Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Lithuania
Date: 2025-06-04
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Lithuania, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 616 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Lithuania  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Lithuania 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

1 

2 

3 

A  reformed  EU  economic  governance  framework  entered  into  force  on  30  April 
2024. Regulation (EU) 2024/1263 of the European Parliament and of the Council on 
the  effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance1,  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure2,  and  the  amended  Council 
Directive 2011/85/EU on the budgetary frameworks of Member States3 are the core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules. 

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the  adjustment  period,  general  government  debt  is  on  a  plausibly  downward 
trajectory, or stays at prudent levels, and that the government deficit is brought and 
maintained below the reference value of 3% of GDP over the medium term, and ii) 
ensuring the delivery of reforms and investments responding to the main challenges 
identified  in  the  context  of  the  European  Semester  and  addressing  the  common 
priorities of the EU. To that end, each plan is to present a medium-term commitment 

1466/97 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1264/oj). 
Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements 
(OJ  L,  2024/1265,  30.4.2024,  ELI: 
for  budgetary 
http://data.europa.eu/eli/dir/2024/1265/oj). 

the  Member  States 

frameworks  of 

2024/1263, 

30.4.2024, 

(OJ 

L, 

EN 

1 

  EN 

 
 
to a net expenditure4 path, which effectively establishes a budgetary constraint for the 
duration  of  the  plan,  covering  four  or  five  years  (depending  on  the  regular  term  of 
legislature in  a Member  State). In  addition,  the plan is  to  explain  how the Member 
State  will  ensure  the  delivery  of  reforms  and  investments  responding  to  the  main 
challenges  identified  in  the  context  of  the  European  Semester,  in  particular  in  the 
country-specific recommendations (including those pertaining to the macroeconomic 
imbalances procedure (MIP), if applicable), and how the Member State will address 
the common priorities of the Union. The period for fiscal adjustment covers a period 
of  four  years,  which  may  be  extended  by  up  to  three  years  if  the  Member  State 
commits  to  delivering  a  set  of  relevant  reforms  and  investments  that  satisfies  the 
criteria set out in Regulation (EU) 2024/1263. 

(3) 

(4) 

Following  the  submission  of  the  plan,  the  Commission  is  to  assess  whether  it 
complies with the requirements of Regulation (EU) 2024/1263. 

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net expenditure path of the Member State concerned and, 
where  applicable,  endorse  the  set  of  reform  and  investment  commitments 
underpinning an extension of the fiscal adjustment period. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF LITHUANIA 

(5) 

On  30  April  2025,  Lithuania  submitted  its  national  medium-term  fiscal-structural 
plan to the Council and to the Commission. The submission took place following an 
extension  of  the  deadline  set  out  in  Article  36  of  Regulation  (EU)  2024/1263,  as 
agreed  with  the  Commission  in  view  of  the  reasons  provided  by  Lithuania.  The 
extension was agreed as the national parliamentary elections had taken place on 13 
and  27  October  2024,  which  was  followed  by  several  months  of  coalition 
negotiations  and  consultations  of  the  new  government’s  programme  and  its 
implementation plan5. 

Process prior to the submission of the plan 

(6) 

Prior to the submission of its plan, Lithuania requested technical information6, which 
the Commission provided on 31 January 2025 and published on 30 April 20257. The 

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Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 
programmes 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-offs and other temporary measures.  
The  Government  Programme  Implementation  Plan  is  an  action  plan,  which  sets  out  clear  actions  and 
deadlines for the implementation of the Government Programme’s objectives. 
Prior guidance transmitted to the Member States and the Economic and Financial Committee includes 
technical information i) without and with an extension of the adjustment period (covering 4 and 7 years, 
respectively), and ii) with and without the deficit resilience safeguard. It also includes the main initial 
conditions  and  underlying  assumptions  used  in  the  Commission’s  medium-term  government  debt 
projection  framework.  The  technical  information  was  calculated  on  the  basis  of  the  methodology 
described 
(https://economy-
finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It  was  based  on  the  European 
Commission  Autumn  2024  Forecast  and  its  medium-term  extension  up  to  2033,  and  long-term  GDP 
growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024  Ageing  Report 

