IMF Staff Concludes Visit to Lithuania

IMF News, November 24, 2025

Source details

Mission leader: Ms. Kazuko Shirono.
Visit dates: November 17–21, 2025.
Press Release No.: 25/383.
Press release date: November 24, 2025.
Note: End-of-Mission press releases convey preliminary findings after a visit. The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
The mission thanked the authorities and other counterparts in Lithuania for candid discussions and useful exchange of views.

2025: "Lithuania's economy is expected to grow moderately in 2025, supported by domestic demand."
2024: "After strong growth in 2024, momentum has been easing due to softening external demand and ongoing trade tensions."
2026: "In 2026, growth is expected to accelerate, driven by stronger private consumption on the back of anticipated Pillar II pension withdrawals and sustained wage gains, investment supported by EU funds, and a more accommodative monetary policy."
Risks: "Weaker-than-expected external demand, particularly from key eurozone partners, and trade uncertainty could weigh on exports and dampen investment."

Headline inflation: "Headline and core inflation are expected to peak in 2025 before gradually easing and settling above 2 percent over the medium term."
Historical figures: "After bottoming out at around 0.1 percent y/y in October 2024, headline inflation has rebounded, climbing to 3.7 percent in October 2025, largely reflecting higher excise duties, and food and services inflation."
Core inflation drivers: "Core inflation remains elevated, primarily due to robust price growth in services, which is in turn driven by substantial wage increases."
Policy implication: "Recent strong wage growth underscores the need to raise productivity to reduce cost-based price pressures and safeguard competitiveness."

2026 fiscal projection: "Lithuania’s fiscal position is expected to deteriorate in 2026, with both deficit and debt set to increase due to higher defense and social spending."
EU rules and budget: "While the government remains committed to complying with EU fiscal rules—utilizing the national defense clause to permit expanded spending—the proposed budget will place public debt on a rising path."
Long-term pressures: "Lithuania will continue to face fiscal pressures from unfavorable demographic trends, defense needs and green transition."
Policy recommendations:
- "Preserve fiscal space by effectively mobilizing sustainable revenue sources and improving spending efficiency to maintain debt sustainability."
- "Strengthen the financial and social stability of the multi-pillar pension system" to respond to adverse demographic shifts.
- "A comprehensive strategy that incorporates these elements is essential to ensure long-term fiscal sustainability."

Banking sector strength:
- "Capital and liquidity ratios well above regulatory requirements."
- "Strong deposit growth, and expanding loan portfolios."
- "Bank profitability remains solid, despite some decline."
- "Asset quality is high, with non-performing loans at historic lows."
Non-bank and fintech:
- "The non-bank sector is relatively small but has grown, with fintech activities expanding rapidly."
- Supervision priority: "Effective supervision of higher-risk fintech institutions remains a priority."
Real estate and risks:
- "Real estate activity is picking up as lower borrowing costs and wage growth have helped improve affordability, supporting real estate prices."
- Macroprudential guidance: "Macroprudential policies should continue to be calibrated in line with evolving financial stability risks and vigilance is warranted given persistent risks from trade tensions and cyber threats."

Source: IMF Press Release No. 25/383 — IMF Staff Concludes Visit to Lithuania, November 24, 2025.