Norway35.3%43.2%53.7%37.5%10.5%25.2%45.5%United States7.2%0.0%3.0%20.7%38.6%66.9%45.4%Russia53.7%56.8%43.3%41.8%36.6%7.9%0.0%LithuaniaEU 
 
 
 
 
   
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Lithuania  faces  deteriorating  water  quality 
and biodiversity loss, which has an impact on 
climate  resilience  and  sectors  reliant  on 
ecosystem  services,  alongside  a  sharp 
decline in farmland bird populations. Despite a 
rich  natural  heritage,  two  thirds  of  Lithuania’s 
protected 
unfavourable 
have 
conservation status, impacting climate adaptation, 
threatens  ecosystem 
while  biodiversity 
resilience. 
several  water 
challenges,  such  as  surface  water  pollution. 
Meanwhile, Lithuania’s sustainable land-use sector 
is  on  track  to  exceed  its  2030  carbon  removal 
targets. 

Lithuania 

habitats 

faces 

loss 

an 

Climate adaptation and preparedness 

Lithuania  is  experiencing  more  frequent  and 
longer  periods  of  extreme  weather  events, 
such  as  drought,  extreme  heat  and 
heatwaves,  and  heavy 
rainfall  causing 
floods,  as  well  as  slow-onset  changes  such 
as a general temperature rise. 2023 saw over 
32%  of  the  territory  affected  by  drought,  while 
losses  amounted  to 
climate-related  economic 
EUR 466  million.  Agriculture  and  forestry  are  key 
sectors  affected,  with  a  high  likelihood  of  facing 
hazards  and  vulnerability.  Climate  change  poses 
risks  to  energy  systems,  human  health  (from 
extreme temperatures), urban infrastructure (from 
heavy  precipitation)  and  ecosystems  (through 
biodiversity  loss).  The  secondary  effects  include 
the  spread  of  pests  and  diseases  that  can  have 
detrimental  effects  on  agriculture,  forestry  and 
human  health (123).  Between  2012  and  2020,  of 
the  19  Member  States 
reporting,  Lithuania 
reported  the  second  highest  number  of  locally 
tick-borne  encephalitis, 
transmitted  cases  of 
suggesting  that  the  local  climate 
is  already 
suitable for ticks (124). 

In 2021, Lithuania enhanced its climate goals 
for  up  to  2050  under  the  National  Climate 
Change  Management  Agenda,  focusing  on 
resilience  and  vulnerability 
adaptation, 
reduction,  with  efforts  coordinated  by  the 

of 

the 

Environment 

Ministry 
and 
implemented through cross-sector policies. In 
2021,  Lithuania  updated 
its  national  climate 
targets  and  goals  under  the  National  Climate 
Change  Management  Agenda,  which  sets  targets 
and  objectives  for  Lithuania’s  climate  change 
management policy up to 2030, 2040 and, in the 
longer  term,  up  to  2050 (125).  The  goals  of  the 
climate change adaptation policy are to strengthen 
adaptive  capacity,  increase  resilience  and  reduce 
vulnerability to the impacts of climate change, and 
to  contribute  to  sustainable  development  and 
responses.  The 
ensure  adequate  adaptation 
implementation  of  the  agenda  is  coordinated  by 
the  Ministry  of  the  Environment.  The  agenda's 
objectives  are  implemented  through  cross-sector 
policies,  such  as  the  National  Progress  Plan  for 
2021-2030, 
Sustainable 
Development  Programme  and  specific  economic 
sectors'  development  programmes  or  short-term 
planning  documents.  Lithuania  has  been  focusing 
on  disaster  risk  assessments,  primarily  under  civil 
protection and disaster management policies. 

National 

the 

climate-adaptation 

Progress has also been made at sub-national 
level.  In  2023,  Lithuania  began  a  municipal 
climate-adaptation  project  that  includes  climate 
projections,  vulnerability  assessment,  adaptation 
planning  and  staff  training.  Lithuania  is  updating 
its 
addressing 
efforts, 
vulnerabilities 
in  various  sectors,  maintaining 
stable governance and fostering collaboration, but 
there  is  room  for  improvement  in  addressing 
barriers  and  nature-based  solutions.  At  sub-
national  level,  municipalities  that  are  signatories 
to  the  EU  Covenant  of  Mayors  cover  49%  of  the 
total  population,  which  is  slightly  higher  than  the 
EU average of 46%. 

Water resilience 

abundant 

Lithuania’s 

Despite 
water 
resources  and  generally  good  groundwater 
quality,  significant  ecological  and  chemical 
deterioration  of  surface  waters,  pollution 
challenges  and  a  EUR 259  million  annual 
investment  gap  for  water  management, 
threaten the country’s climate resilience and 

(123) EEA, 2024, European Climate Risk Assessment. 

(124) Van Heuverswyn et al., 2023, Spatiotemporal spread of tick-
borne encephalitis in the EU/EEA, 2012 to 2020, Link. 

(125) Seimas of the Republic of Lithuania, 2021, National Climate 

Change Management Agenda, Link. 

69 

 
 
 
 
 
 
also 

impacting 

groundwater 

ecological  balance.  Lithuania  has  abundant 
is 
water  resources  and  groundwater  quality 
reported as good. The water exploitation index plus 
(WEI+) is low: it reached 0.4 in 2022 compared to 
an EU average of 4.5, showing a decreasing trend 
over  the  last  few  years.  Nevertheless,  there  has 
been  a  deterioration  in  the  ecological  status  of 
surface  water  bodies,  and  a  steep  reduction  in 
surface  water  bodies  with  good  chemical  status. 
Lakes,  rivers  and  coastal  waters  in  Lithuania  are 
polluted,  with  36.4%  achieving  good  ecological 
status,  due  to  agricultural  runoff,  urban  pollution 
and nutrient flows contributing to the Baltic Sea’s 
eutrophication.  Saline  intrusions,  probably  caused 
by rising sea levels and over-abstraction of water, 
are 
quality. 
Furthermore,  the  widespread  use  of  individual 
wastewater  systems  in  rural  areas  has  raised 
concerns about untreated and unmonitored waste 
water.  94%  of  all  surface  water  bodies  are 
reported as having ‘unknown’ chemical status due 
to  the  lack  of  information  on  the  amounts  of 
hazardous substances released into the water. The 
specific  sources  of  pollution  hampering  the  good 
remain 
status 
chemical 
unidentified,  and 
is 
essential to tackle the pollution issue and increase 
Lithuania’s  water  resilience.  As  shown  in  Graph 
A9.2, the investment gap for water protection and 
water management is EUR 259 million per year by 
2027.  Roughly  30%  of  the  gap  can  be  attributed 
to  unaddressed  financing  needs  in  wastewater 
management  while  the  larger  part  of  the  gap  is 
for  implementing  the  different  aspects  the  Water 
Framework Directive. 

their  proper  monitoring 

of  waterbodies 

habitats  with  unfavourable  conservation  status 
impacts  Lithuania’s  climate  resilience,  as  the  loss 
of  biodiversity  impairs  ecosystems’  ability  to 
provide  services  that  help  mitigate  the  effects  of 
climate  change,  such  as  regulating  water  cycles, 
maintaining  soil  health  and  sequestering  carbon. 
The  common  farmland  bird  index  shows  a  sharp 
decline since 2019, decreasing from 61.7 to 45.2, 
a  value  significantly  below  the  EU-27  average  of 
68.2. It is also the lowest value among all reported 
Member  States  and 
indicates  a  significant 
deterioration 
in  population  abundance  and 
diversity of common farmland bird species. 

Nature  degradation  creates  significant  risks 
to  Lithuania's economy  and  competitiveness, 
its  economy  is  highly  dependent  on 
as 
ecosystem  services.  41%  of  Lithuania’s 
economy  is  directly  and  highly  dependent  on  the 
provision of ecosystem services. Though this value 
is slightly below the EU-27 average of 44%, it still 
means  that  failure  to  maintain  ecosystems' 
capacity to deliver services could entail significant 
costs  or  even  stop  production.  Several  sectors, 
fisheries  and 
such  as  agriculture, 
aquaculture,  construction,  water  utilities  and 
healthcare  (see  Graph  A9.1),  are  particularly 
dependent  on  ecosystem  services,  with  100%  of 
the  gross  value  added  of  these  sectors  directly 
dependent  on  those  services.  Lithuania’s  supply 
chain  dependency  on  ecosystem  services  is  high 
for  25%  of  its  gross  value  added,  showing  a 
higher 
level  of  dependency  than  the  EU-27 
average  of  22%.  Protecting  and  restoring  key 
ecosystems  would  ensure  that  the  long-term 
competitiveness  of  these  economic  sectors  is 
preserved. 

forestry, 

Biodiversity and ecosystems 

The  state  of  nature  and  ecosystems  in 
Lithuania  affects  the  country’s  climate 
resilience.  Lithuania  is  home  to  54  types  of 
natural habitat and 106 species of EU importance. 
However,  according  to  the  latest  available  data 
covering  the  reporting  period  2013-2018,  only 
22.2%  of  the  country’s  protected  habitats  have  a 
good  status,  though  that  is  higher  than  the  EU 
average  of  14.7%.  Similarly,  the  conservation 
status of species, with 36.7% reported as having a 
good  status,  is  above  the  EU  average  of  27%. 
Despite  some  positive  trends,  the  number  of 
habitats and species with bad conservation status 
has  increased.  Having  two  thirds  of  protected 

70 

 
Graph A9.1: Direct dependency(1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 

biodiversity  and  ecosystem  conservation 
in 
Lithuania is around EUR 203 million per year. The 
gap  of  EUR 820  million  is  substantial,  half  of 
Lithuania’s 
investment 
shortfall, putting at risk the country’s commitment 
to global biodiversity agreements and undermining 
its long-term economic and social development. 

environmental 

total 

Graph A9.2: Investment needs and gaps in EUR 
million, in 2022 constant prices 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature, Link. 

Targeted  action  on  nature  protection  and 
restoration  is  needed  to  meet  Lithuania’s 
nature  restoration  targets.  In  2022,  Lithuania 
had  17.8%  of  its  territory  covered  by  protected 
land  area,  below  the  EU-27  average  of  26.1%. 
Lithuania  needs  to  restore  up  to  4 576  km2  of 
habitats listed in Annex I to the Habitats Directive, 
corresponding  to  up  to  7%  of  its  territory  (126). 
Lithuania  needs  EUR 1  billion  of  investment  per 
year to effectively conserve and restore its natural 
capital,  mitigate  the  impacts  of  climate  change 
and  preserve  the  country’s  rich  biodiversity  (see 
Graph  A7.2).  The  current  level  of  financing  for 

Source: European Commission, DG Environment, 
Environmental investment needs & gaps assessment 
programme, 2025 update. 

Sustainable agriculture and land use 

Lithuania’s  carbon  removals  are  on  track  to 
meet  its  2030  target  for  land  use,  land-use 
change  and  forestry  (LULUCF).  Over  the  last 
land-use  sector  has 
ten  years,  Lithuania’s 
maintained a consistent level of carbon removals. 
To meet its 2030 LULUCF target, additional carbon 
removals of  -0.6 million tonnes of CO2 equivalent 
(CO2eq)  are  needed  (127).  The  latest  available 
projections show a surplus compared to the target 
of  -0.3  million  tonnes  of  CO2eq  for  2030  (128).
Lithuania  is  therefore  on  track  to  meet  its  2030 
target. 

(126) European Commission (2022), Impact assessment 

accompanying the proposal for a Regulation on nature 
restoration. 

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

Regulation (EU) 2023/839. 

(128) Climate Action Progress Report 2024 COM/2024/498. 

71 

0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow - 200 400 600 800 1,000 1,200BiodiversityWaterBaselineGap 
     
 
     
 
investments 

example, 
restoration 
management of water resources (130). 

in 
habitats, 

of 

conservation  and 
sustainable 
and 

emissions 

agricultural 

Lithuania’s  agriculture  is  still  a  significant 
source  of  greenhouse  gas  emissions  and 
continues  to  have  an  impact  on  air,  water 
and soils. In 2022, agriculture was responsible for 
a total of 4.1 million tonnes of CO2eq, accounting 
for  around  21%  of  the  country’s  total  emissions 
(excluding  LULUCF).  This 
includes  2.2  million 
tonnes of CO2eq from livestock. Another big source 
of agricultural GHG emissions are drained organic 
soils.  Drained  peatlands  make  up  6%  of 
Lithuania’s  agricultural  land  (compared  to  the  EU 
average  of  3%)  but  account  for  53%  of  the 
(including 
country’s 
LULUCF), significantly  higher than the EU average 
of  25% (129).  Lithuania's  utilised  agricultural  area 
(UAA)  decreased  by  2.7% from  3  million  hectares 
in  2014  to  2.9  million  hectares  in  2023.  The 
country’s nitrogen balance in 2021 was 42.7 kg of 
nitrogen  per  hectare  of  UAA.  The  analysis  of 
Lithuania's  third  river  basin  management  plans 
from  agriculture  as  an 
identified  nutrients 
significant pressure for surface water, affecting its 
good status. As the livestock density decreased to 
the  index  level  of  0.25  in  2020,  i.e.  exactly  three 
times less than the EU average of 0.75, ammonia 
emissions have shown a slight decreasing trend as 
well, with a reduction of 1.6% between 2018 and 
2022.  During  2017-2022,  pesticides  with  levels 
exceeding  thresholds  were  detected  in  9%  of 
Lithuania’s  surface  waters.  Lithuania’s  agriculture 
sector faces the need to balance productivity with 
there  are 
environmental  conservation.  While 
traditional 
negative 
impacts  associated  with 
to 
farming  practices,  efforts  are  underway 
transition 
and 
more 
environmentally friendly systems. 

sustainable 

to 

The  Common  Agricultural  Policy  (CAP)  Strategic 
Plan of Lithuania dedicates approximately 27% of 
its budget to a wide range of measures addressing 
environmental  and  climate-related  challenges  in 
the  agriculture  sector.  Around  40%  of  UAA  is  to 
receive  CAP  support  to  improve  and  protect  soil 
quality,  e.g. by  including  leguminous  crops in  crop 
rotation. 25% of UAA will be  supported to protect 
water quality by reducing the use of fertilisers and 
pesticides.  Furthermore, 
supports 
sustainable farming practices and encourages the 
expansion of the area covered by organic farming. 
The  area  under  organic  farming  in  Lithuania  is 
expected to increase by half, reaching almost 13% 
by  2028.  Other  support  possibilities  cover,  for 

the  plan 

(129) Heinrich-Böll-Stiftung, 2023, Peatland Atlas, Link. 

(130) Lithuania – CAP Strategic Plan, Link. 

72 

 
 
 
Table A9.1:  Key indicators tracking progress on climate adaptation, resilience and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action. The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes figures for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) 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. 
Source: Eurostat, EEA. 