the  Commission’s  Debt 

Sustainability  Monitor 

2023 

in 

EN 

2 

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technical  information  indicates  the  level  of  the  structural  primary  balance  in  2028 
that  is  necessary  to  ensure  that  the  general  government  deficit  is  maintained  below 
3%  of  GDP  over  the  medium  term  and  that  the  general  government  debt  remains 
below  60%  of  GDP  over  the  medium  term,  in  the  absence  of  further  budgetary 
measures beyond the four-year adjustment period. The medium term is defined as the 
ten-year period after the end of the adjustment period. The technical information was 
prepared  and  transmitted  to  the  Member  State  under  two  scenarios:  a  scenario 
including consistency with the deficit resilience safeguard8, in line with Article 9(3) 
of Regulation (EU) 2024/126, and a scenario without this safeguard.  

The  technical  information  for  Lithuania  sets  out  that,  in  order  to  comply  with  the 
applicable  fiscal  rules  over  an  adjustment  period  of  four  years,  and  based  on  the 
Commission’s assumptions, the structural primary balance should amount to at least 
0.3% of GDP at the end of the adjustment period (2028; scenario without the deficit 
resilience  safeguard),  as  per  the  following  table.  For  information,  considering  the 
deficit resilience safeguard, the structural primary balance should amount to at least 
0.3%  of  GDP  at  the  end  of  the  adjustment  period  (2028).  However,  the  deficit 
resilience safeguard is not a requirement for Lithuania, which is eligible for technical 
information. 

Table 1: Technical information provided by the Commission to Lithuania 

Final year of the adjustment period 

2028 

Minimum value of the structural  primary balance (% of GDP), scenario  without 
the deficit resilience safeguard 

0.3 

For  information  only:  Minimum  value  of  the  structural  primary  balance  (%  of 
GDP), scenario with the deficit resilience safeguard 

0.3 

Source: Commission calculations. 

(7) 

In line with Article 12 of Regulation (EU) 2024/1263, Lithuania and the Commission 
engaged  in  a  technical  dialogue  in  April  2025.  The  dialogue  centred  on  the  net 
expenditure  path  envisaged  by  Lithuania,  its  underlying  assumptions  (in  particular 
the GDP deflator, potential GDP growth rates, stock-flow adjustments, the share of 
long-term debt that matures every year, and long-term interest rates), and the impact 
of the 2024 outturn data – of which the general government deficit and debt statistics 
were  published  by  Eurostat  on  22  April  2025  –  compared  to  the  information 
underlying  the  technical  information,  as  well  as  the  envisaged  delivery  of  reforms 
and  investments  responding  to  the  main  challenges  identified  in  the  context  of  the 
European Semester and the common priorities of the Union in a fair green and digital 

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(https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-budgetary-
projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#Lithuania 
The deficit resilience safeguard established in Article 8 of Regulation (EU) 2024/1263 establishes that 
the annual improvement in the structural primary balance is of 0.4 percentage points of GDP (or 0.25 
percentage points of GDP in case of an extension of the adjustment period) until the structural deficit is 
lower than 1.5% of GDP. 

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(8) 

(9) 

transition,  social  and  economic  resilience,  energy  security  and  the  build-up  of 
defence capabilities. 

From November 2024 to February 2025, in line with Article 11(3) and 36(1), point 
(c),  of  Regulation  (EU)  2024/1263,  according  to  the  information  provided  by 
Lithuania in its plan, Lithuania engaged in a consultation process with civil society, 
social partners, regional authorities and other relevant stakeholders. 

The  National  Audit  Office  implementing  the  function  of  a  fiscal  institution 
(hereinafter  –  NAO  FI)  delivered  an  opinion  on  the  macroeconomic  forecast 
underpinning  the  multi-annual  net  expenditure  path.  The  NAO  FI  endorsed  the 
macroeconomic  forecast  and  concluded  that  it is  based  on  credible  macroeconomic 
assumptions and in line with the projections prepared by the NAO FI. 

(10) 

The plan was presented to the national parliament’s committee on European affairs 
and later approved by the Lithuanian government on 30 April 2025. 

Other related processes 

(11) 

(12) 

(13) 

On 25 October 2024, Lithuania submitted its Draft Budgetary Plan for the year 2025. 
The Commission adopted an opinion on this Draft Budgetary Plan on 26 November 
20249. 

