{ "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Republic of Lithuania", "publication": "IMF News, September 17, 2025", "sourceUrl": "https://www.imf.org/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation", "overlayPath": "/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/index.md", "summary": "On September 8, 2025, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for the Republic of Lithuania. The authorities have consented to the publication of the Staff Report prepared for this consultation.", "publishDate": "2025-09-17", "sections": [ { "heading": "Overview", "content": "- On September 8, 2025, the Executive Board completed the Article IV Consultation for the Republic of Lithuania. The authorities consented to publication of the Staff Report prepared for this consultation.\n- Press Release No. 25/299." }, { "heading": "Recent economic developments", "content": "- Growth accelerated to 2.7 percent in 2024, largely driven by private consumption supported by real income gains, offsetting weak investment and net exports.\n- Inflation averaged 0.9 percent in 2024, partly driven by negative base effects from declining energy prices; inflation increased to 3.1 percent in June 2025, partly reflecting increased excise duties.\n- Core inflation remained high in 2024 and the first half of 2025, reflecting persistently high services inflation.\n- Labor market: migration flows eased to normalize in 2024; wage growth remained above 10 percent in 2024 due to increased public wages but markedly eased in Q1 2025.\n- Defense expenditure reached 2.8 percent of GDP in 2024 and is expected to rise to 5 percent of GDP for 2026-30 in line with new NATO commitments.\n- Parliament approved a tax policy package and proposed changes in the Pillar II pension including removing automatic enrollment and introducing options to withdraw funds before retirement age." }, { "heading": "Outlook and projections", "content": "- Growth projections:\n - 2025: 2.9 percent (supported by private consumption and investment, against lower yet continued real wage growth, easing financial conditions, and EU funds).\n - 2026: 3.4 percent (largely reflecting increased private consumption driven by anticipated withdrawals from the Pillar II pension).\n - Medium-term convergence to 2.5 percent.\n- Inflation:\n - Expected to temporarily rise to 3.2 percent in 2025, before gradually moderating." }, { "heading": "Fiscal position and public debt", "content": "- Budget deficit increased to 1.3 percent of GDP in 2024 but was lower than originally planned, driven by higher surplus of social security funds, stronger-than-expected tax revenues, and lower expenditure on goods and services.\n- Public debt rose to 38.2 percent of GDP in 2024.\n- IMF staff emphasize the need for further fiscal adjustments to stabilize the debt ratio at a lower level and preserve fiscal space against future shocks.\n- Pension sustainability: ensuring long-term sustainability of the pension system is essential; staff cautioned that the recent Pillar II reform could lower replacement rates and raise future public liabilities." }, { "heading": "Financial sector and macroprudential stance", "content": "- Banking system: solid capitalization, ample liquidity, and low NPL ratios.\n- Macroprudential stance considered appropriate, but continued vigilance needed on credit growth, house price dynamics, and commercial real estate risks; readiness to adjust capital-based measures encouraged.\n- AML/CFT: strengthening of the AML/CFT framework welcomed; sustained implementation encouraged, including supervision of fintech and virtual asset service providers.\n- Development of domestic capital markets encouraged to facilitate investment growth and help reduce external imbalances." }, { "heading": "Structural reforms and labor market policies", "content": "- Priority reforms:\n - Improve firms’ access to finance to facilitate investments and deepen SME financing.\n - Accelerate adoption of new technologies and AI, and accelerate technological diffusion.\n - Address skills mismatches through improved vocational training and migrant labor integration.\n- Energy and climate:\n - Progress in strengthening energy security through renewables welcomed; continued decarbonization and climate adaptation efforts encouraged to meet EU climate goals." }, { "heading": "Executive Board assessment and recommendations", "content": "- Directors commended Lithuania’s resilience supported by strong fundamentals and policy frameworks but noted downside risks from potential slowdowns in trade partners, geopolitical tensions, and demographic pressures.