73 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems15.550.243.392.080.0232.046.772.76[area impacted by drought as % of total]Forest-fire burnt area (1)32            32            32            32            32            32            [ha, annual average 2006-2023]Economic losses from extreme events-           -           -           -           1              466          24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.00         1.00         [composite score between 0 and 4]Heat-related mortality (3)117          117          117          117          117          [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action49            49            50            51            50            49            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)0.40.50.90.60.4-4.54.5[total water consumption as % of renewable freshwater resources]Water consumption98            97            138          123          105          -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies---64%---59%Groundwater bodies---0%---93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)22.2-----14.7-[% of habitats having a good conservation status]Common farmland bird index58.561.750.946.445.2-72.274.42000=100Protected areas---1718--26[% of protected land areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)3 322       3 611       4 083       4 505       634 378     716 124     [EUR million]Landscape features----4              -[% of agricultural land covered with landscape features]Food waste--137139--[kg per capita]Area under organic farming8.18.18.08.99.37.99-[% of total UAA]Nitrogen balance43.540.833.742.7--[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)------[mgNO3/l]Net greenhouse gas removals from LULUCF (9)5 717-       5 903-       6 073-       5 501-       6 356-       -           256 077-     240 984-     [Kt CO2-eq]LithuaniaEU-27LithuaniaEU-27LithuaniaEU-27LithuaniaEU-27 
 
  
 
FAIRNESS 
ANNEX 10: LABOUR MARKET 

Lithuania’s  labour  market  is  recovering,  but 
further  progress  could  be  hindered  by  the 
remaining structural challenges. The economic 
slowdown,  with  GDP  growth  falling  from  2.5%  in 
2022  to  0.3%  in  2023,  had  an  adverse  effect  on 
recruitment,  with  the  employment  rate  falling 
from 79% in 2022 to 78.5% in 2023 (EU: 75.3%). 
However, in 2024, the GDP grew by 2.7% and the 
employment rate rebounded, reaching 79.2%, only 
1.5  percentage  points  (pps)  short  of  Lithuania’s 
2030  target  of  80.7%.  The  country  still  faces 
structural  challenges  that  hinder  the  economy’s 
competitiveness  and  potential  economic  growth, 
such  as  stagnating  productivity,  labour  shortages, 
skills  mismatches  and  an  underperforming  Active 
Labour Market Policy (ALMP) system. Other factors 
and 
include 
demographic 
underrepresentation  of  certain  groups 
in  the 
labour market, particularly young people, the low-
skilled  and  persons  with  disabilities.  As  Lithuania 
works  towards  its  2030  employment  target,  the 
main  challenges  include  harnessing  the  potential 
of  underrepresented  groups,  including  through 
increased coverage of ALMP measures, addressing 
skills  mismatches  and 
labour  shortages,  and 
enhancing labour productivity. 

change 

Unemployment  rate  rose  amid  a  strong 
growth of the labour force in 2023 and 2024. 
The  labour  force  continued  to  grow  in  2023  and 
2024, driven by migration from non-EU  countries, 
primarily  Ukraine.  Rising  minimum  wage  and 
changes  in  the  tax-system  (131)  may  have  also 
contributed  to  a  rise  in  the  activity  rate  (20-64), 
which increased in both 2023 and 2024, reaching 
85.3%  in  2024  (EU:  80.4%)  and  reflecting  the 
addition  of  51 000  people  to  the  labour  force 
compared to 2022. At the same time, the inactive 
population  (20-64)  continued  to  fall,  reaching 
14.7% in Q4 2024. As a result, the labour market 
struggled  to  absorb  new  entrants  and 
the 
unemployment rate (15-74) rose to 6.9% in 2023, 
up  from  6%  in  2022,  and  to  7.1%  in  2024  (EU: 
5.9%).  Young  people  and  low-skilled  people  were 
among those particularly negatively affected.  

(131) While the minimum wage grew from EUR 607 in January 

2020 to EUR 1 038 in 2025 (net EUR 777), the non-taxable 
income threshold (for those earning up to the amount of the 
minimum wage) more than doubled from EUR 350 in 
January 2020 to EUR 747 in 2024.  

Graph A10.1: Key labour market indicators 

Source: Eurostat [fsi_emp_a], [une_rt_a], [une_ltu_a], 
[edat_lfse_20], EU LFS. 

low 

and 

employment 

The labour market situation of young people 
(15-24) further deteriorated in 2024, marked 
by 
increasing 
unemployment rates. The economic downturn of 
2023  has  disproportionately  affected  youth 
employment.  The employment  rate  of  those  aged 
15-24  was  well  below  the  EU  average  in  2024 
remain 
(30.8%  vs  35%).  Low-skilled  youth 
particularly  vulnerable,  with  an  employment  rate 
of  just  4.3%  in  2024(132),  more  than  four  times 
below  the  EU  average  of  19.7%.  Moreover,  the 
youth  unemployment  rate  (15-24)  rose  from 
11.9%  in  2022  to  13.8%  in  2023  and  surged 
further  to  16.2%  in  2024,  surpassing  the  EU 
average  of  14.9%.  The  youth  unemployment  rate 
increased  significantly  for  young  females  (by  6.2 
pps  to  16.4%  vs  EU  14.6%),  while  having 
decreased for young males (by 1.2 pps to 16% vs 
EU 15.1%) (133).  

The  difficulties  faced  by  young  people  in 
transitioning  to  employment  are  further 
underscored  by  the  rising  share  of  young 
people  not  in  employment,  education  or 
training  (NEETs).  The  share  of  NEETs  increased 
for the second consecutive year, reaching 14.7% in 

(132) Eurostat indicates low reliability of 2024 data for Lithuania 

(133) Eurostat indicates low reliability of this data for 2024. 

74 

505560657075808590051015202520142015201620172018201920202021202220232024Employment rate 20-64 (rhs)Labour force participation 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) 
 
 
 
        
 
 
 
2024  and  surpassing  the  EU  average  of  11%. 
While  the  rate  of  unemployed  NEETs  remained 
relatively  stable  at  4.5%  (up  from  3.8%  in  2022 
and 4% in 2023), the proportion of inactive NEETs 
increased  to  9.5%  in  2023  and  10.1%  in  2024 
(from  6.9%  in  2022)  and  was  one  of  the  highest 
among  the  Member  States 
(EU:  6.9%).  The 
increase in the NEET rate was also driven by a rise 
in early leaving from education and training, which 
rose  from  4.8%  in  2022  to  6.4%  in  2023  and 
8.4% in 2024, albeit still below the EU average of 
9.3%. The new government’s programme includes 
to 
commitments 
employment 
the  Youth  Guarantee, 
supported  by  the  European  Social  Fund  Plus 
(ESF+), to expand careers counselling, especially in 
rural  areas,  and  to  further  improve  access  to 
benefits,  services  and  housing  for  young  families. 
However,  further 
targeted  efforts  would  be 
beneficial  to  tackle  the  problem  of  growing 
numbers of NEETs and unemployed young people. 

to  further  promote  access 
through 

Graph A10.2: Youth labour market outcomes (15-
24 years) 

their 

limiting 

interest 

tailored  support  for 

average  in  2024  (17.2%  vs  11.6%),  and  around 
one  third  of  newly  registered  unemployed  were 
low-skilled,  with  no  professional  qualifications. 
Despite  these  structural  challenges,  less  than  5% 
of all registered unemployed people in 2023 took 
part in  ALMP measures,  reportedly  due to  various 
factors 
to  participate, 
including  a  lack  of  motivation  due  to  debts, 
addictions  or  health  problems,  a  lack  of  suitable 
learning  or  other 
and 
employability  enhancing  offers,  underdeveloped 
public services including public transport and long 
commute  times,  especially  in  the  remote  areas, 
caring  responsibilities  and  other  reasons.  Public 
expenditure  on  ALMPs  was  just  0.13%  of  GDP  in 
2023,  even 
less  than  before  the  pandemic. 
According  to  national  data  the  funding  for  ALMPs 
increased  in  2024  compared  to  2022,  however, 
much of this increase was due to European Social 
Fund  Plus  (ESF+)  funds  absorption.  Lithuania  has 
allocated  EUR  272  million  of  ESF+  inter  alia  for 
tailored ALMP measures to groups of unemployed, 
such  as 
long-term 
unemployed  and  elderly.  These  measures  are 
expected to enable over 54 000 people to become 
more  employable.  However,  given  the  number  of 
the  registered  unemployed  in Lithuania  was  close 
to  162  thousand  in  March  2025,  it  would  be 
beneficial  to  consider  increasing  the  coverage  of 
ALMP measures, including through better  tailoring 
them  to  individual  needs  and  addressing  other 
reasons  limiting  participation  incentives  to  further 
of 
integration 
strengthen 
disadvantaged groups into the labour market. 

low-skilled,  youth, 

activation 

and 

the 

The  disability  employment  gap  remains 
among  the  highest  in  the  EU.  After  a  slight 
decrease  in  2023,  the  disability  employment  gap 
increased substantially in 2024, reaching 39.9 pps 
in 2024, well above the EU average of 24 pps. The 
gap is significantly higher for men than for women 
(46 pps vs 32.8 pps), a trend observed since 2018. 
While  national  statistics  on  employment  and 
unemployment  rates  for  people  with  disabilities 
differ, 
indicate  significant 
challenges in integration of people with disabilities 
into  work.  Only  46.5%  of  people  with  disabilities 
(15-64)  were  active  in  the  labour  market  in 
Lithuania  in  2024,  below  the  EU  average  of 
55.5%. Furthermore, 46.4% of young persons with 
disabilities  (15-29)  were  NEETs,  with  a  disability 
gap  of  33.5  pps  (vs  19.8  pps  in  the  EU),  further 
underscoring  challenges  related  to  their  transition 
into  the  workforce.  There  is  a  strong  correlation 
between  low  employment  rates  among  people 

they  consistently 

Source: Eurostat, LFS [edat_lfse_18, lfsi_emp_a, une_rt_a, 
lfsi_act_a, edat_lfse_20] 

Vulnerable  groups,  such  as  low-qualified 
adults,  face  persistent  barriers  to  labour 
market  integration,  while  the  coverage  of 
ALMP  measures  remains  limited.  Employment 
outcomes 
to 
in  Lithuania  are  closely 
educational  attainment.  The  employment  rate  for 
people  with  at  most  lower-secondary  education 
continued  to  lag  behind  the  EU  average  in  2024 
(53.1% vs 58.7%). The unemployment rate of the 
low-skilled  remained  significantly  above  the  EU 

tied 

75 

010203040506070800510152025303540200720082009201020112012201320142015201620172018201920202021202220232024%%LTUnemployment rate (lhs)Unemployment ratio (lhs)NEET (lhs)In education, training (rhs)Employment rate (rhs) 
       
with disabilities and high poverty rates (see Annex 
issues,  Lithuania  has 
11).  To  address  these 
launched  reforms  to  encourage  people  with 
disabilities to participate in an open labour market. 
These  measures  remain  at  an  early  stage  and 
have  not  yet  brought  about  a  noticeable  increase 
in  employment  of  people  with  disabilities.  Further 
targeted  ALMP 
efforts,  such  as  expanding 
measures  and  enhancing 
cooperation  with 
employers,  could  be  beneficial  to  improve  labour 
market outcomes for people with disabilities. 

Rapid  ageing  and  declining  birth  rates  pose 
long-term  challenges  to  the  size  of  the 
working-age  population.  The  working-age 
population  (15-64)  in  Lithuania  is  projected  to 
decline by 42.4% by 2070, compared to 15.4% in 
the  EU.  While  the  population  decline  has  stalled 
recently, Lithuania experienced a net loss of more 
than  600 000  residents  between  2003  (a  year 
before  joining  the  EU)  and  2021.  A  labour  force 
increased by almost 80 000 people between 2021 
and 2024, mainly driven by increased immigration 
from  non-EU  countries,  including  Belarus  and 
Ukraine. However, the number of non-EU nationals 
started  to  fall  in  the  second  half  of  2024  due  to 
stricter  entry  requirements  and  other  control 
measures (134). The largest recorded decrease was 
among  Ukrainians  from  86 353  to  68 166,  and 
Belarusians,  from  62 167  to  59 399  (135).  In 
addition,  Lithuania  further  reduced  the  quota  of 
non-EU  workers  from  40 000  to  25 000  in  2025, 
which could further slow labour force growth. The 
projected decrease in working-age population risks 
skills 
exacerbating 
of 
mismatches,  underscoring 
activating and better integrating underrepresented 
groups  and  those  outside  the  labour  market  to 
enter work. To maintain a robust workforce in key 
sectors  and bolster Lithuania’s  competitiveness,  it 
would be beneficial to expand the coverage of the 
targeted  ALMP  measures,  improve  upskilling  and 
reskilling, develop a coherent talent attraction and 
increase 
migrant 
productivity. 

the  urgency 

integration 

shortages 

labour 

policy 

and 

and 

(134) This does not apply to people who are not protected under 
the Temporary Protection Directive – this Directive mainly 
applies to Ukrainians who have arrived since 24 February 
2022, but not those who arrived before then, or immigrants 
from other non-EU countries, such as Belarus  

in 

Persistent 
labour  shortages  and  skills 
sectors  hinder 
certain 
mismatches 
potential  productivity  gains.  While  still  lower 
than the EU  average (2.7%), the job vacancy rate 
in  Lithuania  has  been  hovering  around  1.8-2% 
over  2021-2024,  mainly  due  to  labour  shortages 
in  public  administration,  health,  transport  and 
finance.  At  the  same  time,  labour  market  slack, 
reflecting  the  unmet  need  for  labour,  increased 
slightly  in  2024  (10.3%),  but  remained  below  the 
EU  average  (11.7%).  Increasing  labour  market 
slack,  together  with  persistently  high 
labour 
shortages in some sectors, may indicate problems 
with  matching  efficiency  in  the  Lithuanian  labour 
market,  which  is  further  underscored  by  low 
coverage 
The 
macroeconomic  skills  mismatch  (136)  increased 
slightly  in  2024  (21%),  in  contrast  with  most 
Member  States,  remaining  above  the  EU  average 
of 19.6%. 

ALMP  measures. 

the 

of 

Wages have grown rapidly over recent years, 
but  labour  productivity  growth  has  been 
slower,  posing  risks  to  competitiveness. 
Nominal  wages  increased  by  more  than  11%  in 
2022 and 2023 and by 8.6% in 2024. Real wages 
have  also  grown  rapidly  since  2023,  by  7.7%  in 
2024,  and  are  projected  to  continue  growing, 
albeit  more  slowly,  supported  by  robust  nominal 
wage  growth  and  rapid  disinflation  (inflation  fell 
sharply  from  8.7%  in  2023  to  0.9%  in  2024(137)). 
The  statutory  minimum  wage  increased  by  more 
than  26%  between  January  2022  and  July  2024. 
Although wages are still catching up  compared to 
the  EU  average(138),  their  rapid  growth,  coupled 
with stagnating export market shares in 2023 and 
a  drop  in  labour  productivity,  risks  undermining 
Lithuania’s  competitiveness.  Labour  productivity 
decreased  in  2022  and  2023  by  2.3  and  1.1  pps 
respectively,  then  slightly  increased  by  0.4pps  in 
2024  (139),  with  significant  regional  disparities 
(Annex 17). Given the projected decline in working-
age  population,  it  would  be  beneficial  to  increase 

(136) The macroeconomic skills mismatch indicator 

measures the dispersion of employment rates across 
skill groups (proxied by qualification levels, with ISCED 
0-2 low; 3-4 medium and 5-7 high). Source: 
Commission’s own calculations 

(137) European Economic Forecast. Autumn 2024  

(138) The average full-time adjusted salary in Lithuania in 2023 

was EUR 27 178 vs EU average of EUR 37 863. 

(135) Ministry of Interior of Lithuania 

(139) Commission autumn 2024 economic forecast.  

76 

 
 
 
efforts  to  foster  labour  productivity.  As  part  of 
efforts to transpose the Minimum Wage Directive, 
Lithuania  has  changed  its  mechanism  for  setting 
the  minimum  wage,  adding  labour  productivity  to 
the criteria.  

labour  tax  wedge  (140)  has  fallen, 
The 
particularly  for  low-income  earners,  but  a 
high  unemployment  trap  for  some  income 
indicates  that  some  people  are 
levels 
deterred  from  entering  work. 
In  2024, 
Lithuania’s  labour  tax  wedge  was  lower  than  the 
EU  average  for  single  people  earning  below  and 
above  the  average  wage.  Second  earners  at  67% 
of  the  average  wage  whose  spouses  earn  the 
average wage face a tax wedge that is lower than 
the EU average and equal to that of single people 
at  the  same  wage  level  (see  Annex  2).  The 
employment  rate  of  women  is  high  (78.5%  vs 
70.8%  in  the  EU  in  2024)  and  the  prevalence  of 
part-time employment among women is low (7.5% 
vs  27.9%  in  the  EU),  suggesting  that  tax-related 
disincentives  for  second  earners  to  work  or 
increase earnings are limited. However, the short-
term  financial  disincentives  for  those  receiving 
unemployment  benefits  to  go  back  to  paid  work 
(the unemployment trap) were among the highest 
in  the  EU,  especially  for  single  people  taking  up 
jobs at 67% and 100% of the average wage, and 
particularly  during  the  first  three  months  of 
receiving  unemployment  benefit.  The  tax-reform 
package to which Lithuania committed in the RRP, 
along  with 
reform  of 
the  planned  RRP 
unemployment  insurance,  could  address  these 
issues but have stalled in Parliament.  

vs  3.1%).  However,  labour  shortages  were  quite 
pronounced in the field of water management and 
supply, with the vacancy rate of 2.3% vs EU 1.6% 
in 2024. The greenhouse gas emission intensity of 
Lithuania’s  workforce  has 
improved  slightly, 
decreasing  from  14.4  tonnes  per  worker  in  2015 
to 13.9 tonnes in 2023 (EU: 12.3 tonnes).  

