IMF Board Wraps Up Annual Economic Consultation With Lithuania

2025-09-17 05:06:35

(MENAFN- Trend News Agency) BAKU, Azerbaijan, September 17. On September 8, 2025, the Executive Board of the International Monetary Fund (IMF) completed its regular Article IV Consultation for the Republic of Lithuania, with the authorities agreeing to publish the accompanying staff report, Trend reports.

According to the IMF, Lithuania's economy expanded by 2.7 percent in 2024, largely driven by private consumption supported by real income growth, which offset weak investment and net exports.

Inflation averaged 0.9 percent in 2024, reflecting declining energy prices, but rose to 3.1 percent in June 2025 following higher excise duties. Core inflation remained elevated due to persistent price pressures in services.

The labor market tightened in 2024 as migration flows normalized. Wage growth exceeded 10 percent last year, boosted by public sector pay increases, but eased significantly in early 2025.

Lithuania's fiscal position remained relatively solid, with the budget deficit at 1.3 percent of GDP in 2024 - below initial projections thanks to stronger tax revenues, a surplus in social security funds, and lower spending on goods and services. Public debt reached 38.2 percent of GDP.

Defense expenditure stood at 2.8 percent of GDP in 2024 and is set to rise to 5 percent for 2026–2030, in line with new NATO commitments. Parliament also approved a tax policy package and proposed reforms to the Pillar II pension system, including the removal of automatic enrollment and the introduction of early withdrawal options.

Looking ahead, the IMF projects Lithuania's growth at 2.9 percent in 2025, supported by private consumption, investment, easing financial conditions, and EU funds.

Growth is expected to accelerate to 3.4 percent in 2026, partly reflecting pension withdrawals, before moderating to 2.5 percent in the medium term. Inflation is forecast to temporarily rise to 3.2 percent in 2025 before gradually easing.

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