On 2 May 2025, Lithuania requested the activation of the national escape clause to 
accommodate  higher  defence  spending,  in  accordance  with  Article  26 (1)  of 
the  Commission  Communication 
Regulation (EU) 2024/1263  and 
(C(2025)2000 final)  of  19 March  2025.  On  [8  July  2025],  the  Council,  upon  a 
recommendation from the Commission, adopted the recommendation activating the 
national escape clause for Lithuania10.  

following 

On 21 October 2024, the Council addressed to Lithuania a series of country-specific 
recommendations  (CSRs)  in  the  context  of  the  2024  cycle  of  the  European 
Semester11. On [8 July 2025], the Council addressed to Lithuania a series of country-
specific recommendations (CSRs) in the context of the 2025 cycle of the European 
Semester.12 

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(14) 

In line with Article 16 of Regulation (EU) 2024/1263, the Commission assessed the 
plan as follows: 

9 
10 

11 

12 

Commission Opinion on the Draft Budgetary Plan of Lithuania, 26.11.2024, C(2024)9058 final. 
Council Recommendation allowing Lithuania to deviate from, and exceed, the net expenditure path set 
in Council recommendation [xxx] (Activation of the national escape clause), OJ C XXX, X.X.2024, p. 
XX. 
Council  Recommendation  of  21  October  2024  on  the  economic,  social,  employment,  structural  and 
budgetary policies of Lithuania, OJ C 6822, 29.11.2024 
Council  Recommendation  of  [8  July  2025]  on  the  economic,  social,  employment,  structural  and 
budgetary policies of Lithuania 

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Context: macroeconomic and fiscal situation and outlook 

(15) 

(16) 

Economic activity in Lithuania grew by 2.8% in 2024, driven by a strong increase in 
private  consumption,  buoyant  services  exports  and  despite  a  decline  in  investment. 
According  to  the  European  Commission  Spring  2025  Forecast,  the  economy  is 
expected  to  grow  by  2.8%  in  2025,  supported  by  an  acceleration  of  consumption 
growth and a modest recovery in investment. In 2026, real GDP is set to accelerate 
again to 3.1% as investment growth strengthens. Over the forecast horizon (i.e. 2025-
2026), potential GDP growth in Lithuania is expected to slightly increase from 2.7% 
in 2024 to 2.8% in 2025, and decline to 2.2% in 2026, driven by natural population 
decline  and  the  decrease  in  persons  in  Lithuania  fleeing  the  war  in  Ukraine.  The 
unemployment  rate  stood  at  7.1%  in  2024  and  is  projected  by  the  Commission  to 
amount to 6.8% in 2025 and 6.6% in 2026. Inflation (GDP deflator) is projected to 
increase from 3.4% in 2024 to 3.6% in 2025 and to decrease again to 2.4% in 2026. 

Regarding fiscal developments, Lithuania’s general government deficit amounted to 
1.3%  of  GDP  in  2024.  According  to  the  European  Commission  Spring  2025 
Forecast,  it  is  set  to  increase  to  2.3%  of  GDP  in  2025  and,  on  a  no-policy-change 
basis, to stabilise at 2.3% in 2026. General government debt was 38.2% of GDP at 
end-2024.  According  to  the  European  Commission  Spring  2025  Forecast,  the  debt 
ratio is projected to increase to 41.2% of GDP at end-2025 and 43.9% at end-2026. 
The fiscal forecast by the Commission does not consider the policy commitments in 
the  medium-term  plans  as  such  until  they  are  underpinned  by  credibly  announced 
and sufficiently specified concrete policy measures. 

Net expenditure path and main macroeconomic assumptions in the plan 

(17) 

(18) 

(19) 

(20) 

Lithuania’s national medium-term fiscal-structural plan covers the period 2025-2029 
and presents a fiscal adjustment over four years. 

The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 
2024/1263. 

The plan commits to the net expenditure path indicated in Table 2, corresponding to 
average net expenditure growth of 5.0% over the years 2025-2029 and 5.2% over the 
adjustment period 2025-2028. 