The ICT sector has also expanded, benefiting 
from the relocation of many Belarussian ICT 
workers  and  companies  in  2020,  with  5.3% 
of  ICT  specialists  in  total  employment  in 
2024  (EU:  5%).  The  proportion  of  working-age 
population  (25-64)  with  basic  digital  skills  was 
close  to  the  EU  average  in  2023  (64.1%  vs 
64.7%).  Under its RRP, Lithuania has introduced a 
learning  and  entrepreneurship  support  scheme 
that  supports  both  the  unemployed  and  the 
employed  seeking  to  obtain  high  value-added 
qualifications and skills and helps entrepreneurs to 
relevant  for  green  and  digital 
create 
transition.  According  to  the  RRP,  by  Q2  2026 
19 350  participants  will  obtain  skills  and 
qualifications  in  high  value-added  areas  (10 000 
of  whom  in  digital  skills),  and  1 325  participants 
will  be  supported  for  job  creation  (of  whom  673 
for  jobs  to  support  the  digital  transition  and  652 
for  jobs  to  support  the  green  transition  and 
circular  economy).  This,  together  with  the  reform 
on  adult  learning  (see  Annex  12),  is  expected  to 
boost the digital skills of the workforce. 

jobs 

accounted 

The  workforce  is  adapting  to  the  green  and 
digital  transitions,  with  a  growing  need  for 
skilled  workers  in  emerging  sectors.  In  2023, 
in  the  country’s  energy-intensive 
employment 
industries 
total 
for  1.9% 
employment  (EU:  3.5%),  while  jobs  in  the  green 
economy  have  expanded  rapidly.  Between  2016 
and  2021,  employment  in  the  environmental 
goods  and  services  sector  grew  by  33.2%, 
reaching  3.8%  of  total  employment  in  2022  (EU: 
3.3%). 
in 
construction, a key sector for the green transition, 
was significantly lower than the EU average (1.8% 

job-vacancy 

In  2024, 

rate 

the 

of 

(140) Labour tax wedge is the difference between the employer's 

labour costs and the employee's net take-home pay, 
including any cash benefits from government welfare 
programmes. 

77 

 
 
 
ANNEX 11: SOCIAL POLICIES 

Lithuania continues to face challenges linked 
to  persistently  high  levels  of  inequality  and 
poverty  risks,  particularly  for  older  people, 
unemployed  people  and  persons  with 
disabilities.  The  capacity  of  the  social  protection 
system  is  limited  due  to  continuous  underfunding 
and  gaps  in  access  by  certain  groups.  An  ageing 
population  also  exerts  additional  pressure  on  the 
social  security  systems,  particularly  pension 
system  and  long-term  care,  posing  risks  for 
Lithuania’s  sustainable  and  inclusive  growth  and 
prosperity. To achieve the 2030 poverty reduction 
target,  it  would  be  beneficial  for  Lithuania  to 
implement the delayed reforms under the recovery 
and resilience plan (RRP) as soon as possible, and 
to  address  high  levels  of  income  inequality,  old-
age  poverty  and  its  gender  gap,  poverty  of  the 
unemployed  and  persons  with  disabilities. 
Addressing  these  challenges  will  contribute  to 
inclusive growth and competitiveness. 

Poverty  and  social  exclusion  remain  high, 
despite  long-term  convergence  and  recovery 
from  the  COVID-19  pandemic.  Following 
several years of decline, the rate of people at-risk-
of-poverty  or  social  exclusion  (AROPE)  rose  by 
1.1 pps  to  24.6%  in  2022  and  to  25.8%(141)  in 
2024.  While  the  severe  material  and  social 
deprivation  rate  in  2024  is  9.3 pps  lower  than  in 
2016  and  stands  at  6.1%,  below  the  EU  average 
of  6.4%,  the  at-risk-of-poverty  rate  (AROP)  only 
fell  by  0.4 pps  in  the  same  period.  Therefore,  the 
AROPE in 2024 remains among the highest in the 
EU,  4.8 pps  above  the  EU  average  of  21.0%, 
mainly  driven  by  high  AROP  rate  of  21.5%  (EU: 
16.2%).  Among  the  factors  behind  persistently 
high  poverty  rates  are  low  spending  on  social 
protection, 
low  adequacy  of  pensions,  social 
benefits  and  minimum  income  support,  coverage 
to  quality  education, 
gaps, 
employment  support,  health  and  social  services, 
especially  in  rural  areas  and  for  disadvantaged 
groups. 

lack  of  access 

(141) Eurostat data for 2024 for Lithuania are provisional 

78 

Graph A11.1: AROPE and its components 

Source: Eurostat, EU-SILC [ilc_peps01n, ilc_li02, ilc_mdsd11, 
ilc_lvhl11n] 

Sustained  efforts  are  needed  to  reach  the 
national  poverty  reduction  target  by  2030. 
The  number  of  persons  AROPE,  after  having 
dropped  to  661  000  in  2021  (from  712  000  in 
2019),  started  to  increase  again  as  of  2022.  In 
2024,  it  has  surpassed  the  2019  levels,  reaching 
744  000  AROPE  persons.  Several  factors  may 
have  contributed  to  the  rise,  such  as  record  high 
inflation  in  2022  (18.9%)(142),  specifics  of  the 
indexation  mechanisms 
social 
of 
benefits(143)  and 
in  median 
the  sharp 
income(144),  which  raised  the  poverty  threshold 
from  EUR  483  in  2021  to  EUR 564  in  2023  and 
EUR  615  in  2024.  Furthermore,  the  depth  of 
poverty increased by 2.7 pps in 2024, compared to 
2022,  meaning  that  the  gap  between  the median 

certain 

rise 

(142) It eroded much of the value of increases in the non-taxable 
amount of income, the minimum wage, pensions and social 
benefits in 2021 and 2022 - Estimations performed by the 
European Commission, Joint Research Centre, based on the 
EUROMOD model, I6.0+. 

(143) E.g. a delay in indexation of the cash social assistance 

benefits, as the State Supported Income amount used for 
calculation of the benefit relies on the amount of minimum 
consumption basket of the previous year. I.e. the current 
amount of State Supported Income (EUR 221) for 2025 is 
approx. 50% of the minimum consumption needs amount of 
2024 (EUR 446). Accordingly, there is at least one year (de 
facto – two years) delay in indexation of the amount of cash 
social assistance, which in case of high inflation (as it was in 
2022 and 2023) could particularly affect the recipients. 

(144) JRC Estimations performed by the European Commission, 

Joint Research Centre, based on the EUROMOD model, I6.0+. 

051015202530352015201620172018201920202021202220232024% of populationLTAt-risk-of-poverty-or-social-exclusion rateAt-risk-of-poverty rateSevere material and social deprivationPeople living in low work intensity households 
 
 
  
 
 
 
income of persons AROP and the poverty threshold 
increased to 25.5% (EU: 22.8%). Therefore, to get 
back on track to achieve the 2030 national target 
of  lifting  223 000  people out  of poverty  or  social 
exclusion,  next  steps  could  include  measures  to 
address  monetary  poverty,  which  is  the  main 
driver  behind  high  AROPE  rate,  and  which  is 
particularly acute for certain vulnerable groups, as 
described below. 

Income inequality remains among the highest 
in the EU. Gross market incomes in Lithuania are 
among the most unequally distributed in the EU - 
in 2024, the income of the top 20% exceeded that 
of  the  bottom  20%  by  6.54  times  (EU:  4.66), 
showing  an  increase  from  6.32  in  2023.  The 
income  gap  is  particularly  high  in  the  lower 
quintiles - the S50/S20 group, with the income of 
the  middle-income  earners  being  2.61  times 
higher  than  of  the  lowest-income  earners  (EU: 
2.18), also due in part to a steep rise in minimum 
wages. At the same time, the ability of tax-benefit 
mechanism  to  reduce  income  inequality  lags 
behind the EU average, including due to the limited 
progressivity of the taxation system (Annex 2), and 
low  adequacy  of  pensions  and  social  benefits.  In 
its  RRP,  Lithuania  set  out  plans  to  a  reform  to 
increase  the  adequacy  of  the  minimum  income 
system,  as  well  as  to  adopt  the  tax  reform  that 
would  include  increasing  the  effectiveness  of 
personal  income  taxation  and  social  insurance 
contributions  in  reducing  income  inequality  and 
poverty.  However,  the  adoption  of  these  reforms 
has  been  delayed.  While 
the  Government 
Programme  Implementation  Plan  hints  at  some 
reforms 
measures 
mentioned above, their shape and content is still in 
the making. 

that  are 

related 

the 

to 

Older  people  continue  to  face  significant 
poverty risks, with women being particularly 
affected. More than one-third of the people aged 
sixty-five and over are people at-risk-of-poverty or 
social exclusion, which is more than double the EU 
average  in  2024  (39.1%  vs  19.4%).  Older  people 
who  are  single  are  particularly  affected,  with  an 
AROPE rate of 55.9% in 2024 (EU: 30%); however, 
the  rate  has  improved  from  59.3%  in  2023.  High 
AROPE rates for this group are primarily driven by 
high  monetary  poverty,  with  the  AROP  rate  at 
36.9%  in  2024  (EU:  16.8%),  and  considerably 
higher  for  women  (41.9%)  compared  to  men 
(27.5%). The gender gap in old-age poverty can be 
attributed  to  a  combination  of  factors,  including 
gender pay gap, impact of informal care provision 

79 

their 

longer 

in  2023, 

on  women’s  careers  and 
life 
expectancy  at  sixty-five  (twenty  years  vs  fifteen 
years  for  men),  which  translates  into  a  larger 
share of older single women. The low adequacy of 
pensions  is  a  significant  determinant,  with  an 
aggregate  replacement  ratio  for  pensions  among 
the  lowest  in  the  EU  (0.38  vs  EU  0.61).  Although 
the old-age social insurance pension increased on 
average  by  12%  from  EUR 483  in  2022  to  EUR 
it  remained  below  the  AROP 
539 
threshold  of  EUR  615  in  2024  (income  reference 
year  2023)  and  the  median  relative  income  of 
older  people  remained  at  63%  of  the  income  of 
those  aged  under  sixty-four,  among  the  lowest  in 
the EU (EU: 90%.) These challenges are likely to be 
exacerbated by the rapid ageing of the Lithuanian 
is 
population.  The  old-age  dependency  ratio 
projected to increase from 0.31 in 2023 to 0.67 in 
2070(145).  A  very  high  share  of  out-of-pocket 
health  spending  (31.8%  vs  EU  average  14.3%), 
with  nearly  half  of  all  out-of-pocket  payments 
being  for  outpatient  pharmaceuticals,  also  has  a 
negative  impact  on  older  people.  The  government 
has  already  announced  its  intentions  to  improve 
the pension indexation mechanism and reform the 
second  pillar  of  pension  accumulation  system.  In 
addition, 
if  Lithuania 
considered  specific  measures  to  address  the  old-
age poverty gender gap.  

it  would  be  beneficial 

Poverty  and  social  exclusion  risks  are  also 
influenced  by  employment  status  and  show 
considerable  regional  disparities.  The  AROPE 
rate of persons in rural areas (33.6% vs 21.3% in 
the  EU)  and  in  towns  and  suburbs  (26.9%  vs 
20.3%  in  the  EU)  was  higher  than  in  the  cities 
(17.9% vs 21.4% in the EU) in 2024, also because 
of the higher prevalence of unemployment outside 
the  cities  (see  Annex  10),  and  limited  access  to 
public  services  in  the  rural  areas.  Rural  regions, 
especially those bordering Belarus and Russia, are 
among  those  with  the  highest  AROP  rates.  The 
AROP rate for the unemployed remains among the 
highest  in  the  EU  (59.5%  in  2024  vs  EU:  48.8%). 
Furthermore, the poverty rate of the low-skilled in 
2024 was 33.2% (EU: 28.7%) while around a third 
of  the  newly  registered  unemployed  were  low-
skilled  (see  Annex  10).  While  the  coverage  of 

(145) https://doi.org/10.2908/PROJ_23NDBI.  

The old-age dependency ratio is the ratio of the number of older 
people at an age when they are generally economically 
inactive (i.e. aged 65 and over), compared to the number of 
people of working age (i.e. 15-64 years old). 

 
 
unemployment benefits for standard employees is 
higher  than  the  EU  average,  the  majority  of  the 
self-employed  are  not  covered  by  unemployment 
insurance.  The  RRP  reform  aiming  to  broaden  the 
unemployment 
to  self-
employed  and  ease  the  conditions  for  accessing 
the unemployment benefits has been delayed, and 
there  is  no  clarity  if  the  new  Government  will 
pursue it. 

insurance  coverage 

Poverty  is  particularly  acute  among  persons 
with  disabilities.  Persons  with  disabilities  face 
the highest AROPE rate in the EU (45.8% vs 28.8% 
in the EU). It is mainly driven by the AROP rate that 
is  also  the  highest  in  the  EU  (38.2%  vs  20.7%  in 
the  EU  in  2024).  This  also  reflects  the  low 
employment rates of people with disabilities, with 
the  disability  employment  gap  in  Lithuania  being 
among the highest in the EU (see Annex 10), which 
is  further  hindering  Lithuania’s  inclusive  growth 
and  competitiveness.  At  the  same  time,  Lithuania 
allocated  3.7%  of 
its  GDP  to  sickness  and 
disability  payments  and  measures,  the  fourth 
highest  in  the  EU  and  had  similar  disability 
prevalence  rates  (27.4%  of  Lithuania’s  total 
population  in  2023  vs.  26.8%  in  the  EU).  Such  a 
situation signals low efficiency of social protection 
spending on sickness and disability policies. Recent 
reforms on the disability assessment (as of 2024) 
and on the participation of persons with disabilities 
in an open labour market (as of 2023), along with 
other  efforts  aim  to  address  these  issues.  With a 
budget  of  more  than  EUR 175  million,  European 
Social  Fund  Plus  (ESF+)  programmes  will,  in 
addition  to  comprehensive  family  services  for  at 
least 75 000 persons, and community services for 
at 
least  5 400  vulnerable  children,  support 
deinstitutionalisation  of  at  least  3 300  persons 
with  disabilities  through  the  transition  from 
institutional  care  to  family  and  community-based 
services.  While 
remains  unclear  whether 
measures  addressing  low  adequacy  of  disability 
benefits  will  be  included  in  the  scope  of  the 
improving  minimum 
planned  RRP  reform  on 
income  adequacy,  it  would  be  beneficial  for 
Lithuania 
to  consider  targeted  measures  to 
address this. 

it 

The risk of poverty or social exclusion among 
children  continues  to  fall.  Since  2015,  the 
AROPE  rate  for  children  fell  by  13.2 pps,  reaching 
21.7%  in  2023  (EU:  24.8%).  However,  in  2024  it 
increased to 22.8% (EU: 24.2%). Lithuania has not 
set  a  separate  target  for  reducing  the  number  of 
children  at-risk-of-poverty  or  social  exclusion.  To 

mitigate  the  impact  of  poverty  on  children,  it  is 
implementing the European Child Guarantee (ECG) 
under 
its  2023  action  plan.  The  2024 
implementation  report  claims  relative  progress  in 
some  areas,  e.g.  early  childhood  education  and 
care,  while  more  effort  in  areas  such  as  housing 
would  be  beneficial.  The  implementation  of  the 
ECG  is  supported  by  ca  EUR 99  million  in  ESF+ 
funding,  which 
the 
requirement  for  Lithuania  to  allocate  at  least  5% 
of the ESF+ funds to fight child poverty. 

significantly 

exceeds 

the 

to  keep 

inefficient 

Energy  poverty  and  underdeveloped  public 
transport system pose challenges to the fair 
green transition. Energy prices surged by 56% in 
2022 compared to 2021 and dropped by only 4% 
in  2023,  prompting  ad  hoc  government  measures 
to  cushion 
impact  on  households  and 
businesses.  Despite these interventions,  the  share 
of  population  unable 
their  homes 
adequately  warm  was  almost  double  the  EU 
average  in  2024  (18%  vs  9.2%),  and  particularly 
high  for  people  at-risk-of-poverty  (33.8%).  The 
country’s  reliance  on  district  heating  systems, 
infrastructure, 
which  often  use 
exacerbates  these  challenges.  Furthermore,  the 
housing  stock  is  dominated  by  multi-apartment 
buildings  that  are  energy  inefficient  and  suffer 
from  persistent  quality  gaps.  Around  eight  out  of 
ten homes were built before 1993 and have been 
poorly maintained. Around three-quarters of multi-
family  households,  and  most  single-family 
households  have  a  very  low  energy  efficiency 
rating,  and  less  than  2%  have  a  high  energy 
efficiency rating(146). The public transport usage is 
the lowest in the EU, with only 7.1% of land travel 
done by public transport in 2022 (EU: 16.6%). The 
Lithuanian RRP includes the investments needed to 
accelerate  the  renovation  of  multi-apartment 
buildings through financial support to households, 
as  well  as  to  support  the  use  of  clean  transport 
vehicles  by  the  public  and  private  sectors. 
However,  Lithuania  would  benefit  from  a  more 
clearer 
robust  national 
definitions  and  methodologies  for  energy  and 
transport  poverty,  to  ensure  that  vulnerable 
households receive the support they need to cope 
with  energy  and  transport  costs.  A  current  TSI 
project  aiming  to  help  Lithuania  implement  the 

strategy,  alongside 

(146) OECD report on affordable housing policy actions in 

Lithuania - https://www.oecd.org/en/publications/policy-
actions-for-affordable-housing-in-lithuania_ca16ff6d-
en.html. 