\n- Fiscal strategy: comprehensive approach needed to address defense spending increases and long-term expenditure needs related to aging and the green transition.\n- Revenue and spending: additional revenue mobilization measures and spending efficiency gains broadly agreed as needed to stabilize debt and preserve fiscal space; measures to address high inequality encouraged.\n- Pension reform caution: design reforms to ensure both financial and social sustainability.\n- Financial oversight: continue close oversight of the banking sector and sustain AML/CFT implementation.\n- Structural policies: support for measures to raise productivity and alleviate skills mismatches, deepen SME financing, and foster technological diffusion." }, { "heading": "Key statistics (selected)", "content": "- Real GDP growth: 2022: 2.5; 2023: 0.4; 2024: 2.7; 2025: 2.9; 2026: 3.4; medium-term: 2.5.\n- Domestic demand growth: 2022: 2.3; 2023: -1.3; 2024: 3.1; 2025: 3.3; 2026: 3.7.\n- Private consumption: 2022: 2.0; 2023: -0.3; 2024: 3.6.\n- Domestic fixed investment: 2022: 5.2; 2023: 9.3; 2024: -1.1; 2025: 5.0; 2026: 5.3; 2027: 4.7; 2028: 4.6; 2029: 4.5.\n- Nominal GDP (in billions of euros): 2022: 67.4; 2023: 73.8; 2024: 78.4; 2025: 83.9; 2026: 88.9; 2027: 92.8; 2028: 97.4; 2029: 102.4; 2030: 107.5.\n- Output gap (percent of potential GDP): 2022: -0.7; 2023: -0.5; 2024: 0.8.\n- Unemployment rate (year average, in percent of labor force): 2022: 6.0; 2023: 6.9; 2024: 7.1; 2025: 6.6; 2026: 6.1; 2027: 5.9.\n- Average monthly gross earnings: 2022: 13.3; 2023: 12.2; 2024: 10.4; 2025: 8.1; 2026: 5.8; 2027: 5.4.\n- Average monthly gross earnings, real (CPI-deflated): 2022: -4.6; 2023: 3.5; 2024: 9.6; 2025: 4.9; 2026: 2.8.\n- Labor productivity: 2022: -1.0; 2023: 1.1; 2024: 2.4.\n- HICP, period average: 2022: 18.9; 2023: 8.7; 2024: 0.9; 2025: 3.2.\n- HICP core, period average: 2022: 13.6; 2023: 10.7; 2024: 3.0.\n- HICP, end of period: 2022: 20.0; 2023: 1.6; 2024: 1.9.\n- GDP deflator: 2022: 16.1; 2023: 9.0; 2024: 3.9.\n- General government fiscal balance (percent of GDP): 2022: -2.8; 2023: -4.1; 2024: -3.9; 2025: -4.0.\n- Structural fiscal balance (percent of potential GDP): 2022: -1.5; 2023: -2.7; 2024: -4.4.\n- Revenue (percent of GDP): 2022: 35.5; 2023: 36.7; 2024: 38.2; 2025: 38.3; 2026: 38.1; 2027: 38.4.\n- Expenditure (percent of GDP): 2022: 36.3; 2023: 37.4; 2024: 39.5; 2025: 41.1; 2026: 42.2; 2027: 42.1; 2028: 42.4; 2029: 42.3.\n- General government gross debt: 2022: 37.3; 2023: 46.5; 2024: 50.2; 2025: 52.3; 2026: 54.2; 2027: 55.9.\n- Current account balance (percent of GDP): 2022: -6.1; 2023: 1.8.\n- Gross national saving (percent of GDP): 2022: 22.0; 2023: 23.1; 2024: 22.8; 2025: 23.0; 2026: 23.3; 2027: 23.8; 2028: 24.4; 2029: 25.0; 2030: 25.4.\n- Gross national investment (percent of GDP): 2022: 28.1; 2023: 20.4; 2024: 21.0; 2025: 21.3; 2026: 22.5; 2027: 23.6.\n\nSource: IMF Executive Board Concluding Statement on the 2025 Article IV Consultation with the Republic of Lithuania (Press Release No. 25/299).\n\n---\n\n\n References\n\n- Republic of Lithuania and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/lithuania\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json)", "Published: September 17, 2025", "On September 8, 2025, the Executive Board completed the Article IV Consultation for the Republic of Lithuania. The authorities consented to publication of the Staff Report prepared for this consultation.", "Press Release No. 25/299.", "Growth accelerated to 2.7 percent in 2024, largely driven by private consumption supported by real income gains, offsetting weak investment and net exports.", "Inflation averaged 0.9 percent in 2024, partly driven by negative base effects from declining energy prices; inflation increased to 3.1 percent in June 2025, partly reflecting increased excise duties.", "Core inflation remained high in 2024 and the first half of 2025, reflecting persistently high services inflation.", "Labor market: migration flows eased to normalize in 2024; wage growth remained above 10 percent in 2024 due to increased public wages but markedly eased in Q1 2025.", "Defense expenditure reached 2.8 percent of GDP in 2024 and is expected to rise to 5 percent of GDP for 2026-30 in line with new NATO commitments.", "Parliament approved a tax policy package and proposed changes in the Pillar II pension including removing automatic enrollment and introducing options to withdraw funds before retirement age.", "Growth projections:", "Inflation:", "Budget deficit increased to 1.3 percent of GDP in 2024 but was lower than originally planned, driven by