Republic of Lithuania: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania

IMF Staff Country Reports, September 1, 2021

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Canonical URL: Republic of Lithuania: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania

With a demonstrated resilience to the crisis and the recovery gaining strength, macroeconomic policies should aim at preserving stability and complementing structural reforms that address long-standing challenges.
A medium-term plan to rebuild buffers, support potential growth, and target pockets of vulnerability would help address pre-existing disparities and poverty.
Sustained productivity growth, supported by the implementation of politically difficult but needed structural reforms, is the only way to support high wage growth and convergence with Western Europe.
Failure to do so could jeopardize Lithuania’s hard-earned competitiveness gains.

Resilience to the crisis and a strengthening recovery are evident.
Pre-existing disparities and poverty remain concerns that require targeted actions.
Productivity growth is central to sustaining high wage growth and convergence with Western Europe.
Political economy constraints make needed structural reforms difficult but essential.
Insufficient reform implementation risks reversing competitiveness gains.

Macroeconomic policies should preserve stability while complementing structural reforms.
Develop and implement a medium-term plan to:
- Rebuild fiscal and policy buffers.
- Support potential GDP growth.
- Target pockets of vulnerability and address pre-existing disparities and poverty.
Prioritize sustained productivity growth through the implementation of politically difficult structural reforms to maintain wage growth and convergence with Western Europe.

Subjects: Anti-money laundering and combating the financing of terrorism (AML/CFT); COVID-19; Crime; Financial institutions; Financial statements; Health; International organization; Loans; Monetary policy; Nonperforming loans; Public financial management (PFM)
Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT); authorities' agenda; Baltics; COVID-19; Europe; Financial statements; Global; hard-earned competitiveness gain; Lithuanian authorities; Loans; Nonperforming loans; potential GDP; transparency policy; Western Europe