The technical information (assuming a linear adjustment path) is consistent with an 
average net expenditure growth of 4.2% over the years 2025-2029 and 4.3% over the 
years  2025-2028.  The  net  expenditure  path  committed  to  in  the  plan  is  reported  to 
lead  to  a  structural  primary  balance  of  0.3%  of  GDP  at  the  end  of  the  adjustment 
period (2028). This is equal to the minimum level of the structural primary balance 
of 0.3% of GDP in 2028 provided by the Commission in the technical information on 
31 January 2025. 

(21) 

The plan assumes potential GDP growth to decrease to 1.8% in 2029 (from 2.8% in 
2024). In addition, the plan expects the growth rate of the GDP deflator to increase 
to 3.4% in 2025 (from 2.8% in 2024), before decreasing to 2.5% in 2028 and 2029. 

Table 2: Net expenditure path and main assumptions in Lithuania’s plan 

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2024 

2025 

2026 

2027 

2028 

2029 

Average 
over the 
period of 
validity of 
the plan 

2025-2029 

N/A 

6.1 

5.2 

4.8 

4.5 

4.3 

5.0 

Average 
over the 
adjustme
nt period 

2025-
2028 

5.2 

N/A 

6.1 

11.6 

17.0 

22.3 

27.5 

n.a. 

n.a. 

2.8 

2.5 

2.3 

2.1 

2.0 

1.8 

2.4 

2.3 

2.8 

3.4 

2.8 

2.6 

2.5 

2.5 

2.8 

2.8 

Net 
expenditure 
growth 
(annual, %) 

Net 
expenditure 
growth 
(cumulative, 
from base 
year 2024, 
%) 

Potential 
GDP growth 
(%) 

Inflation 
(GDP 
deflator 
growth) (%) 

Source: Medium-term fiscal-structural plan of Lithuania and Commission calculations. 

Implications of the plan’s net expenditure commitments for general government debt 

(22) 

If the net expenditure path committed to in the plan and the underlying assumptions 
materialise,  general  government  debt  would,  according  to  the  plan,  gradually 
increase from 38.5% in  2024 to 43.7% of GDP at the end of the adjustment period 
(2028), as per the following table. After the adjustment, general government debt is 
planned  to  decrease  slightly  until  2031,  followed  by  a  resumed  increase  over  the 
medium term, reaching 48.4% in 2038. 

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Table 3: General government debt and balance developments in Lithuania’s plan 

2024 

2025 

2026 

2027 

2028 

2029 

2038 

Government debt 

38.5 

41.0 

42.5 

43.5 

43.7 

43.2 

48.4 

(% of GDP) 

Government 
balance 

(% of GDP) 

-1.3 

-1.3 

-1.3 

-1.3 

-1.2 

-1.4 

-3.0 

Source: Medium-term fiscal-structural plan of Lithuania 

Thus,  according  to  the  plan,  general  government  debt  would  stay  below the  Treaty 
reference  value  of  60%  of  GDP  over  the  medium  term.  Therefore,  based  on  the 
plan’s  policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure 
path put forward in the plan is consistent with the requirement for debt as set out in 
Article 16(2) of Regulation (EU) 2024/1263. 

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(23) 

(24) 

Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
deficit  would  decline  from  1.3%  of  GDP  to  1.2%  of  GDP  at  the  end  of  the 
adjustment  period  (2028).  Thus,  according  to  the  plan,  the  general  government 
balance  would  not  exceed  the  3%  of  GDP  reference  value  at  the  end  of  the 
adjustment period (2028). 

In  addition,  in  the  ten  years  following  the  adjustment  period  (i.e.  until  2038),  the 
government  deficit  would  not  exceed  3%  of  GDP.  Therefore,  based  on  the  plan’s 
policy commitments  and macroeconomic  assumptions, the net  expenditure path  put 
forward  in  the  plan  is  consistent  with  the  requirement  for  the  deficit  as  set  out  in 
Article 16(2) of Regulation (EU) 2024/1263. 

