To preserve sustainable economic growth, Lithuania should continue the fiscal adjustment, further strengthen the resilience of the banking system and maintain competitiveness so that growth and job creation are robust, the statement reads.
The mission expects Lithuania to be able to reduce its fiscal deficit to 2.6 percent of GDP this year.
“At the same time, the quality of fiscal measures has weakened over time and the consolidation now relies mainly on one-off measures or extensions of temporary measures,” according to the statement.
In the Fund’s view, so far, most of the fiscal consolidation in Lithuania has taken place on the expenditure side, while the country’s revenue-to-GDP ratio is the lowest in the EU.
As usual, the IMF proposes to Lithuania to expand “the taxation of wealth, notably real estate and motor vehicles”. It also proposes to consider possibilities to broaden the bases for corporate income tax and a personal income tax as well as to improve tax administration.