80 

 
 
Social Climate Fund should provide more clarity on 
the concepts of energy and transport poverty and 
measures for vulnerable households to address it. 

on 

social 

protection 

The  social  protection  system  presents 
In  2023, 
adequacy  and  coverage  gaps. 
expenditure 
benefits 
amounting  to  16.2%  of  GDP  was  among  the 
lowest  in  the  EU  (EU:  26.8%)(147).  The  impact  of 
social  transfers  (excluding  pensions)  on  poverty 
reduction was substantially below the EU average 
in  2024  (25.9%  vs  34.4%),  having  dropped  from 
2023  levels  (29.9%  vs  EU  34.7%).  Access  to 
adequate  social  protection  for  the  self-employed, 
comprising  9.9%  of  total  employment  in  2023, 
remains  a  challenge.  More 
lack 
unemployment  benefits  coverage  and  only  45.4% 
of  unemployed  (at-risk-of-poverty  before  social 
transfers)  receive  any  sort  of  social  benefits 
(EU:52.4%).  Tackling  the  structural 
issues  of 
poverty,  social  exclusion,  and  income  inequality  is 
inclusive 
essential  for  promoting  sustainable, 
growth  and 
in 
Lithuania.  To  achieve  this,  it  would  be  beneficial 
for the country to implement the reforms outlined 
in the RRP as well as to explore ways to enhance 
social spending and improve its targeting to those 
most in need. 

competitiveness 

than  80% 

long-term 

system 

long-term 

The 
remains 
care 
fragmented  and  lacks  adequate  financing, 
homecare  and  staff.  Lithuania  has  high  long-
term  care  (LTC)  needs,  with  the  share  of  people 
severe  difficulties 
over 
in 
sixty-five  with 
performing  personal 
care  activities  and/or 
household  activities  being  above  the  EU  average 
(34.8%  vs  26.6% 
in  2019).  However,  public 
spending  on  LTC  in  2022  was  below  the  EU 
average 
(1%  of  GDP  vs  1.7%  of  GDP), 
concentrating on residential care (55.7%) and cash 
benefits (38%). To address the very limited  share 
earmarked  to  homecare  (6.4%),  Lithuania  uses 
EUR 11 millions of RRP  funds to equip 90 mobile 
LTC teams, establish 10 day care centres and train 
1  000  homecare  specialists  by  2026,  and  will 
further  support  the  development  of  out-patient 
LTC services with ca EUR 70 million from European 
Social  Fund  Plus.  Shortage  of  LTC  formal  workers 
exacerbates  funding  related  challenges  with  1.1 
employed  LTC  worker  per  100  individuals  aged 

(147) Eurostat. The general government expenditure (COFOG) on 
social protection was also lower than the EU average – 
13.5% of GDP vs 19.4% in the EU. 

sixty-five  and  above 
in  2023  (EU:  3.2).  An 
estimated  90%  of  people  with  LTC  needs  use 
informal  carers,  well  above  the  70%  in  the  EU, 
while  less  than  5%  of  people  with  LTC  needs  in 
Lithuania  receive  only  formal  care  and  the 
remainder use a combination of the two. However, 
the  social  protection  of  the 
informal  carers 
remains 
limited.  Given  the  rapid  ageing  of 
population,  it  would  be  beneficial  for  Lithuania  to 
step  up  efforts  to  address  these  issues  in  LTC 
provision. 

House  prices  have  increased  strongly  over 
the  last  decade  but  have  slowed  down 
recently.  House  prices  have  more  than  doubled 
since  2015.  They  rose  by  9.7%  in  2024  in  2023, 
after having increased by 19% and 9.8% in 2022 
and 2023, respectively,  but  are still estimated to 
not  be  overvalued.  Real  estate  sales  and  building 
permits  have  fallen  since  2021,  adjusting  to  the 
higher  interest  rate  environment  of  the  last  two 
years. 

low. 

housing 

remains 

affordability 

Overall 
has 
deteriorated  over  recent  years,  and  the 
quality  of  housing 
The 
standardised  house  price-to-income  ratio  has 
increased by 6% since 2015. However, while house 
prices  grew  less  than  household  income  between 
2015  and  2020,  they  have  grown  more  strongly 
since  then  and  the  standardised  house  price-to-
income  ratio  has  increased  by  10%  since  2020. 
Considering  the  cost  of  mortgages,  the  borrowing 
capacity  of  households  remained  broadly  stable 
over  the  last  decade.  While  the  rental  market  is 
very  small,  the  ratio  of  new  rents  to  incomes 
decreased over the last decade. The overcrowding 
rate rose each year from 21.1% in 2020 to 26.3% 
in 2024 (vs EU: 16.9%), mirroring the growth trend 
in  house  prices.  The  overcrowding  rate  was 
especially  high  in  cities  (30.9%  vs  EU  20.3%), 
where  the  real  estate  price  growth  was  most 
pronounced. However, the housing cost overburden 
rate (6.2% vs EU 8.2%) and the housing cost as a 
share  of  disposable  household  income  (15.5%  vs 
EU  19.2%)  remained  below  the  EU  average  in 
2024,  mostly  due  to  a  high  share  of  property 
ownership  (87.4%  in  2024,  vs  68.4%  in  the 
EU)(148).  The  quality  of  housing  remains  low  -  the 
share  of  population  having  neither  a  bath,  nor  a 
shower  in  their  household  amounted  to  5.4%  in 
2023 (vs EU 1.7% in 2020).   

(148) Statistics Eurostat. 

81 

 
 
 
to 

response 

affordability. 

In 
these  challenges  and 
following  the  OECD  recommendations  on 
affordable  housing  policy  options  in  2023, 
Lithuania  has  recently  assigned  the  Ministry  of 
Environment  with  the  task  to  govern  the  area  of 
housing 
public 
consultations were launched in December 2024 to 
assess  the  housing  affordability  situation  in  the 
country  in  detail.  Nevertheless,  Lithuania  would 
benefit  from  more  intensity  in  developing  the 
affordable  housing  policy,  given  the  sharp  rise  in 
real  estate  prices  is  likely  to  continue  putting 
pressure on housing affordability. 

addition, 

In 

82 

 
ANNEX 12: EDUCATION AND SKILLS 

of 

strong 

predictors 

Skills  development  in  Lithuania  is  hindered 
by  a  lack  of  equity  in  general  education, 
teacher  shortages,  the  low  attractiveness 
and  labour  market  relevance  of  vocational 
education  and  training  (VET)  and  higher 
education,  and  low  levels  of  adult  learning, 
which  all  hamper  the  country’s  innovation 
capacity  and  competitiveness.  At  the  age  of 
15,  around  one  in  four  students  lacks  basic  skills 
with  socio-economic  status  and  school  location 
remaining 
students’ 
achievement. Despite measures, teacher shortages 
to  falling 
remain  a  challenge.  To 
enrolments, quality concerns and the weak labour 
market  relevance  of  higher  education,  measures 
are  under  way  to  improve  the  overall  quality  and 
to  consolidate  some  colleges  with  results  to  be 
seen. Although labour and skills shortages persist, 
the  labour  market  relevance  of  VET  and  higher 
education remains low, as does the share of adults 
engaged  in  learning  activities.  The  new  individual 
learning  accounts  (ILA)  platform (149)  aims  to 
address  this,  but  the  areas  for  improvement  are 
already  visible.  These  and  other  weaknesses  in 
skills  development  and  human  capital  formation, 
together  with  a  projected  decline  in  the  working-
age  population  (see  Annex  10),  hinder  Lithuania’s 
and 
productivity 
for 
potential 
competitiveness. 

respond 

growth 

is 

gradually 

extended, 

The legal entitlement for universal preschool 
but 
access 
accessibility  challenges  remain. 
In  2023, 
96.2%  of  children  between  the  age  of  three  and 
the  start  of  compulsory  primary  education  were 
enrolled  in  early  childhood  education  and  care 
(ECEC)  (EU:  94.6%).  36.9%  (150)  of  under  3-year-
olds participated in childcare in 2024 (EU: 39.2%); 
however,  national  data  show  a  constant  increase 
and  a  participation  rate  of  43.5%.  Very  low 
participation rates in  rural areas, where the share 
of  disadvantaged  children  is  higher,  remains  a 
challenge (151).  By  September  2025,  all  two-year-
old  children  will  have  the  right  to  access  ECEC. 
However, infrastructural  limitations and shortages 
of  teachers  and  staff  may  hinder  successful 
implementation  and  effective  access  to  quality 

ECEC (152).  By  2027,  at  least  70%  of  children  in 
rural  areas  between  the  ages  of  two  and  five 
should participate in ECEC (153). 

for 

complex 

putting  more 

Around  one  in  four  students  lacks  minimum 
basic  skills  in  mathematics,  reading  and 
science, 
skills 
development  at  risk.  According  to  the  2022 
International  Student 
OECD  Programme 
Assessment  (PISA)  results,  one  in  four  Lithuanian 
15-year-olds  lacks  basic  skills  in  mathematics 
(27.8%  vs  EU:  29.5%)  and  reading  (24.9%  vs  EU: 
26.2%),  the  same  for  one  in  five  students  in 
science  (21.8%  vs  EU:  24.2%).  While  in  most  EU 
Member  States  the  underachievement  rate  has 
increased  significantly  since  2012,  in  Lithuania  it 
has remained stable for reading and mathematics 
and has only increased for science (5.7 pps vs 7.4 
pps  in  the  EU).  The  share  of  top  performers  is 
limited  and  unchanged  since  2012,  with  7.2%  in 
mathematics  (EU:  7.9%),  5.5%  in  science  (EU: 
6.9%)  and  4.7%  in  reading  (EU:  6.5%) (154),  which 
might hinder future innovation potential. 

rate 

students 

than  among 

in 
underachievement 

Equity  and  urban-rural  disparities  are 
the  education 
persistent  challenges 
system. 
in 
The 
mathematics  is  around  four  times  higher  among 
disadvantaged 
their 
advantaged peers: 46.5% (EU: 48%) and 11% (EU: 
10.9%),  respectively.  Top  performance  levels  in 
mathematics  are  at  1.9%  among  disadvantaged 
students  (EU:  1.8%)  compared  with  16.3%  (EU: 
18.4%)  among  advantaged  students.  Additionally, 
a  very  high  urban-rural  achievement  gap  can  be 
observed  between  mean  PISA  scores  in  all  three 
areas tested. Students in urban schools achieve on 
average  71  score  points  more  in  mathematics 
than  their  peers  in  rural  areas,  above  the  EU 
average  gap  of  46  score  points.  The  underlying 
factors  include  high  regional  disparities,  with 
29.8% of people being at risk of poverty or social 
exclusion  in  rural  areas  compared  to  17.6%  in 
urban  areas.  The  school  network  has  become 
inefficient  with  a  high  number  of  small  schools 
concentrated  in  rural  areas  that  are  associated 

(149) Lifelong learning platform. 

(150) Eurostat provisional data 

(151) Rodiklių duomenų bazė - Oficialiosios statistikos portalas. 

(152) Ministry of Education, Science and Sport (2022a). 

Ikimokyklinio ugdymo infrastruktūros plėtros Lietuvos 
savivaldybėse galimybių studija. 

(153) Agreement on National Education Policy (2021-2030) - 

Švietimo, mokslo ir sporto ministerija. 

(154) OECD (2023), PISA 2022 Results (Volume I): The State of 

Learning and Equity in Education. 

83 

 
 
 
 
 
 
with  weaker  outcomes  and  higher  costs  per 
student (155).  Schools  with  low  student  numbers 
also  pose  a  challenge  to  the  efficient  use  of 
teaching  staff,  contributing  to  teacher  shortages 
and part-time positions on offer, resulting in lower 
salaries  and  a  need  for  teachers  to  combine 
working in several locations. 

includes 

Various  measures  are  under  way  to  tackle 
the  longstanding  issue  of  an  urban-rural 
achievement  gap.  The  RRP 
the 
Millenium  Schools  programme  to  provide  children 
to  high-quality  schools 
with  better  access 
regardless  of  their  background.  At  least  80%  of 
Lithuanian  municipalities  are  involved  across  the 
country.  Between 2020 and 2023, the number of 
schools  in  the  country  fell  from  978  to  928. 
However,  the  network  is  not  yet  sufficiently 
rationalised,  and  too  many  schools  are  exempt 
from 
(250 
schools  in  2023) (156).  As  part  of  the  RRP,  since 
2023-2024,  Lithuania  started  implementing  a 
new, competence-based curriculum. The successful 
implementation  and  a  plan  to  improve  equity 
through  the  curricula  will  be  important  to  raise 
students’ educational outcomes (157).  

reorganisation 

requirements 

the 

The  attractiveness  and 
labour  market 
low,  hindering 
relevance  of  VET  remain 
competitiveness.  The  share  of  learners  enrolled 
in  medium-level  (ISCED  level  3-4)  vocational 
programmes  (36.2%  in  2023)  is  significantly 
below the EU average (52.4%). This is mainly due 
to  the  stigma  around  VET,  which  is  still  widely 
regarded  as  a  ‘second  chance’  system  for  pupils 
with lower-than-average general education results. 
Furthermore, 
VET 
enrolments in STEM fields (50.3% of all medium-
level VET pupils) exceed the EU average of 36.3% 
in  2023,  the  overall  enrolment  rates  have 
decreased  almost  twice  compared  to  the  2017 
levels.  This  increases  the  risk  of  labour  and  skills 
shortages  in  the  sectors  most  susceptible  to 
changes  in  the  supply  of  VET  graduates,  such  as 
construction  and 
the 
employment  rate  of  recent  VET  graduates  (aged 
20-34) in 2023 was below the EU average (76.6% 

although  medium-level 

transport.  Furthermore, 

(155) H. Blöchliger, R. Tusz (2020). Regional Development in 

Lithuania: A tale of two economies. OECD Economics 
Department Working Papers No 1650. 

(156) National Audit Office (2024), Švietimui skirtų asignavimų 

panaudojimas Nr. VAE-4. 

(157) OECD Skills Strategy Lithuania | OECD. 

84 

vs  80%(158)  as  was  their  exposure  to  work-based 
learning  (59.5%  vs  65.3%),  indicating  structural 
issues  related  to  the  quality  and  labour  market 
relevance  of  VET.  These  challenges  are  further 
underscored  by  the  rising  share  of  young  people 
(15-29) neither in employment nor in education or 
training  (NEETs)  (see  Annex  10).  To  tackle  these 
issues, Lithuania’s RRP contains reforms, including 
drafting  new  and  updating 
existing  VET 
programmes  in  close  consultation  with  social 
partners,  as  well  as  investments  in  professional 
competences  of  VET  teachers  and 
increased 
participation  in  apprenticeships.  Lithuania  is  also 
pursuing  a  Technical  Support  Instrument  (TSI) 
project  to  improve  the  evaluation  and  quality 
assurance  of  VET.  To  make  VET  more  attractive 
and  flexible,  career  guidance  in  schools  was 
introduced  in  2023  and,  from  2020,  pupils  in  the 
last  four  years  of  general  secondary  education 
(grades  9  to  12)  can  enrol  in  experimental  VET 
programmes (159). 

Although measures are being implemented to 
attract and train teachers, shortages persist. 
In  2022,  39.8%  of  general  education  teachers 
were 55 years or older, the highest rate in the EU 
(EU:  24.8%).  Teacher  shortages  risk  worsening  in 
the coming years. including due to low prestige of 
the  profession,  low  wages,  excessive  workload, 
uncertainty  about  ongoing  changes  in  education, 
challenging relationships with children and parents 
and  unmotivated  people  choosing  pedagogical 
studies (160).  The  average  salary  of  teachers 
working  full-time  stood  at  112%  of  the  national 
average  wage  in  2023,  followed  by  two  further 
increases  in  2024  to  reach  the  130%  national 
target.  However, 
large  salaries  discrepancies 
remain due to an inefficient school network where 
small rural schools are usually unable to offer full-
time  work  schedules.  Providing  flexible  pathways 
for  skilled  individuals  into  teaching,  recognising 
skills and work experience gained in compensation 
schemes,  financing  trainings  of  working  teachers 
to  acquire  additional  qualifications,  providing 
needs-based 
development 
professional 
opportunities,  and  improving  the  quality  of  initial 
teacher  education  by  equipping  educators  with 
teaching  methods  aligned  with  the  new  general 

(158) Eurostat. 

