{
  "title": "Lithuania—Concluding Statement of the Staff Visit",
  "publication": "IMF News, May 19, 2011",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/52/mcs051911",
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  "summary": "Describes the preliminary findings of IMF staff at the conclusion of certain missions (official staff visits, in most cases to member countries).",
  "publishDate": "2011-05-19",
  "sections": [
    {
      "heading": "Context and timing",
      "content": "- Vilnius, May 19, 2011\n- Describes preliminary findings of IMF staff at the conclusion of the mission."
    },
    {
      "heading": "Economic outlook and growth projections",
      "content": "- Real GDP is projected to grow by 6 percent in 2011 and 4¾ percent in 2012.\n- Booming exports and strengthening domestic demand are expected to support rapid economic growth in 2011-12.\n- Private consumption is being boosted by increasing confidence that the recovery is robust.\n- Strong private fixed investment reflects rising corporate profitability and capacity utilization.\n- Solid employment growth is reducing the unemployment rate and contributing to increasing wage growth.\n- Core CPI inflation turned positive in April; headline CPI inflation is being boosted temporarily by high food and energy prices.\n- Risks to the growth forecast are balanced: domestic demand could surprise on the upside, but sovereign financing concerns elsewhere in Europe could spill over to funding pressures for Lithuania."
    },
    {
      "heading": "Fiscal developments, targets, and required adjustment",
      "content": "- Under its latest Convergence Program, the government aims to cut the general government deficit to 5.3 percent of GDP in 2011 and 2.8 percent of GDP in 2012.\n- With strong economic growth boosting government revenue, the target for 2011 is likely to be achieved.\n- Assuming that the wage bill is kept unchanged in nominal terms, IMF staff project a fiscal deficit of 4 percent of GDP in 2012.\n- Therefore, additional fiscal measures of 1¼ percent of GDP are needed to achieve the 2012 target of 2.8 percent of GDP.\n- With the recovery firmly entrenched, additional fiscal consolidation should start as soon as possible."
    },
    {
      "heading": "Composition of additional fiscal adjustment (policy recommendations)",
      "content": "- Expand wealth taxation:\n  - Introduce taxes on residential real estate and motor vehicles.\n  - Rationale: these taxes are less distortive than other taxes, are progressive, and could increase revenue substantially and quickly.\n- Eliminate exemptions from corporate and personal income tax."
    },
    {
      "heading": "Medium-term fiscal objective and structural reforms",
      "content": "- Medium-term objective: fiscal surplus of ½ percent of GDP.\n- Structural fiscal issues requiring further progress:\n  - Pension reform:\n    - Support an increase in the retirement age.\n    - Support the separation of the basic social pension and the introduction of means testing.\n    - Support limited government matching of individual contributions to the second pillar.\n  - Tax compliance:\n    - Welcome actions taken to strengthen revenue administration, including improved targeting of different taxpayer segments, enhancement of border monitoring, and more extensive use of cash registers.\n    - Support further efforts to strengthen tax compliance.\n  - State-owned enterprise reform:\n    - Welcome strengthening of transparency regarding state-owned assets.\n    - Support analysis of the social functions of state-owned enterprises and the development of governance reforms."
    },
    {
      "heading": "Banking system assessment and supervisory recommendations",
      "content": "- The banking system as a whole is on the mend, but challenges remain.\n- The average non-performing loan ratio has stabilized.\n- Lower loan-loss provisioning and wider interest margins helped banks post small profits for the first time since 2008.\n- Capital adequacy and liquidity ratios remain well above regulatory minima.\n- Supervisory actions recommended:\n  - Continue to closely monitor the sufficiency of all banks’ loan loss provisions.\n  - Ask banks to raise capital where needed under a strict timeframe.\n- With improved conditions, banks’ lending standards have eased, suggesting that credit is available for sound borrowers.\n\nLithuania—Concluding Statement of the Staff Visit (Vilnius, May 19, 2011).\n\n---\n\n\n References\n\n- Republic of Lithuania and the IMF\n- Mission Concluding Statements\n- PRESS CENTER\n- Article IV\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/52/mcs051911"
    }
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    "Published: May 19, 2011",
    "Vilnius, May 19, 2011",
    "Describes preliminary findings of IMF staff at the conclusion of the mission.",
    "Real GDP is projected to grow by 6 percent in 2011 and 4¾ percent in 2012.",
    "Booming exports and strengthening domestic demand are expected to support rapid economic growth in 2011-12.",
    "Private consumption is being boosted by increasing confidence that the recovery is robust.",
    "Strong private fixed investment reflects rising corporate profitability and capacity utilization.",
    "Solid employment growth is reducing the unemployment rate and contributing to increasing wage growth.",
    "Core CPI inflation turned positive in April; headline CPI inflation is being boosted temporarily by high food and energy prices.",
    "Risks to the growth forecast are balanced: domestic demand could surprise on the upside, but sovereign financing concerns elsewhere in Europe could spill over to funding pressures for Lithuania.",
    "Under its latest Convergence Program, the government aims to cut the general government deficit to 5.3 percent of GDP in 2011 and 2.8 percent of GDP in 2012.",
    "With strong economic growth boosting government revenue, the target for 2011 is likely to be achieved.",
    "Assuming that the wage bill is kept unchanged in nominal terms, IMF staff project a fiscal deficit of 4 percent of GDP in 2012.",
    "Therefore, additional fiscal measures of 1¼ percent of GDP are needed to achieve the 2012 target of 2.8 percent of GDP.",
    "With the recovery firmly entrenched, additional fiscal consolidation should start as soon as possible.",
    "Expand wealth taxation:",
    "Eliminate exemptions from corporate and personal income tax.",
    "Medium-term objective: fiscal surplus of ½ percent of GDP.",
    "Structural fiscal issues requiring further progress:",
    "The banking system as a whole is on the mend, but challenges remain.",
    "The average non-performing loan ratio has stabilized.",
    "Lower loan-loss provisioning and wider interest margins helped banks post small profits for the first time since 2008.",
    "Capital adequacy and liquidity ratios remain well above regulatory minima.",
    "Supervisory actions recommended:",
    "With improved conditions, banks’ lending standards have eased, suggesting that credit is available for sound borrowers.",
    "[Republic of Lithuania and the IMF](http://www.imf.org/external/country/LTU/index.htm)",
    "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Article IV](https://www.imf.org/external/pubs/ft/aa/aa04.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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