higher surplus of social security funds, stronger-than-expected tax revenues, and lower expenditure on goods and services.", "Public debt rose to 38.2 percent of GDP in 2024.", "IMF staff emphasize the need for further fiscal adjustments to stabilize the debt ratio at a lower level and preserve fiscal space against future shocks.", "Pension sustainability: ensuring long-term sustainability of the pension system is essential; staff cautioned that the recent Pillar II reform could lower replacement rates and raise future public liabilities.", "Banking system: solid capitalization, ample liquidity, and low NPL ratios.", "Macroprudential stance considered appropriate, but continued vigilance needed on credit growth, house price dynamics, and commercial real estate risks; readiness to adjust capital-based measures encouraged.", "AML/CFT: strengthening of the AML/CFT framework welcomed; sustained implementation encouraged, including supervision of fintech and virtual asset service providers.", "Development of domestic capital markets encouraged to facilitate investment growth and help reduce external imbalances.", "Priority reforms:", "Energy and climate:", "Directors commended Lithuania’s resilience supported by strong fundamentals and policy frameworks but noted downside risks from potential slowdowns in trade partners, geopolitical tensions, and demographic pressures.", "Fiscal strategy: comprehensive approach needed to address defense spending increases and long-term expenditure needs related to aging and the green transition.", "Revenue and spending: additional revenue mobilization measures and spending efficiency gains broadly agreed as needed to stabilize debt and preserve fiscal space; measures to address high inequality encouraged.", "Pension reform caution: design reforms to ensure both financial and social sustainability.", "Financial oversight: continue close oversight of the banking sector and sustain AML/CFT implementation.", "Structural policies: support for measures to raise productivity and alleviate skills mismatches, deepen SME financing, and foster technological diffusion.", "Real GDP growth: 2022: 2.5; 2023: 0.4; 2024: 2.7; 2025: 2.9; 2026: 3.4; medium-term: 2.5.", "Domestic demand growth: 2022: 2.3; 2023: -1.3; 2024: 3.1; 2025: 3.3; 2026: 3.7.", "Private consumption: 2022: 2.0; 2023: -0.3; 2024: 3.6.", "Domestic fixed investment: 2022: 5.2; 2023: 9.3; 2024: -1.1; 2025: 5.0; 2026: 5.3; 2027: 4.7; 2028: 4.6; 2029: 4.5.", "Nominal GDP (in billions of euros): 2022: 67.4; 2023: 73.8; 2024: 78.4; 2025: 83.9; 2026: 88.9; 2027: 92.8; 2028: 97.4; 2029: 102.4; 2030: 107.5.", "Output gap (percent of potential GDP): 2022: -0.7; 2023: -0.5; 2024: 0.8.", "Unemployment rate (year average, in percent of labor force): 2022: 6.0; 2023: 6.9; 2024: 7.1; 2025: 6.6; 2026: 6.1; 2027: 5.9.", "Average monthly gross earnings: 2022: 13.3; 2023: 12.2; 2024: 10.4; 2025: 8.1; 2026: 5.8; 2027: 5.4.", "Average monthly gross earnings, real (CPI-deflated): 2022: -4.6; 2023: 3.5; 2024: 9.6; 2025: 4.9; 2026: 2.8.", "Labor productivity: 2022: -1.0; 2023: 1.1; 2024: 2.4.", "HICP, period average: 2022: 18.9; 2023: 8.7; 2024: 0.9; 2025: 3.2.", "HICP core, period average: 2022: 13.6; 2023: 10.7; 2024: 3.0.", "HICP, end of period: 2022: 20.0; 2023: 1.6; 2024: 1.9.", "GDP deflator: 2022: 16.1; 2023: 9.0; 2024: 3.9.", "General government fiscal balance (percent of GDP): 2022: -2.8; 2023: -4.1; 2024: -3.9; 2025: -4.0.", "Structural fiscal balance (percent of potential GDP): 2022: -1.5; 2023: -2.7; 2024: -4.4.", "Revenue (percent of GDP): 2022: 35.5; 2023: 36.7; 2024: 38.2; 2025: 38.3; 2026: 38.1; 2027: 38.4.", "Expenditure (percent of GDP): 2022: 36.3; 2023: 37.4; 2024: 39.5; 2025: 41.1; 2026: 42.2; 2027: 42.1; 2028: 42.4; 2029: 42.3.", "General government gross debt: 2022: 37.3; 2023: 46.5; 2024: 50.2; 2025: 52.3; 2026: 54.2; 2027: 55.9.", "Current account balance (percent of GDP): 2022: -6.1; 2023: 1.8.", "Gross national saving (percent of GDP): 2022: 22.0; 2023: 23.1; 2024: 22.8; 2025: 23.0; 2026: 23.3; 2027: 23.8; 2028: 24.4; 2029: 25.0; 2030: 25.4.", "Gross national investment (percent of GDP): 2022: 28.1; 2023: 20.4; 2024: 21.0; 2025: 21.3; 2026: 22.5; 2027: 23.6.", "[Republic of Lithuania and the IMF](http://www.imf.org/external/country/LTU/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[www.imf.org/lithuania](https://www.imf.org/en/Countries/LTU)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/index.md", "json": "/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2025/09/15/pr-25299-lithuania-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:07:23.290Z" }