(159) CEDEFOP 2023 - VET system description in Lithuania. 

(160) Valstybės kontrolės (2023). Vertinimo ataskaita. Pedagogų 
poreikio užtikrinimo vertinimas. 2023 rugsėjo 6 d. Nr. VRE-5. 
State control (2023). 

 
 
 
market  demand (164).  The  number  of  students 
enrolling  in  pedagogical  studies  and  choosing 
STEM 
insufficient, 
contributing to teacher shortages in STEM subjects. 

specialisations 

remains 

recommended  by 

labour 
To  respond  to  quality  concerns, 
market relevance and declining enrolment in 
colleges,  the  mergers  of  some  colleges  is 
under  way,  although  there  are  concerns 
about efficiency gains. As part of the process to 
rationalise 
landscape 
the  higher  education 
incentivised by the RRF, the government approved 
five college mergers. However, as three of the five 
mergers  were  not 
the 
independent  body’s  review,  the  Centre  for  Quality 
Assessment  in  Higher  Education  (SKVC),  potential 
efficiency  gains  remain  to  be  seen.  As  of  2028, 
colleges  will  be  assessed  according  to  new 
evaluation  criteria  on  their  applied  research 
capacity, 
the  minimum  number  of  students 
enrolled,  labour  market  relevance  and  teaching 
staff.  Since  2024,  higher  education  institutions 
must  apply  the  same  minimum  requirements  to 
applicants  for  state-funded  and  non-state-funded 
study  places.  An  attempt  was  also  made  to 
strengthen 
the  social  dimension  of  higher 
education  by  reserving  1 300  places  for  students 
from  vulnerable  socio-economic  backgrounds.  In 
addition, 
increasing 
accessibility  to  higher  education  for  individuals 
from  the  lowest-income  households.  Among  this 
group,  the  proportion  of  individuals  aged  25-29 
who  obtained  higher  education  in  2023  was 
51.3%,  steadily  rising  from  37.1%  in  2022  and 
33.2% in 2021. 

Lithuania 

observes 

curricula  are  measures  which  could  be  further 
(161).  Enhancing 
induction  and 
strengthened 
mentoring  programmes,  educators’  professional 
cooperation,  and  targeted  financial  incentives  in 
disadvantaged schools could also help.  

Student  enrolment  numbers 
in  tertiary 
education are on a continuous decline due to 
demographic  trends,  while  labour  market 
relevance remains a challenge. Between 2017 
and  2022,  the  number  of  students  enrolled  in 
tertiary  education  fell  by  17.3%,  in  line  with 
demographic trends. The share of 25-34-year-olds 
with  a  tertiary  qualification  remains  one  of  the 
highest  in  the  EU  (58.2%  vs  EU:  44.2%,  2023). 
While  89.5%  of  recent  tertiary  graduates  (20-34) 
were  employed  in  2023,  only  47%  of  college 
graduates are employed in positions matched with 
their  level  of  education  (162).  The  gender  gap 
among  young  graduates  remains  one  of  the 
widest,  with  women  significantly  outnumbering 
men  in  tertiary  attainment  by  18.4 pps  (EU: 
11.2 pps  in  2024).  The  RRP  incentivises  higher 
education 
internationalise  their 
profile and attract and integrate foreign students. 

institutions  to 

are 

interest 

enrolments 

Tertiary 
declining 
disproportionately  in  some  STEM  fields.  To 
in  STEM 
increase  achievement  and 
subjects,  a  Science,  Technology,  Engineering,  Arts, 
Mathematics (STEAM) education strategic plan for 
2023-2030(163)  has  been  put  in  place.  By  2024, 
seven  regional  STEAM  open  access  centres  and 
three  methodological  centres  were 
running. 
Tertiary enrolments in some STEM fields declined, 
making  up  25.0%  of  all  tertiary  enrolments  in 
2023,  down  from  27.3%  in  2017.  The  decline  is 
driven  by  decreasing  enrolments  in  engineering, 
manufacturing  and  construction,  contributing  to 
shortages on the labour market. Enrolments in ICT 
are  slowly  increasing,  up  from  4.1%  to  7.2% 
between  2017  and  2023,  while  the  share  of 
women among ICT students remains low at 16.9%. 
The  supply  of  ICT  graduates  falls  short  of  labour 

(161) OECD (2021). OECD Skills Strategy Lithuania. 

(162) Ministry of Education, Science and Sport, (2023). Kolegijų 
tinklo stiprinimas: stiprės koleginės studijos, reikalavimai 
studentams priklausys nuo pasirinktų studijų Press release, 
14 June 2023. 

(163) Ministry of Education, Science and Sport, (2023). 2023-2030 

(164) Job Creation and Local Economic Development 2024 - 

metų STEAM ugdymo stiprinimo planas. 

Country Notes: Lithuania | OECD. 

85 

 
 
 
 
Graph A12.1: Trends in the number of students 
enrolled in tertiary education and in STEM fields 
(ISCED 5-8) 

Source: Eurostat: educ_uoe_enrt03 

(SMEs) 

The link between skills forecasting and skills 
development  remains  weak.  Skills  shortages 
are  cited  by  59%  of  small  and  medium-sized 
enterprises 
in  Lithuania  as  hindering 
general  business  activities (165).  With  the  working-
age population projected to decline and persistent 
skills  shortages,  there  is  a  growing  need  for  a 
smooth interaction  between  skills  forecasting  and 
skills  development.  However,  skills  forecasting  is 
currently  fragmented  across  multiple  institutions 
and  levels,  limiting  the  translation  of  its  results 
into  skills  development.  To  determine  the  number 
and  allocation  of  state-financed  VET  places,  the 
Ministry  of  Education,  Science  and  Sport  relies  on 
input  from  other  ministries  and  social  partners; 
however,  their  capacity  to  provide  constructive 
input  also  varies  significantly.  The  Skills  Strategy, 
adopted  in  2021,  aims  to,  among  other  things, 
strengthen  the  governance  of  skills  policies,  and 
EUR 64 million from the European Social Fund Plus 
(ESF+)  has  been  allocated  to  further  support  its 
implementation. 

is 

to 

scope 

improve 

There 
green 
competencies  and  skills  development  across 
the  education  system.  Eighth  grade  students 
demonstrate  some  specific  knowledge  and 
understanding  of  the  concepts  and  systems 
underpinning  sustainability,  but  a  more  critical 
perspective  could  be  further  developed  (166).  The 
RRP  includes  measures  to  develop  green  skills, 
such  as  creating  new  and  updating  existing  VET 

programmes  by  experts  and  in  consultation  with 
social  partners,  and  to  support  the  reskilling  and 
upskilling  in  high  added-value  areas,  including 
green  skills  and  qualifications  to  the  green 
transition (167).  However,  a  recently  introduced  ILA 
platform does not prioritise acquiring green skills. 

As  part  of  the  broader  need  for  upskilling 
and  reskilling  the  current  workforce,  the 
development  of  green  skills  is  essential  for 
Lithuania’s  green  transition.  In  2024,  labour 
shortages  were  reported  in  several  occupations 
requiring  specific  skills  related  to  the  green 
transition, 
recycling 
including  garbage  and 
collectors,  incinerator  and  water  treatment  plant 
operators and building structure cleaners. Although 
the country’s economy is not very energy intensive, 
the  need  for  reskilling  the  workforce  is  also 
mentioned 
just  transition  plan, 
namely  in  the  oil-refining,  cement  and  fertiliser 
manufacturing  plants,  where  more  than  4 000 
jobs  could  be  directly  impacted  by  the  green 
transition.  Participation  rates  of  workers  in  the 
energy-intensive sectors in education and training 
have  dropped  for  4.1pps  in  2024  (to  8.3%  in  the 
last  four  weeks)  after  a  considerable  increase  in 
the  preceding  two  years.  .  68%  of  Lithuanian 
people believe that they have the necessary skills 
to  contribute  to  the  green  transition  (EU:    54%) 
(168). 

in  Lithuania’s 

The  general  population’s  levels  of  digital 
skills  have  improved  but  remain  below  the 
EU  average.  In  2023,  52.9%  of  the  population 
had at least a basic or above basic level of digital 
skills  (EU:  55.6%),  up  from  48.8%  in  2021.  This 
gap is more pronounced among older people, with 
only  63%  of  individuals  aged  65-74  having  used 
the  internet  in  2023.  The  RRP  is  funding  digital 
education  infrastructure  in  schools  and  aims  to 
tackle  gaps  in  digital  skills  with  reforms  and 
investments in  a  lifelong  learning  platform  where 
digital skills and related upskilling programmes are 
considered a priority and funded accordingly. 

While participation in adult learning remains 
low,  the  new  ILA  platform  is  the  first  major 
step to improve it, contributing to Lithuania’s 
human 
and 
competitiveness.  In  2022,  participation  in  adult 
learning  stood  at  27.4%,  well  below  the  EU 

formation 

capital 

(165) Eurobarometer survey. 

(166) 2022 International Civic and Citizenship Study (ICCS). 

(167)The ESF+ provides funding for green skills and jobs. 
(168)Special Eurobarometer 527. 

86 

020,00040,00060,00080,000100,000120,000140,00005,00010,00015,00020,00025,000201720182019202020212022Overall number of students enrolled in tertiary educationNumber of students enrolled by area of studyStudents enrolled in tertiary educationNatural science, matematics and statisticsEngineering, manufacturing and constructionICT 
  
 
 
average  of  39.5% (169),  and 
it  remains  far 
(26.3 pps)  from the  2030  national  skills target  of 
53.7%.  Only  a  slight  improvement  (2.4 pps)  was 
recorded  compared  to  2016.  Participation  was 
particularly  low  among  men,  older  people,  low-
skilled and people outside the labour force and in 
rural  areas.  The  newly  introduced  ILA  platform 
offers  a  single  point  for  all  adult 
learning 
information  and  a  credit  of  up  to  EUR 500  to 
eligible  adults  to  cover  their  training  costs.  More 
than  15 000  individuals  have  already  completed 
courses via the platform, and Lithuania estimates 
that  over  100 000  will  be  able  to  improve  their 
competences  up  to  2030  (including  via  ESF+ 
funding).  However,  to  maximise  the  re-  and 
upskilling  effect  of  the  ILA  platform  it  remains 
important  to  grant  supported  access  to  the 
vulnerable  who  are  currently  not  eligible  to  ILA 
credit,  along  with  shortening  of  the  5-year  term 
for  ILA  credit  to  allow  for  faster  turnover.  In 
addition,  addressing  concerns  over  quality  and 
labour market relevance of some programs in the 
ILA  platform,  increasing  employer  participation 
and  strengthening  the 
involvement  of  social 
partners in the decision-making process will be key 
for its success.  

(169) From the Adult Education Survey 2022, special extraction 

excluding guided-on-the-job training. 

87 

 
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Lithuania 

(1) Update of 5 May 2025. 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 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

88 

27,48,452,914,71,46,5479,27,12,3140,625,822,825,939,96,236,94,3Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketSocial Scoreboard for LithuaniaBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2024)Young people not in employment, education or training(% of the population aged 15-29, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)Employment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2023)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024) 
 
 
 
  
 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

fairness,  while 
its 

Lithuania’s  health  system  faces  challenges 
that  need  be  addressed  if  the  country  is  to 
improve  the  health  of  its  population  and 
boosting 
social 
the 
economy.  Key 
competitiveness 
challenges include: (i) low life expectancy, linked to 
high  treatable  and  preventable  mortality;  (ii) 
limited  access  to  care;  (iii)  suboptimal  cost-
effectiveness  and  funding  of  the  health  system; 
(iv)  insufficient  focus  on  disease  prevention;  and 
(v) shortages of health workers.  

of 

in  Lithuania 
Life  expectancy  at  birth 
rebounded  above  its  pre-COVID-19  level  but 
was still among the lowest in the EU in 2023. 
There  is  also  a  striking  gender  gap,  with  women 
expected  to  live  9  years  longer  than  men.  That 
said,  women  can  only  expect  to  live  about  4.1 
years  longer  than  men  in  good  health.  Treatable 
mortality is one of the highest in the EU, with little 
improvement since 2018, suggesting shortcomings 
the  health  system. 
in 
Mortality 
diseases 
(‘cardiovascular  diseases’)  is  high,  due  in  part  to 
behavioural  and  environmental  risk  factors,  but 
decreased  in  2022.  While  suicide  rates  were 
among  the  highest  in  the  EU  in  2022,  they  have 
decreased  by  around  50%  since  2013.  Improving 
mental health is one of the priorities of Lithuania’s 
2022-2030  health  protection  and  promotion 
development strategy. 

the  effectiveness  of 
due 

circulatory 

to 

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat (demo_mlexpec) 

The weak health outcomes negatively impact 
Lithuania’s  workforce,  productivity  and 
competitiveness. 
In  Lithuania,  mortality  at 
working  age  as  a  proportion  of  total  mortality  is 
significantly  higher 
the  EU  average, 
than 
exacerbating the effects of population ageing on a 
shrinking  labour  force.  Between  2022  and  2040, 
Lithuania’s  working  age  population  is  forecast  to 
shrink  by  1.0%  every  year  as  a  result  of  lower 

89 

birth rates (EU-level projection: 0.3%). The number 
of potential  productive life years lost  due to non-
communicable  diseases  such  as  cancer  and 
cardiovascular  diseases  is  considerably  higher  in 
Lithuania than the EU average (1 893 per 100 000 
population vs 1 017) (170). 

Graph A14.2: Treatable mortality 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

by 

followed 

expenditure), 

Health expenditure in Lithuania remains low, 
as does the share of health spending covered 
by  public  funds.  In  2022,  health  spending  per 
inhabitant  was  lower  than  the  EU  average  and 
around  two  thirds  of  it  was  publicly  funded.  The 
largest  share  of  health  spending  per  inhabitant 
goes towards outpatient care (around 35% of total 
health 
retail 
pharmaceuticals  and  medical  devices  (26%),  and 
(26%).  On  average,  Lithuania 
inpatient  care 
allocated 0.28% of GDP to capital spending in the 
health sector between 2016 and 2022, which was 
lower  than  the  EU  average  of  0.48%  (171).  This 
could  account  for  the  low  availability  of  key 
diagnostic  technologies  (medical  imaging).  The 
number  of  hospital  beds  in  2022  was  slightly 
higher  than  the  EU  average  but  has  decreased 
since  2019.  The  share  of  out-of-pocket  health 
spending  in  Lithuania  (31.8%)  is  among  the 
highest in the EU (EU average: 14.3%). Nearly half 
of  all  out-of-pocket  payments  are  for  outpatient 
(172).  Lithuania 
received  a 
pharmaceuticals 
country-specific 
to 
recommendation 
provide  adequate  financing  for  healthcare  (see 

in  2024 

(170) Update to 2022 data of analysis presented by Health at a 

Glance: Europe 2016 - © OECD 2016. 

(171) OECD/European Commission, see Health at a Glance Europe 

2018, 2020, 2022 and 2024. 

(172) OECD/European Commission (2024), Health at a Glance: 

Europe 2024: State of Health in the EU Cycle, pp. 186-187. 

