Navigating Minefields and Headwinds: National Security, Demographic Shifts, Climate Change and Fiscal Policy in Lithuania
IMF Working Papers, September 20, 2024
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- Navigating Minefields and Headwinds: National Security, Demographic Shifts, Climate Change and Fiscal Policy in Lithuania
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Bibliographic details
- Authors: Serhan Cevik
- Published: September 20, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400289842.001
Immediate fiscal challenges
- National security is identified as a primary immediate fiscal challenge.
- Higher costs of borrowing are an immediate fiscal challenge that exacerbates near-term pressures.
- Debt sustainability concerns would not allow financing additional spending with more debt.
Demographic trends and projections
- Population decline: from 3.7 million in 1991 to 2.8 million in 2023.
- Old-age dependency ratio: expected to increase from 33 percent in 2023 to 53.4 percent by 2050.
Long-term spending pressures and climate change
- Long-term spending pressures (from demographics and climate change) are projected to amount to as much as 11.2 percent of GDP.
- This 11.2 percent of GDP is described as about 30 percent of the current level of spending.
Policy recommendations and comprehensive strategy
- A comprehensive strategy is recommended to address long-term fiscal challenges.
- Recommended elements of the strategy include:
- Tax policy changes to raise additional revenue.
- Primary emphasis on reducing expenditure needs through pension reforms.
- Primary emphasis on reducing expenditure needs through healthcare reforms.
Key statistics and facts (preserved)
- Population: 3.7 million (1991); 2.8 million (2023).
- Old-age dependency ratio: 33 percent (2023); 53.4 percent (by 2050).
- Projected long-term spending pressure: as much as 11.2 percent of GDP.
- Relative magnitude of projected pressure: about 30 percent of the current level of spending.
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- Working Paper