Macroeconomic assumptions of the plan 

(25) 

The  plan  is  based  on  a  set  of  assumptions  which  differs  from  the  Commission’s 
assumptions transmitted to Lithuania on 31 January 2025. In particular, the plan uses 
28  February  2025  as  the  cut-off  date  for  the  data  and  other  information  taken  into 
account  for  the  macroeconomic  and  budgetary  projections.  The  plan  does  not  take 
into account the latest outturn data for 2024, as published by Eurostat in April 2025. 
Nevertheless, the differences between the 2024 data used in the plan for calculating 
the  adjustment  and  the  data  published  by  Eurostat  are  small  and  do  not  affect 
materially the adjustment needs. In addition to the late cut-off date for the data and 
other  information,  the  plan  also  uses  different  assumptions  for  a  further  nine 
variables,  namely,  potential  GDP,  the  GDP  deflator,  implicit  interest  rates  and 
market  interest  rates,  revenue  elasticity  for  2025,  stock-flow  adjustments  and  one-
offs, debt composition and maturity profile. A careful assessment of these differences 
in assumptions is necessary, especially as average net expenditure growth in the plan 

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is higher than implied by the technical information. The differences in assumptions 
with the most significant impact on average net expenditure growth are listed below, 
together with an assessment of each difference considered in isolation. 

– 

– 

– 

– 

– 

The plan is based on more recent statistical data and estimates for 2024 for the 
macro-fiscal variables. This difference is duly justified as it takes into account 
more  recent  information.  Notably,  the  general  government  deficit  turned  out 
lower than assumed in the Commission’s technical information, which makes 
for a better starting budgetary position. This contributes to higher average net 
expenditure  growth  over  the  validity  of  the  plan  than  according  to  the 
Commission’s assumptions. 

The  plan  uses  smoothed  potential  output  growth,  which  also  contributes  to 
higher average net expenditure growth over the validity of the plan compared 
to  the  Commission’s  assumptions.  The  possibility  to  use  alternative  potential 
growth  assumptions  is  granted  by  Article  36,  paragraph  (1),  point  (f),  of 
Regulation  (EU)  2024/1263,  provided  that  cumulative  growth  over  the 
projection  horizon  (i.e.  up  to  2038)  is  broadly  in  line  with  the  Commission’s 
assumptions,  which  is  the  case  in  the  plan.  Consequently,  this  assumption  is 
deemed to be duly justified. 

The  plan  uses  an  updated  convergence  value  for  the  GDP  deflator  based  on 
market expectations. The plan also assumes a slightly lower GDP deflator for 
2025  and  somewhat  higher  for  2026  compared  to  the  Commission’s 
assumptions. These contribute to a higher average net expenditure growth over 
the  validity  of  the  plan.  The  differences  are  in  part  due  to  more  recent 
information,  in  particular  consumer  price  inflation  developments  in  the  first 
months  of  2025,  especially  for  energy  and  food  prices.  By  contrast,  the  plan 
assumes faster convergence to the convergence value compared to what would 
be  implied  by  a  linear  convergence  rule,  which  partly  balances  the  impact  of 
the  other  differences  in  GDP  deflator  assumptions  on  the  maximum  net 
expenditure growth. While the deflator assumption for 2026 does not factor in 
the  deflationary  developments  in  commodity  markets  since  April  2025,  taken 
together  with  the  steeper  decline  in  2027-2028,  the  difference  in  the  GDP 
deflator assumption is deemed to be duly justified. 

The  commitment  for  net  expenditure  growth  presented  in  the  plan  for  2025 
implies that Lithuania assumes a higher than unitary revenue elasticity for that 
year.  This  contributes  to  higher  average  net  expenditure  growth  over  the 
validity  of  the  plan  than  according  to  the  Commission’s  assumptions.  This 
assumption is not consistent with the common DSA framework.  

The plan uses more cautious assumptions on implicit and market interest rates 
as  well  as  for  stock-flow  adjustments  than  the  Commission’s  technical 
information. These contribute to lower average net expenditure growth over the 
horizon of the plan. This difference is motivated by prudent budgetary policy-
making and is therefore duly justified. 