76.575.274.275.877.681.380.480.180.681.420192020202120222023LithuaniaEU185.6181.0199.7190.9183.491.389.291.793.389.720182019202020212022per 100 000 populationLithuaniaEU 
 
          
          
 
 
 
 
Table A14.1:Key health indicators 

*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 based on 2022 (or latest 2021) data except for Luxembourg (2017). Doctors’ density data refer to practising 
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data 
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and 
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents. 
Source:  Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023. 

to  medicines.  Under 

Annex  16).  The  2025  budget  for  the  Compulsory 
Health  Insurance  Fund  has  increased  by  14% 
compared  to  2024,  with  key  priorities  such  as 
reimbursable  health  services  and 
expanding 
improving  access 
the 
Lithuanian  recovery  and  resilience  plan  (RRP), 
around  EUR 269 million  is  planned  for  health 
reforms and supporting investments. In addition to 
the  RRP,  significant 
for  healthcare 
(EUR 475 million)  is  being  used  under  the  EU 
cohesion policy in 2021-2027. These funds aim, in 
particular, to improve the health infrastructure and 
the  accessibility,  quality  and  resilience  of  health 
services. 

funding 

As regards public health, Lithuania has scope 
to  step  up its  efforts  on  disease  prevention. 
The  share  of  total  spending  on  health  directed  at 
prevention was lower than the EU average in 2022 
and  had  decreased  compared  to  2021.  Lithuania 
has  one  of  the  EU’s  lowest  daily  consumption 
levels  of  fresh  fruit,  and  a  high  prevalence  of 
overweight  and  obesity  among  adults.  Despite  a 
reduction  between  2010  and  2022,  alcohol 
(173).  Preventable 
consumption 
mortality  was  among  the  highest  in  the  EU  in 
2022  (309.2  deaths  per  100 000  population). 
Starting  in  2025,  breast  cancer  screening  will  be 
expanded to women aged 45-74, and reforms will 
be  implemented  for  the  early  diagnosis  and 
treatment  of  several  types  of  cancer.  Lithuania 
participates in the EU4Health-funded joint actions 
PreventNCD  and  JACARDI  that  aim  to  reduce  the 
burden  of  cancer  and  other  non-communicable 

remains  high 

diseases,  and 
diabetes, respectively. 

cardiovascular  diseases  and 

a 

received 

to 
There  are  challenges  with  access 
healthcare and high unmet needs for medical 
care in Lithuania. In 2024, the proportion of the 
population reporting unmet needs for medical care 
was  above  the  EU  average  (4.3%  vs  2.5%).  Such 
unmet  needs  are  mainly  due  to  waiting  lists. 
Lithuania 
country-specific 
recommendation  in  2024  to  strengthen  primary 
care, expand preventive care and address regional 
disparities. In July 2024, the government extended 
the  pilot  shuttle  service  for  patients  who  cannot 
use  their  own  means  of  transport  or  public 
transport  for  health,  social  or  economic  reasons 
across  the  entire  territory.  The  main  objective  of 
this  patient-centred  scheme  is  to  increase  access 
to  healthcare  services.  Lithuania  also  initiated 
primary  care  reforms  in  mid-2023,  including  the 
creation  of  a  new  type  of  provider  (municipal 
health centres) that offers primary and secondary 
care  services,  and  a  new  ‘care  coordinator’  role. 
Since  January  2025,  primary  care  providers  are 
obliged  to  remain  open  for  12  hours  each 
weekday.  Urgent  ambulatory  care  for  specific 
acute  conditions  must  also  be  provided  within  24 
hours  in  urgent  care  units  or  hospital  emergency 
departments.  In  addition,  Lithuania  is  involved  in 
the  EU4Health-funded  CIRCE  joint  action  which 
in 
aims to extend  six  selected  best  practices 
primary care to other EU countries (174). Despite its 
efforts, Lithuania is facing significant challenges in 
implementing healthcare reforms. 

(173) Health at a Glance: Europe 2024, Chapter 4. 

(174) Home | CIRCE-JA. 

90 

20192020202120222023EU average* (latest year) Cancer mortality per 100 000 population271.5276.5259.4261.5n.a.234.7 (2022)Mortality due to circulatory diseases per 100 000 population 731.7 793.5 800.7 784.5n.a.336.4 (2022)Current expenditure on health, purchasing power standards, per capita1 9102 0232 3182 318n.a.3 684.6 (2022)Public share of health expenditure, % of current health expenditure 66.4 70.2 68.8 66.5 66.581.3 (2022)Spending on prevention, % of current health expenditure 2.73.95.64.7n.a.5.5 (2022)Available hospital beds per 100 000 population** 537 515 518 485n.a.444 (2022)Doctors per 1 000 population*4.64.54.54.4n.a.4.2 (2022)*Nurses per 1 000 population* 7.7 7.8 7.9 7.5n.a.7.6 (2022)*Mortality at working age (20-64 years), % of total mortality22.422.421.921.222.214.3 (2023)Number of patents (pharma / biotech / medical technology)7911129 (2023)***Total consumption of antibacterials for systemic use,                    daily defined dose per 1 000 inhabitants****16.314.214.118.518.720.0 (2023) 
 
 
 
          
 
in  2020  to  22.5% 

was  double  the  EU  average  (54.4%  vs  27.7%). 
Furthermore,  the  share  of  the  population  using 
online health services (excluding phone) instead of 
in-person  consultations  increased  steadily,  from 
9.3% 
in  2024.  Planned 
investments under the RRP aim to boost the digital 
transformation  of 
in 
Lithuania. Measures focus on: (i) increasing the use 
of  e-health  by  healthcare 
(ii) 
(iii)  further 
digitalising  emergency  functions; 
uptake  of  telemedicine;  and  (iv)  developing  a 
national  digital  health  eco-system.  The  aim  is  to 
improve  the  accessibility,  quality  and  resource 
efficiency  of  health  services  and  to  promote  a 
digitally integrated healthcare system. 

the  healthcare  sector 

institutions; 

of 

faces 

shortages 

Lithuania 
health 
professionals,  which  hampers  the  provision 
of healthcare. In 2022, the density of doctors in 
Lithuania  was  slightly  above  the  EU  average. 
However,  doctors  are  unevenly  distributed  across 
the country, with the biggest concentrations in the 
Vilnius and Kaunas districts. The density of nurses 
in  Lithuania  is  similar  to  the  EU  average  but  the 
in  2022 
nurse-to-doctor  ratio  was  only  1.7 
compared  to  an  EU  average  of  2.2.  However,  a 
shortage of 4 643 nurses is projected for 2032 in 
view  of  the  growing  demand  for  care  (175). 
Lithuania had one of the highest shares of nursing 
personnel aged 55-64 (37.9%) in the EU and a low 
share  of  nursing  personnel  aged  25-34  years 
(10.6%). A long-term health workforce action plan 
is  being  implemented,  with  a  focus  on  attracting 
and  retaining  health  professionals,  especially  in 
the  regions.  The  competences  of  nurses  and 
midwives  have  expanded  since  2024,  allowing 
them  to  cover  a  wider  range  of  consultations. 
These  measures  are  expected  to  reduce  pressure 
on  family  doctors  and improve  access  to  care  for 
patients.  Since  January  2025,  the  salaries  of 
care 
employees  working 
institutions have increased by an average of 10%, 
and  a  new  platform  to  monitor  health  workforce 
competences  has  been  established  with  support 
from the RRP. In addition, Lithuania participates in 
the  EU4Health-funded  HEROES 
joint  action 
through  which  EU  countries  share  expertise  on 
health workforce planning (176). 

in  public  health 

innovation  and 

The  Lithuanian  health  system’s  potential  to 
drive 
industrial 
foster 
in  the  EU  medical  sector 
development 
remains  largely  untapped.  Lithuania  is  among 
the  EU  countries  that  report  the  lowest  public 
spending  on  health  research  and  development. 
This  is  reflected  in  the  low  number  of  European 
patents  granted 
the  combined  areas  of 
pharmaceuticals,  biotechnologies  and  medical 
devices  (177).  Clinical  trial  activity  in  Lithuania  is 
also limited (178). 

in 

Lithuania has a good uptake of e-health and 
overall  health  system  digitalisation.  For 
instance,  in  2024,  the  share  of  people  accessing 
their  personal  health  records  online  in  Lithuania 

(175) Government's Centre for Strategic Analysis (2023), STRATA. 
(176) JA HEROES | Health Workforce Planning Project. 
(177) European Patent Office, Data to download | epo.org. 
(178) EMA (2024), Monitoring the European clinical trials 

environment, p. 9. 

91 

 
 
 
 
 
HORIZONTAL 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  Annex  assesses  Lithuania’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. 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 
inequalities  and  tackle  climate 
poverty,  fight 
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 
the EU. 

Lithuania  still  needs  to  improve  on  SDGs 9 
related  to  competitiveness.  The  share  of 
households  with  a  high-speed  internet  connection 
(SDG 9) in 2023 (78.1%) is around the EU average 
(78.8%).  Lithuania  has  slowly  improved  gross 

Graph A15.1: Progress towards the SDGs in Lithuania 

domestic  expenditure  on  R&D,  which  rose  from 
0.9%  of  GDP  in  2017  to  1.05%  of  GDP  in  2023, 
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  26  applications  per  million  inhabitants  in 
2024  (EU  average:  156).  Several  reforms  and 
investments  in  the  recovery  and  resilience  plan 
(RRP) 
further  developing  digital 
infrastructure  and  equipment  and  improving  the 
quality of education and digital skills at all levels. 

focus  on 

While  Lithuania  performs  well  on  several  of 
the  SDGs  related  to  sustainability  (SDGs 11, 
14), it needs to catch up with the EU average 
on  others  (SDGs 2,  6,  7,  9,  11,    13)  and  it  is 
moving away from the target on SDG 15.  On 
SDG 13  (Climate  Action),  the  share  of  renewable 
final  energy  consumption 
energy 
increased  from  26%  in  2017  to  31.9%  in  2023, 
above  the  EU  average  of  24.6% 
in  2023. 
Meanwhile,  net  greenhouse  gas  emissions  fell  to 
4.4%  in  2023,  remaining  significantly  below  the 

in  gross 

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 
five 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 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

92 

 
 
 
 
 
 
 
EU  average  of  6.8%.  However,  the  average  CO2 
emissions  per  km  from  new  passenger  cars, 
although lower at 129.9 g in 2023, was materially 
above  the  EU  average  of  107.6 g  in  2023.  On 
SDG 15  (Life  on  land),  Lithuania  is  moving  away 
In  particular,  the  share  of 
from  the  goals. 
phosphate  in  rivers  increased  from  0.064 mg  PO4 
per  litre  in  2016  to  0.159  in  2022  (EU  average: 
0.074 
impact  on 
ecosystems  doubled  between  2018  (15.5%)  and 
2023 (32%)  and is well  above the EU  average of 
3.6% in 2023.  

in  2022).  The  drought 

On SDG 7 (Affordable and clean energy), Lithuania 
has  achieved  significant  progress  in  its  share  of 
renewable  energy  in  total  energy  consumption, 
which  increased  from  26%  in  2017  to  31.9%  in 
2023 and is well above the EU average (24.5% in 
2023).  Similarly,  progress  was  made  on  other 
energy  indicators,  including  energy  productivity 
(from 4.6% in 2017 to 6% in 2023), though this is 
still  significantly  below  the  EU  average  (9.8%)  in 
2023. The Lithuanian RRP includes investments in 
solar  and  wind  energy  capacity 
to  provide 
additional  security  of  supply  and  flexibility  to 
accommodate  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 
4.5% in 2023 but remained significantly above the 
EU average of 1.5% (2020).  

cities 

SDG 11 

On 
and 
(Sustainable 
communities),  the  rate  of  the  population 
under  severe  housing  deprivation  fell  from 
8.9% in 2015 to 4% in 2023 and now equals 
the  EU  average  of.  On  SDG 12  (Responsible 
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 23 tonnes 
in  2023  (EU  average:  14.2  tonnes  in  2023).  Its 
waste  generation  needs  further  improvement,  as 
the  circular  material  use  rate  decreased  from 
4.5% in 2017 to 3.9% in 2023 (EU average: 11.8% 
in 2023). 

In  particular, 

Lithuania  is  performing  well  on  two  SDGs 
related to social fairness (SDGs 4 and 5), but 
still  needs  to  catch  up  on  several  others 
(SDGs  1,  3,  7,  8,  10),  and  it  is  moving  away 
from  the  target  for  SDG  2.  Regarding 

93 

Lithuania’s  performance  on  SDG 4 
(Quality 
education),  significant  efforts  have  been  made  to 
catch up to the EU average regarding participation 
in  childhood  education,  which  increased  from 
88.1%  in  2016  to  96.2%  in  2023  (EU  average: 
94.6%  in  2023),  while  further  efforts  are  needed 
to reach the EU average on adult learning, up from 
6.6% in 2018 to 9.8% in 2024 (EU average: 13.3% 
in  2024).  On  the  negative  side,  there  is  a 
significant increase in early leavers from education 
– from 4% in 2019 to 8.4% in 2024 in Lithuania, 
while  in  the  EU,  a  decrease  was  recorded  –  from 
10.1% in 2019 to 9.3%. 

Lithuania  reduced  the  risk  of  poverty  or  social 
exclusion (SDG 1) from 29.8% in 2017 to 24.3% in 
2023  but is  still  above  the  EU  average  of  21.3%. 
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 
percentage  points  (pps)  in  2017  to  10.7  pps  in 
2022 but increased slightly in 2023 to 12.2% and 
it  remains  well  above  the  EU  average  (0.4  pps  in 
2023).  Lithuania is moving away from the targets 
for  SDG 3  (Good  health  and  well-being)  and 
remains  below  the  EU  average.  For  SDG  3,  this 
concerns  in  particular  healthy  life  expectancy  – 
this  was  60.3  years  in  2022  (EU  average:  63.6 
years).  Uneven  progress  has  been  made  on  
causes of death indicators, with some improving – 
especially road traffic deaths, where the indicator 
fell  from  6.8%  in  2016  to  5.6%  in  2023  (EU 
average:  4.5%)  but  with  the  rate  of  standardised 
avoidable mortality nearly double the EU average. 
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.  

Lithuania  is  improving  on  two  SDGs  related 
to  macroeconomic  stability  (SDGs 16  and  8) 
but  is  moving  away  from  SDG  17.  Lithuania 
made significant progress on the investment share 
of  GDP  and  is  now  above  the  EU  average (SDG 8 
on  Decent  work  and  economic  growth)  with  its 
share increasing from 20.1% in 2017 to 23.7% in 
2023  (EU:  22.4%  in  2023).  The  employment  rate 
is performing better than the EU average (79.2%, 
vs  75.8%  for  the  EU  in  2023).  On  the  negative 
side,  the  long-term  unemployment  rate  and  the 
indicator  on  young  people  not 
in  education, 
employment  or  training  has  deteriorated  (from 
1.9% in 2019 to 2.3% in 2023 and from 10.9% in 

 
2018 to 14.7% in 2023 respectively). Lithuania is 
improving  on  SDG 16  (Peace,  justice  and  strong 
institutions).  The  Corruption  Perceptions 
Index 
improved from 60% in 2018 to 63% in 2024 (EU 
average:  62%),  and  general  government  total 
expenditure  on  law  courts  per  capita  increased 
from  EUR 49  in  2019  to  EUR 56  in  2024.  This  is, 
however,  still  far  from  the  EU  average  of 
EUR 121.7 in 2023. 

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

94 

 
 
 
 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

Lithuania  faces  structural  challenges  in  a 
wide  range  of  policy  areas,  as  identified  in 
the country-specific recommendations (CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.  They  refer,  among  other 
things,  to  taxation  policy,  education  and  training, 
labour  market  policy,  research  and  innovation, 
energy,  resource  efficiency,  sustainable  transport, 
social protection and housing and healthcare. 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Lithuania to date and the commitments in its 
recovery  and  resilience  plan  (RRP).  At  this 
stage, Lithuania has made at least ‘some progress’ 
on 78% of the CSRs (368), and ‘limited progress’ on 
22% (Table A16.2). 

competitiveness, 

EU funding instruments provide considerable 
supporting 
to  Lithuania  by 
resources 
investments  and  structural  reforms  to 
increase 
environmental 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs.  In  addition  to  the  EUR 3.85  billion 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (369) 
to  Lithuania 
are  providing  EUR 6.3  billion 
(amounting  to  EUR 7.8  billion  with  national  co-
financing) 
to  boost 
competitiveness  and  growth.  Support  from  these 
instruments combined represents around 13.7% of 
these 
2024  GDP 
instruments  to  different  policy  objectives 
is 
outlined 
in  Graphs  A16.1  and  A16.2.  This 
substantial  support  comes  on  top  of  financing 
provided  to  Lithuania  under  the  2014-2020 
multiannual  financial  framework,  which  financed 
projects  until  2023  and  has  delivered  significant 
benefits  for  the  economy  and  Lithuanian  society. 

(371).  The  contribution  of 

for  2021-2027 

(370) 

(368) 14% of the 2019-2024 CSRs have been fully implemented, 
15%  substantially  implemented,  and  some  progress  has 
been made on 49%. 

(369) In  2021-2027,  cohesion  policy  funds  include  the  European 
Regional  Development  Fund, 
the 
European Social Fund Plus and the Just Transition Fund. The 
information  on  cohesion  policy  included  in  this  annex  is 
based  on  adopted  programmes  with  the  cut-off  date  of  5 
May 2025. 

the  Cohesion  Fund, 

(370) European  territorial  cooperation 

(ETC)  programmes  are 

excluded from the figure. 

(371) RRF  funding 

loans,  where 
includes  both  grants  and 
applicable. GDP figures are based on Eurostat data for 2024. 

programmes 

Project  selection  under  the  2021-2027  cohesion 
advanced,  while 
policy 
implementation  of  selected  projects  has  also 
gained  momentum, 
substantial 
investment.  

enabling 

is 

invest 

transition, 

The  Lithuanian  RRP  contains  45  investments 
and  173  reforms  to  stimulate  sustainable 
targeted  at  addressing 
growth.  These  are 
common  European  challenges  by  embracing  the 
green  and  digital 
to  strengthen 
economic and social resilience and to promote the 
In  particular, 
cohesion  of  the  single  market. 
Lithuania’s  plan  aims  to  accelerate  reforms  and 
investments in education and healthcare. The plan 
will  also 
in  more  sustainable  power 
generation  and  energy  storage,  promote  green 
mobility,  facilitate  the  5G  rollout  and  strengthen 
social protection. A year before the end of the RRF 
timespan, implementation  is  well  on its  way,  with 
47% of the funds disbursed. Lithuania has fulfilled 
30% of the milestones and targets in its RRP (372). 
Efforts are needed to ensure completion of all RRP 
measures by 31 August 2026. In this context, it is 
the 
important 
fragmentation  and  limited  cooperation  among 
national, 
and 
stakeholders,  which  constitutes  a  bottleneck  for 
the implementation of EU funds. 

authorities 

Lithuania 

regional, 

address 

local 

for 

to 

Lithuania also receives funding from several 
other  EU  instruments,  including  those  listed 
in  Table  A16.1.  Most  notably,  the  common 
agricultural policy (CAP) provides Lithuania with an 
EU  contribution  of  EUR 4  billion  under  the  CAP 
(373).  Operations 
strategic  plan  2023-2027 
amounting  to  EUR  210  million  (374)  have  been 
signed  under  the  InvestEU  instrument  backed  by 
the  EU  guarantee,  improving  access  to  financing 
for riskier operations in Lithuania. 

(372) As  of  mid-May  2025,  Lithuania  has  submitted  3  payment 

requests. 

(373) An  overview  of  Lithuania’s  formally  approved  strategy  to 
implement  the  EU’s  common  agricultural  policy  nationally 
can  be  found  at:  https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/lithuania_en 

(374) Data reflect the situation on 31.12.2024. 

95 

 
 
 
 
 
 
Graph A16.1: Distribution of RRF funding in 
Lithuania by policy field 

EUR 200 million (19% of the total ESF+ allocation) 
to help 54 000 unemployed people gain skills and 
receive  personalised  support.  An  additional 
EUR 64.5  million  will  boost  adult  lifelong  learning 
and  skills  development,  aiming  to  upskill  1 770 
inactive people  and  provide  training  to  more  than 
80 000 through individual learning accounts. 

(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 circle 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. 
Source: European Commission 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Lithuania 

Source: European Commission 

The 

and 

in  skills 

European 

competitiveness 

Cohesion  policy  funds  aim  to  increase  the 
productivity 
of 
Lithuanian  firms  and  improve  the  business 
Regional 
environment. 
Development  Fund  (ERDF)  will  support  nearly 
5 000 small and medium-sized enterprises (SMEs) 
investing 
for  smart  specialisation, 
industrial transition and entrepreneurship, and will 
improve  digital  connectivity  for  nearly  15 000 
households  and  1 400  businesses  by  providing 
very  high-capacity  broadband  access.  Lithuania  is 
the  Strategic 
significant  use 
making 
Technologies  for  Europe  Platform 
to 
(STEP) 
strengthen  its  competitiveness,  allocating  EUR 59 
covering  digital 
million 
technologies  and  deep  tech,  clean  and  resource-
efficient 
biotechnologies. 
Moreover, the European Social Fund Plus (ESF+) is 
supporting  Lithuania’s  labour  market  with  over 

to  STEP  priorities 

technologies 

and 

of 

are 

funds 

contributing 

Other 
to 
competitiveness  in  Lithuania,  for  instance 
through  open  calls.  The  Connecting  Europe 
Facility  has  financed  strategic  investments  in  rail 
transport such as the Rail Baltica, the development 
of  alternative  fuel  infrastructure  in  the  air  and 
maritime  sectors,  the  integration  of  the  energy 
market  including  the  synchronisation  of  the  Baltic 
States  with  the  EU’s  electricity  system  and  in  5G 
connectivity  along  transport  corridors,  along  Via 
Baltica.  Horizon  Europe  has  supported  research 
and  innovation,  from  scientific  breakthroughs  to 
scaling up innovations, with widening participation 
and spreading excellence and climate, energy and 
mobility as top priorities for Lithuania. In Lithuania, 
the  Technical  Support  Instrument  (TSI)  is  focused 
on  providing  support  to  the  integration  of  Rail 
Baltica in the European rail network. The TSI is also 
helping  Lithuania  to  implement  specific  reforms 
included  in  its  RRP,  such  as  strategic  planning, 
decision making and municipal capacity building.  

to 

the 

improvements 

Lithuania’s  RRP  also  contains  ambitious 
business 
improve 
measures 
environment  and  competitiveness.  As  part  of 
the  measures  covered  by  payment  requests 
submitted over the past year, reforms include new 
risky 
limiting  cash  payments 
legislation 
economic  sectors, 
tax 
to 
administration  and  online  tax  collection,  new 
legislation  on  adult  education  and  vocational 
training,  a  renewed  framework  of  incentives  for 
business  to  invest  in  R&D,  the  setting-up  of  a 
competence  centre  for  open  data  and  digital 
transformation  and  the  establishment  of  a  data 
exchange  tool,  as  well  as  a  significant  capital 
injection  of  EUR  150  million  into  Lithuania’s 
national  promotional  institution  (ILTE)  to  improve 
access to finance. 

in 
the 

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  and 
green  transition  in  Lithuania  during  the 
current  seven-year  EU  budget  (multiannual 
financial  framework).  The  ERDF  is  investing 
over EUR 15 million in systems for climate-related 
the 
disaster  prevention  and 

resilience,  and 

96 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generationSmarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
       
 
       
in 

Cohesion Fund (CF) supports resource efficiency by 
creating  additional  capacity  of  almost  130 000 
tonnes/year  for  waste  recycling.  ERDF  and  CF 
investments are also boosting capacity to produce 
renewable  energy  by  800 MW.  This  will  increase 
the  share  of 
final  energy 
renewables 
consumption  and  reduce  dependence  on  fossil 
fuels. Lithuania’s  CAP  strategic  plan  allocates 
EUR 402  million 
(41%  of  rural  development 
funding)  to  environmental  and  climate  objectives 
and  EUR 753 million (25%  of  direct  payments)  to 
eco-schemes. These support sustainable practices, 
including  pasture  management  for  soil  quality, 
restricted  fertiliser  use  in  orchards,  and  no-tillage 
techniques  and  grassland  conversion.  The  TSI  is 
also  providing  support  to  improve  environmental, 
food  and  veterinary  safety  and  the  monitoring  of 
green public procurement. 

Lithuania’s  RRP,  including  the  REPowerEU 
chapter, has a comprehensive set of reforms 
and  investments  for  the  green  transition. 
Measures covered by payment requests submitted 
over  the  past  year  include:  (i)  new  legislation  on 
restoring  and  protecting  wetlands;  (ii)  enhancing 
the investment environment for renewable energy 
developers,  for  instance,  by  reducing  the  duration 
of  the  permit-granting  procedures  to  one  year,  or 
waiving  the  necessary  permits  for  establishing 
new renewable energy power plants of up to 100 
kW); (iii) setting up competence centres on building 
renovation  and  green  finance;  (iv)  a  financial 
instrument  providing  up  to  EUR  550  million  to 
finance  investments into  renewable  energy  power 
plants  and  (v)    a  unique  200  MW  energy  storage 
system  that  ensures  the  security  of  Lithuania’s 
energy 
the 
synchronisation  of  the  Baltic  States  with  the 
European continental network. 

system,  which  also 

enabled 

Promoting  fairness,  social  cohesion  and 
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Lithuania. The ERDF support will enable access to 
new or modernised healthcare facilities for a large 
part  of  the  society,  improving  the  healthcare 
ERDF 
system’s 
infrastructure  investments,  the  ESF+  promotes 
social cohesion through support to social services. 
These  will  help  to  move  away  from  institutional 
care,  provide  family  crisis  support  and  addiction 
recovery,  and  help  reduce  child  poverty.  With 
EUR 175 million in funding, these programmes will 
support  deinstitutionalisation  for  3 300  people, 

Complementing 

capacity. 

comprehensive family services for 75 000 people, 
and  community  services  for  5 400  vulnerable 
children.  The  TSI  is  also  providing  support  to 
mental health among Lithuanian youth. 

Lithuania’s RRP contains several reforms and 
investments  related  to  fairness  and  social 
policies.  Reforms  and  investments  covered  by 
payment  requests  over  the  last  year  include 
reforms to improve quality and access to medical 
services and to ensure more efficient provision of 
for  education 
ambulance  services.  Reforms 
included new legislation outlining the requirements 
for  the  development  and 
implementation  of 
National qualification programmes for pedagogical 
staff,  as  well  as  revisions  to  the  curriculum  for 
pre-primary,  primary, 
lower  secondary,  and 
secondary  education.  Reforms  and  investments 
have  also  been  made  to  ensure  digitisation  and 
accessibility of cultural resources. 

97 

 
 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

(1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI - Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

98 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)1 060.8RRF loans758.70 Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total)7 033.56 274.33 918.6European Regional Development Fund (ERDF)3 683.83 616.12 106.2Cohesion Fund (CF)2 039.81 248.51 057.2European Social Fund (ESF, ESF+) and the Youth Employment Initiative (YEI)1 309.91 136.4 670.1Just Transition Fund (JTF) 273.3 85.0European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF) 63.4 61.239.5Migration, border management and internal security - AMIF, BMVI and ISF (4) 238.1428.0252.1The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan1 260.8European Agricultural Guarantee Fund (EAGF)1 094.0European Fund for Agricultural Development (EAFRD) 166.8Allocation 2023-20273 998.13 020.6977.5Allocation 2021-2026 2 297.61 552.7FisheriesMigration and home affairs 
 
 
       
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

99 

LithuaniaAssessment in May 2025Relevant SDGs2019 CSR 1Some progressImprove tax compliance and Some progressSDG 8, 16broaden the tax base to sources less detrimental to growth.Some progressSDG 8, 10, 12Address income inequality, poverty and  social exclusion, including by improving the design of the tax and benefit system.Some progressSDG 1, 2, 8, 10, 122019 CSR 2Some progressImprove quality and efficiency at all education and training levels, including adult learning. Some progressSDG 4Increase the quality, Some progressSDG 3affordability and Some progressSDG 3efficiency of the healthcare system.Some progressSDG 32019 CSR 3Some progressFocus investment-related economic policy on innovation, Some progressSDG 9, 10, 11energy andSubstantial progressSDG 7, 9, 10, 11, 13resource efficiency, Some progressSDG 6, 10, 11, 12, 15sustainable transport and Limited progressSDG 10, 11energy interconnections, taking into account regional disparities. Substantial progressSDG 7, 9, 10, 11, 13Stimulate productivity growth by improving the efficiency of public investment. Some progressSDG 8, 16Develop a coherent policy framework to support science-business cooperation and Full implementationSDG 9consolidate research and innovation implementing agencies.Full implementationSDG 92020 CSR 1Some progressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability, while enhancing investment. Not relevant anymoreSDG 8, 16Strengthentheresilienceofthehealthsystem,includingbymobilisingadequatefundingandaddressing shortages in the health workforce and of critical medical products.Some progressSDG 3Improve the accessibility and quality of health services.Some progressSDG 32020 CSR 2Some progressMitigate the impact of the crisis on employment.Full implementationSDG 8Increase the funding and coverage of active labour market policy measures Some progressSDG 8and promote skills.Some progressSDG 4Ensurethecoverageandadequacyofthesocialsafetynetandimprovetheeffectivenessofthetaxand benefit system to protect against poverty.Some progressSDG 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 progressSDG 8, 16and promote private investment to foster the economic recovery.Some progressSDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonthecoverageandtake-upofveryhigh-capacity broadband, Some progressSDG 9on clean and efficient production and use of energy, Substantial progressSDG 7, 9, 13and sustainable transport. Some progressSDG 11Promote technological innovation in small and medium-sized enterprises.Some progressSDG 8, 9 
 
 
  
 
Table (continued) 

(Continued on the next page) 

100 

2021 CSR 1Not relevant anymoreIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Keepthegrowthofnationallyfinancedcurrent expenditure under control. Not relevant anymoreSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositions and ensuring fiscal sustainability in the medium term.Not relevant anymoreSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Not relevant anymoreSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthe coverage, adequacy and sustainability of health and social protection systems for all.Not relevant anymoreSDG 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 situationNot relevant anymoreSDG 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 fundsNot relevant anymoreSDG 8, 16For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent medium-term fiscal positions.Not relevant anymoreSDG 8, 16Foster cooperative public procurement at central government and municipality levels.Substantial progressSDG 92022 CSR 2Not relevant anymoreProceed 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.SwiftlyfinalisethenegotiationswiththeCommissionofthe2021-2027cohesionpolicyprogrammingdocuments with a view to starting their implementation2022 CSR 3Some progressStrengthen primary and preventive care.Some progressSDG 3Reducefragmentationintheplanninganddeliveryofsocialservicesandimprovetheirpersonalisationand integration with other services.Substantial progressSDG 1, 2, 10Improve access to and quality of social housing.Some progressSDG 1, 2, 102022 CSR 4Some progressReduce overall reliance on fossil fuelsSome progressSDG 7, 9, 13by accelerating the deployment of renewablesSubstantial progressSDG 7, 9, 13and increasing energy efficiency and decarbonisation of industry, [transport] and buildings,Limited progressSDG 7and [increasing energy efficiency and decarbonisation] of transportSome progressSDG 11and ensure sufficient capacity of energy interconnections.Substantial progressSDG 7, 9, 132023 CSR 1Some progressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatsuchsupportmeasuresaretargetedatprotectingvulnerablehouseholdsandfirms,fiscallyaffordableandpreserveincentivesforenergysavings.Full implementationSDG 8, 16While maintaining a sound fiscal position in 2024,Full implementationSDG 8, 16preservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofgrantsundertheFacility and of other Union funds, in particular to foster the green and digital transitions.Full implementationSDG 8, 16Fortheperiodbeyond2024,continuetopursueinvestmentandreformsconducivetohighersustainable growth and preserve a prudent medium-term fiscal position.Full implementationSDG 8, 16Strengthen the adequacy of healthcare andLimited progressSDG 3social protection,Some progressSDG 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 with the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
  
 
Table (continued) 

Source: European Commission 

101 

2023 CSR 2ContinuethesteadyimplementationofitsrecoveryandresilienceplanandswiftlyfinalisetheREPowerEUchapterwithaviewtorapidlystartingimplementationthereof.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarityandsynergywiththerecovery and resilience plan.2023 CSR 3Some progressStrengthenprimarycareandexpandpreventivecareinorderto,interalia,makethehealthcaresystem more resilient.Some progressSDG 3Improve the planning and delivery of social services.Substantial progressSDG 1, 2, 10Improve access to, and the quality of, social housing.Some progressSDG 1, 2, 102023 CSR 4Some progressFurther reduce reliance on fossil fuels and imported energySome progressSDG 7, 9, 13byacceleratingthedeploymentofrenewables,inparticularbyensuringsufficientgridcapacityandaccess,Substantial progressSDG 7, 9, 13ensuring the transformation and decarbonisation of industrial production,Limited progressSDG 7and increasing the uptake of public and sustainable transport, as well asLimited progressSDG 11by making buildings more energy-efficient with a view to, inter alia, reducing energy poverty.Limited progressSDG 1, 2, 7, 10 Ensuresufficientcapacityofelectricityinterconnectionsinordertoincreasesecurityofsupply,continuing the timely synchronisation with the Union electricity grid.Substantial progressSDG 7, 9, 13Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsandcompetencesneededforthegreen transition.Limited progressSDG 42024 CSR 1Some progressSubmit the medium-term fiscal-structural plan in a timely manner.Full implementationSDG 8, 16InlinewiththerequirementsofthereformedStabilityandGrowthPact,limitthegrowthinnetexpenditurein2025toarateconsistentwith,interalia,maintainingthegeneralgovernmentdeficitbelowthe3%ofGDPTreatyreferencevalueandkeepingthegeneralgovernmentdebtataprudentlevel over the medium term. Full implementationSDG 8, 16Provide adequate financing for healthcare, Limited progressSDG 3social protection Some progressSDG 1, 2, 10and general public services.Limited progressSDG 9, 162024 CSR 2Addressrelevantchallengestoallowforcontinuedswiftandeffectiveimplementationoftherecoveryandresilienceplan,includingtheREPowerEUchapter,ensuringcompletionofreformsandinvestmentsbyAugust2026.Acceleratetheimplementationofcohesionpolicyprogrammes.Inthecontextoftheirmid-termreview,continuefocusingontheagreedpriorities,whileconsideringtheopportunitiesprovidedbytheStrategicTechnologiesforEuropePlatforminitiativetoimprovecompetitiveness. 2024 CSR 3Limited progressImprovehealthoutcomesandtheresilienceofthehealthsystembystrengtheningprimarycareandexpanding preventive care. Some progressSDG 3Increase the adequacy of old-age pensions, while maintaining the sustainability of the pension system. Limited progressSDG 8Addressregionaldisparitiesbypromotingcooperationamongmunicipalitiesinimprovingaccesstopublic services, including public transport.Limited progressSDG 10, 112024 CSR 4Limited progressAddress skills mismatches by improving the labour market relevance of higher education. Some progressSDG 4Facilitate private investment in research and innovation. Limited progressSDG 9Step up resource productivity to progress towards a circular economy. Limited progressSDG 6, 12, 15RRP 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.RRP 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. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

Lithuania’s  regional  economic 
landscape 
presents  significant  regional  disparities,  due 
to  asymmetric  economic  structure  and 
development,  with  a  fast-advancing  Capital 
Region  and  the  remaining  regions  lagging 
behind. Significant overall depopulation combined 
with  ageing  and  internal  migration  towards  the 
Capital Region suggest that more efficient delivery 
of public services is needed. 