The  remaining  differences  in  assumptions  do  not  have  a  significant  impact  on 
average  net  expenditure  growth  compared  to  the  Commission’s  assumptions.  On 
balance,  the  impact  on  average  net  expenditure  growth  from  the  more  cautious 
assumption  on  the  interest  rates  and  stock-flow  adjustments  balances  that  of  the 
different  assumption  on  revenue  elasticity  in  2025.  In  turn,  this  implies  that  the 
difference between the net expenditure path in the plan and the  one consistent with 

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the technical information is explained by assumptions that the Commission considers 
duly  justified.  Overall,  all  the  differences  in  assumptions  taken  together  lead  to 
average  net  expenditure  growth  in  the  plan  that  is  higher  than  the  average  net 
expenditure  growth  implied  by  the  technical  information.  Based  on  the  above 
assessment, the plan fulfils the requirement under Article 13, point (b), of Regulation 
(EU) 2024/1263. The Commission will take into account the above assessment of the 
plan’s  assumptions  in  future  assessments  of  compliance  with  the  net  expenditure 
path. 

Fiscal strategy of the plan 

(26) 

According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure  will  be  delivered  through  both  expenditure  restraint  and  discretionary 
revenue  increases.  The  fiscal  strategy  includes  tax  policy  changes  aimed  at 
improving  personal  income  tax  progressivity,  encouraging  investment  through 
corporate  income  tax  revision,  broadening  the  tax  base  and  reducing  tax  evasion 
through  smarter  administration  and  international  cooperation.  Additionally,  it 
emphasises future savings in the public sector via zero-based budgeting, reduction of 
low-priority  expenditure  and  annual  public  spending  reviews  to  enhance  efficiency 
and  allow  a  reallocation  of  funds  to  higher-priority  areas  such  as  national  defence. 
The specification of the policy measures to be adopted is to be confirmed or adjusted 
and  quantified  in  the  annual  budgets.  Some  measures  were  specified  in  the  2025 
budget,  adopted  by  the  National  Parliament  on  19  December  2024,  whereas  others 
are expected to be confirmed in the forthcoming budgets. Measures planned for 2025 
include,  on  the  revenue  side  with  a  positive  fiscal  impact,  an  increase  in  excise 
duties,  mostly  on  polluting  fuels,  and  an  increase  in  the  corporate  income  tax  rate. 
The  adjustments  to  the  personal  income  tax  exemption  (the  non-taxable  income 
amount)  will  have  a  revenue-reducing  effect.  On  the  expenditure  side,  spending 
increases  are  planned  for  public  wages,  defence,  and  pensions.  At  the  same  time, 
there are risks to the implementation of the indicative fiscal strategy in the plan, as 
other specific measures have yet to be worked out, the level of additional revenues 
coming from measures to fight tax evasion is generally difficult to predict, and there 
is  a  need  to  make  additional  fiscal  space  to  increase  funding  for  healthcare,  social 
protection and other public services, as also recommended by the Council. 

Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(27) 

The plan describes policy intentions concerning reforms and investments to respond 
to the main challenges identified in the context of the European Semester, especially 
the  CSRs,  and  to  address  the  common  priorities  of  the  Union.  The  plan  includes 
about  60  reforms  and  investments,  of  which  11  are  financially  supported  by  the 
Recovery  and  Resilience  Facility  and  25  by  the  cohesion  policy  funds.  The  plan’s 
reforms  and  investments  are  based  on  an  existing  government  strategy  document 
(‘Plan  for  the  implementation  of  the  Nineteenth  Government  Programme  of  the 
Republic of Lithuania’). 

(28) 

Concerning the common priority of a fair green and digital transition, including the 
climate objectives  set  out  in Regulation  (EU) 2021/1119,  the plan includes reforms 

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and  investments  aiming  to  increase  the  share  of  renewable  energy  sources  by 
ensuring  their  integration  into  electricity  grids,  to  increase  the  energy  efficiency  of 
district  heating,  hot  water  and  cooling  systems  and  to  develop  recharging  and 
refuelling  infrastructure  for  alternative  fuels.  The  plan  also  describes  measures  to 
promote  the  decarbonisation  of  Lithuanian  industry  and  improve  the  incentives  for 
more  efficient  waste  prevention,  management  and  recovery  of  secondary  raw 
materials. Finally, the plan also describes measures, as part of the expansion of ultra-
fast broadband coverage in the country, to design the mobile infrastructure needed to 
operate  on  the  territory  of  at  least  five  Lithuanian  counties.  These  measures  and 
others in the plan contribute to the implementation of the 2023, 2022 and 2020 CSRs 
on  climate  change  mitigation  and  sustainability,  in  particular  decarbonisation  and 
expanding  renewable  energy  production,  but  also  energy  efficiency  and  the 
development  of  sustainable  transport.  The  measures  also  contribute  to  CSRs  in  the 
area of the expansion of very high-capacity broadband. 

Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European Pillar of Social Rights, the plan includes reforms and investments aiming 
to  modify  the  indexation  regime  for  the  basic  amounts  of  social  benefits  to  ensure 
that it better reflects developments in prices and average wages, adjust the indexation 
of  social  insurance  pensions,  improve  the  implementation  of  employment  support 
measures, introduce sustainable budget-based funding model for adult learning,  and 
develop  a network of regional career centres throughout  the country. The plan also 
includes reforms and investments aiming to introduce quality requirements for social 
housing, and define, implement,  apply  and maintain  quality  requirements for social 
services.  Finally,  the  plan  aims  to  improve  healthcare  access  and  quality,  reduce 
shortages of health professionals and enhance disease prevention. These reforms and 
investments contribute to the 2023, 2020 and 2019 CSRs on improving the planning 
and  delivery  of  social  services,  improving  the  implementation  of  active  labour 
market policies, strengthening the resilience of the health system, as well as reducing 
inequality, poverty and social exclusion. 

Concerning the common priority of energy security, the plan includes the completion 
of  the  Strategic  Harmony  Link  Project  between  Lithuania  and  Poland  and 
strengthening  of  the  resilience  of  energy  systems  in  strategic  sites  through  the 
installation of anti-drone systems, stockpiling equipment or the construction of safety 
walls. These reforms and investments contribute to the 2023 CSR on energy security. 

Concerning  the  common  priority  of  defence  capabilities,  the  plan  includes  reforms 
and investments to develop the National  Infantry Division and its enabling military 
units,  to  develop  the  necessary  infrastructure  to  host  the  German  Brigade  in 
Lithuania,  to  strengthen  Lithuania’s  defence  industry  and  to  promote  scientific-
technological progress. 

The  plan  provides  information  on  the  consistency  and,  where  appropriate, 
complementarity  with  the  cohesion  policy  funds  and  Lithuania’s  RRP.  The  plan 
includes  measures  from  the  RRP  such  as  the  implementation  of  renewable  fuel 
production and the development of infrastructure for their use in the transport sector, 
or  the  improvement  of  employment  support  measures.  The  plan  also  supports  the 
same objectives as the RRP. 

(29) 

(30) 

(31) 

(32) 

(33) 

The plan aims to contribute to meet the public investment needs of Lithuania related 
to  the  common  priorities  of  the  Union.  The  investment  needs  largely  refer  to 
investments outlined in the reforms and investments section. Regarding defence, the 

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plan  explains  that  the  Lithuanian  State  Defence  Council  expressed  the  ambition  to 
allocate EUR 28 billion to defence between 2026 and 2030, corresponding to 5-6% 
of GDP annually. This is above the NATO reference target of 2% of GDP. 

Conclusion of the Commission’s assessment 

(34) 

Overall, the Commission is of the view that Lithuania’s plan fulfils the requirements 
of Regulation (EU) 2024/1263. 

OVERALL CONCLUSION 

(35) 

In  accordance  with  Article  17  of  Regulation  (EU)  2024/1263,  the  net  expenditure 
path as set in the plan should be recommended by the Council to Lithuania. 

HEREBY RECOMMENDS that Lithuania 

1. 

Ensure that net expenditure growth does not exceed the maxima established in 
Annex I to this Recommendation. 

ANNEX I 

Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 

Lithuania 

Growth rates (%) 

Years 

2029 
4.3 
27.5 
(*) The cumulative growth rates are calculated by reference to the base year of 2024. The 
cumulative growth rates are used in the annual monitoring of ex-post compliance in the 
control account. 

Annual 
Cumulative (*) 

2027 
4.8 
17.0 

2025 
6.1 
6.1 

2026 
5.2 
11.6 

2028 
4.5 
22.3 

Done at Brussels, 

For the Council 
The President 

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