Map A17.1:  GDP per head (in purchasing power 
standard PPS), 2023 

still 

significant 
in  economic  development 

regional 
There 
are 
differences 
in 
Lithuania, which have widened over the past 
decade,  with  the  Capital  Region  (Vilnius 
county) growing faster than other territories. 
The difference in GDP per capita as percentage of 
the  EU  average  between  the  Capital  Region  and 
the  Central  and  Western  Region  of  Lithuania 
increased from 48 percentage points (pps) in 2014 
to  65  pps  in  2023.  At  NUTS 3  level,  the  most 
developed  region,  Vilnius  county,  had  a  GDP  per 
head (in purchasing power standard, PPS) of 132% 
of  the  EU  average  in  2023,  far  surpassing  other 
regions.  Kaunas  and  Klaipėda  counties  reached 
above  75%  of  the  EU  average,  while  the  other 
regions remain around 60% or less. The four least 
developed  counties  (Tauragė,  Alytus,  Utena  and 
Marijampolė),  which  border      Belarus  and  Russia, 
had  a  GDP  per  head  of  around  50%  of  the  EU 
average (Map A17.1). 

Source: Eurostat 

Map A17.2:  Real GDP per head growth (2014-
2023) 

Convergence  was  hampered  by  slower 
growth of GDP per head in the less developed 
counties.  The  strong  average  annual  real  growth 
in  Lithuania  (3.6%)  was  pushed  by  the  two  most 
developed  counties,  Kaunas  and  Vilnius,  which 
reached  3.6%-4.0%,  while  Klaipėda 
county 
registered  a  more  modest  1.7%.  In  contrast,  the 
two  least  developed  counties  (Utena  and  Alytus) 
had  growth  rates  of  1.3%  and  2.2%,  respectively 
(Map A.17.2). 

Source: Eurostat 

102 

 
 
 
 
 
 
 
 
 
 
 
 
Table A17.1:Selection of indicators at regional level in Lithuania 

Source: Eurostat and JRC 

Creating  opportunities  across  regions  would 
help to maintain and attract the working-age 
population required to sustain GDP growth in 
the  long  term.  The  decline  in  the  working-age 
population  for  more  than  two  decades,  and  even 
sharper  decline  in  the  young  population,  have 
become  a  challenge.  Between  2014  and  2023, 
Lithuania’s  working-age  population  (20-64  years 
old)  declined  by  an  average  of  4.6  per  1 000 
inhabitants  of  the  same  age  per  year.  The  young 
population  (less  than  20  years  old)  decreased  by 
an average of 8.9 per 1 000 per year.  

The  Capital  region  is  the  exception  in  the 
working-age  population  trend.  There, 
the 
working-age  population  between  2014  and  2023 
increased  by  6.5  per  1 000  inhabitants  of  the 
same  age  per  year  in  the  same  period,  while  the 
young  population  increased  by  12  per  1 000,  as 
the  young  and  active  population  migrated  to  the 
Capital  Region  to  study  and  work.  The  positive 
demographic  trend  in  the  Capital  region  was  also 
strengthened  by  external  immigration,  as  a  large 
proportion  of  the  Ukrainian  refugees  in  Lithuania 
have  settled  down  in  Vilnius.  In  contrast,  less 
developed  and  peripheral  counties  experienced 
steep  annual  declines 
the  working-age 
population  (down  10-19  per  1 000  per  year)  and 
in the young population (down 30-35 per 1 000). 

in 

population  and 

The 
the  working-age 
population started to increase in 2022, mainly 
due  to  the  return  of  Lithuanian  citizens  or  people 

born in Lithuania, as well as net migration of non-
EU  citizens.  The  working-age  population  grew  by 
2%  over  the  two  years  to  2023,  with  notable 
expansion  in  the  prosperous  regions  of  Vilnius, 
Klaipėda,  Kaunas,  as  well  as  in  Šiauliai.  This 
increase  was  primarily  driven  by  the  native 
population,  which  accounted  for  85%  of  the 
growth, non-EU citizens contributed 17%, while the 
population of EU citizens saw a decline during this 
period (186). 

(186) Based on Eurostat, Labour Force Survey and demographic 

data.  

103 

GDP per head (PPS)Real GDP per head growthProductivity - GDP per person employed (PPS)Real productivity growth (per person employed)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)Population growthNatural population changeNet migrationIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % changeAverage annual change per 1000 residentsAverage annual change per 1000 residentsAverage annual net crude migration rate (%)Average annual change per 1000 residents of same age% change over 2 years20232014-202320232014-202320222013-20222014-20232014-20232014-20232014-20232021-2023European Union (27 MS)1001.61000.61000.91.7-1.53.2-2.10.0Lithuania873.6822.0732.3-2.1-5.43.3-4.62.0Vilniaus apskritis1324.01092.5912.58.1-3.422.66.55.6Alytaus apskritis482.2530.8471.6-12.2-12.23.3-16.7-2.4Kauno apskritis853.6791.9752.6-0.5-6.514.4-2.62.1Klaipėdos apskritis761.7740.7691.53.3-6.120.60.74.0Marijampolės apskritis502.6520.2480.6-14.1-10.41.2-17.6-2.5Panevėžio apskritis613.1641.0591.9-13.9-11.30.6-17.9-3.0Šiaulių apskritis612.9621.1602.1-7.3-9.612.4-10.21.1Tauragės apskritis503.9572.8442.8-15.2-10.40.9-18.7-2.2Telšių apskritis602.4620.4560.6-11.4-7.61.5-15.9-2.2Utenos apskritis481.3611.7542.0-13.1-14.59.4-16.9-1.6Working age population (20-64) growth 
 
 
   
 
Competitiveness 

Graph A17.1: Labour productivity per hour 

of  Lithuania  is  dominated  by  micro-enterprises, 
mainly  in  low-performing  economic  areas  with 
moderate  relevance  to  the  knowledge  economy 
and 
innovation  development.  However,  good 
examples  of  local  clusters  development  can  be 
observed  across  the  regions:  Kaunas  county 
succeeds in attracting investments and developing 
the  biotechnology  sector,  Klaipėda  –  marine 
technologies,  while  Panevėžys  county  aims  to 
become a hub for robotics. 

high-skill 

employment, 

Counties with lower productivity face deficits 
in  key  growth  drivers.  Vilnius  county  leads  in 
R&D, 
connectivity, 
innovation  and  competitiveness.  The  county 
to  business  R&D, 
allocates  0.9%  of  GDP 
services 
employment 
accounts for nearly 50% of total employment, and 
10%  of  employment  is  in  high-tech  sectors.  In 
contrast, all the other counties invest just 0.3% of 
GDP in business R&D, with 35% of employment in 
knowledge-intensive  services  and  2.7%  in  high-
tech sectors. 

in  knowledge-intensive 

in  human 
Significant  disparities  remain 
capital  and  skills  –  key  assets 
for 
productivity  growth.  In  2023,  62%  of  people 
aged  25-64  in  Vilnius  county  held  an  academic 
degree,  the  highest  proportion  in  the  EU,  and 
compared to an average of 40% in other counties 
in  Lithuania.  Cities  lead,  with  62%  of  residents 
having an academic degree, versus 35% in towns 
and  suburbs  and  32%  in  rural  areas.  There  are 
notable  regional  disparities  in  digital  literacy.  In 
2023,  53%  of  people  had  basic  or  above  basic 
digital skills, below the EU average of 56%. Cities 
performed  better  (60%)  than  rural  areas  (47%). 
Students  attending  urban  schools  scored  in  2022 
on  average  70  points  higher  PISA  tests  (187)  than 
their  15-year-old  peers  attending  rural  schools  in 
the  areas  of  mathematics,  science  and  reading 
literacy,  well  above  the  EU  average  urban-rural 
achievement gap. 

Transport  connections  and 
infrastructure 
also vary significantly across the counties. In 
Vilnius  county,  81%  of  the  population  within  a 
120 km  radius  can  be  reached  in  under  90 
minutes by car, compared to the national average 
of 68%, and just 47% in Šiauliai county. Public and 
on-demand  transport  options  are  scarce  in  rural 
areas,  hindering  easy  access  to  jobs  and  public 

(187) Programme for International Student Assessment (PISA). 

Unit: Real GDP per hour worked (EUR, 2015 prices) 
Source: ARDECO (JRC) 

Lithuania’s  GDP  disparities  are  primarily 
driven by differences in productivity. In 2022, 
productivity (GDP  per  hour  in  PPS)  averaged  73% 
of the EU level, with Vilnius county leading at 91%. 
Kaunas  and  Klaipėda  counties  followed  at  75% 
and  69%  respectively.  Conversely,  Marijampolė, 
Alytus,  Tauragė  counties 
lagged  significantly 
behind,  with  productivity  below  50%  of  the  EU 
average (Graph A17.1). 

Productivity  has  been  catching  up  with  the 
EU  average,  but  internal  disparities  persist. 
Lithuania’s real  productivity  per hour grew rapidly 
(2013-2022), 
on  average  at  2.3%  annually 
outpacing  the  EU  average  of  0.9%,  yet 
it 
in  2022  and  2023  and  regional 
decreased 
disparities  have  not  closed.  Vilnius  and  Kaunas 
counties  posted  strong  growth  (2.5%  and  2.6%), 
while  Tauragė  county,  a  less  developed  NUTS 3 
region,  led  with  2.8%.  In  contrast,  Alytus  and 
Marijampolė 
slower 
productivity  growth  (1.6%  and  0.6%  respectively). 
In  2023,  productivity  per  hour  decreased 
countrywide,  the  least  in  Vilnius  county  (-1.2%) 
and more than 4% in most  of the other counties, 
further widening disparities.  

had  much 

counties 

Uneven economic development stalls internal 
convergence  in  productivity  levels.  In  major 
cities, especially in Vilnius, innovation has become 
the  basis  for  economic  transformation,  attracting 
highly  skilled  professionals  and  developing  high 
added-value  products,  sales  of  which  led  to 
significant  GDP  and  productivity  growth.  The  rest 

104 

051015202530354045201220132014201520162017201820192020202120222015 EUR per hour workedOther NUTS3 regionsCapital regionNational averageEU27 
        
 
services,  particularly  for  vulnerable  populations. 
Digital connectivity shows smaller disparities, with 
internet  access  reaching  89%  of  households 
overall, ranging from 92% in cities to 85% in rural 
areas. 

Social fairness 

Populations living outside the Capital Region 
also  face  more  difficulties  finding  work.  In 
2023, the Capital Region reported an employment 
rate  of  83%  and  an  unemployment  rate  of  4.9%. 
In contrast, the Central and Western Region had an 
employment  rate  of  76%  and  an  unemployment 
rate  of  7.8%.  Disparities  were  more  pronounced 
types:  cities  had  higher 
across  settlement 
lower  unemployment 
employment 
lagged  with  73% 
(5.3%),  while  rural  areas 
employment and 8.6% unemployment, highlighting 
persistent regional and urban-rural divides. 

(84%)  and 

internal  migration  have 

Lithuania’s demographic trends over the last 
decades, driven by population decline, ageing 
and 
increased 
pressure  on  public  services,  especially  in 
shrinking  rural  and  peripheral  areas.  Overall, 
only  29%  of  rural  residents  lived  within  a  10-
minute  drive  of  the  nearest  healthcare  centre, 
matching 
to 
healthcare  centres varied regionally,  from  36%  in 
Vilnius  county  to  19%  in  Telšiai  county.  33%  of 
children  in  rural  areas  were  within  a  15-minute 
walk  of  a  primary  school.  This  is  above  the 
average  (31%)  in  the  EU  (188)  with  the  highest 
proportion  in  Marijampolė  county  (40%)  and  the 
lowest in Vilnius county (28%) (Graph A17.3). 

the  EU  average.  Accessibility 

Graph A17.2: Access to healthcare and primary 
education in rural areas, 2023 

Units: Percentage of population that can reach nearest hospital within 
10 minutes by car (EU-27); Percentage of children under 15 years old 
who can reach primary school within 15-minute walk (EU-24). 
Source: Eurostat 

Lithuania  is  considering  sharing  provision  of 
municipal services to improve the efficiency, 
accessibility  and  quality  of  public  services. 
However,  the  current  legal  framework  for  the 
provision  of  shared  municipal  services  like  public 
transport,  healthcare,  education,  social  and 
business  services,  water,  wastewater  treatment 
and  waste  management  faces  obstacles  due  to 
conflicting 
lacks 
coordination  and  guidance,  making  it  difficult  for 
municipalities  to  set  up  shared  services.  Reaping 
the potential benefits of shared municipal services 
in  Lithuania  may 
the 
underlying 
institutional 
legal, 
foundations (189). 

require  strengthening 
and 
fiscal 

regulations  and 

loopholes, 

Sustainability 

Sustainability 
varies 
considerably  between  Lithuania’s  NUTS 2 

performance 

(189) 
Lithuania, OECD 2024. 

Enabling inter-municipal shared services provision in    

(188) The average is calculated based on 24 Member States, as no 

data are available for Bulgaria, Malta and Latvia. 

105 

010203040Vilniaus apskritisUtenos apskritisKauno apskritisKlaipedos apskritisAlytaus apskritisTelšiu apskritisPanevežio apskritisŠiauliu apskritisTaurages apskritisMarijampoles apskritisLithuaniaEuropean UnionAccess to healthcare (% of population)Access to primary school (% of children under 15 years old) 
 
        
 
 
 
regions,  particularly  in  emissions.  In  2023, 
Lithuania’s average greenhouse gas emissions per 
capita (7.2 tonnes of CO2 equivalent) aligned with 
the EU-27 average. But emissions in the region of 
Central-Western  Lithuania 
tCO2eq)  were 
nearly  double  those  in  the  Capital  Region  (4.3 
tCO2eq)  due  to  the  high  energy  intensity  of 
industry in the former region. 

(8.5 

While  Lithuania  is  below  the  EU  average  in 
green  infrastructure  and  employment,  there 
are  notable  regional  differences.  Electric 
infrastructure  varies  across 
vehicle  charging 
regions  but  remains  limited  overall,  with  an 
average  of  42  charging  points  within  10 km, 
compared to the EU average of 287, and even the 
best-performing Capital  Region reaching only 123 
charging  points  (190).  The  proportion  of  green  jobs 
also 
variations, 
averaging  8.5%  of  total  employment  nationally 
(below  the  EU’s  15%),  ranging  from  15%  in  the 
Capital  Region  to  just  5.6%  in  the  region  of 
Central-Western Lithuania (191). 

significant 

regional 

shows 

(190) Indicators of access to alternative fuel infrastructure are 

based on calculations by DG REGIO and the JRC, using data 
from the European Alternative Fuels Observatory (EAFO), 
Eurostat, TomTom and Eco-Movement. 

(191) Measuring transition to a competitive and sustainable 

economy, JRC. 

106