Lithuania

Showing progress in recent years, Lithuania falls into the upper-middle ranks internationally (rank 13) in the area of economic policies. Its score on this measure has improved by 0.2 points since 2014.

While the country did experience a sharp mid-2020 decline in GDP, growth returned almost immediately to modest levels, with a performance that exceeded that in most other EU states. After years of budgetary surpluses, the balance turned negative in 2020, with a 7.2% deficit. The gap was projected to narrow in subsequent years. Public debt rose to the moderate level of 47% of GDP.

The unemployment rate jumped sharply to nearly 8.5% in 2020, falling below 8% in 2021. Wage growth continued nonetheless. A structural mismatch between skilled labor demand and supply is worsening. Overall tax revenues are low in cross-EU comparison, with VAT playing a significant role. Labor taxes diminish economic competitiveness. Tax evasion is an ongoing problem.

The pandemic and migrant crises delayed urgently needed reforms in areas such as the labor market and energy infrastructure. Inflation rates were the euro zone’s highest in late 2021. R&D expenditures are comparatively low, with little research performed in the private sector.

With gaps in its social safety net, Lithuania receives a middling overall score (rank 22) with regard to social policies. Its score on this measure is unchanged relative to its 2014 level.

Education quality is a concern, with students showing middling achievements. An education reform program has been drafted but not yet implemented. Relative-poverty and social-exclusion rates are high. Income inequality is high, but wealth inequality is low in cross-EU comparison. Minimum wages and pensions have been increased.

A surplus of hospital beds proved useful during the pandemic, but excess death rates were high. Health outcomes are poor in cross-EU comparison. The share of women employed is high, but child-care provision is insufficient. A variety of benefits for families and pregnant women have been increased.

A crisis in which Belarus encouraged a flow of illegal immigrants over Lithuania’s border led to policy difficulties. Initially all migrants seeking asylum were admitted; subsequently the country began physically deterring entry, prompting human-rights criticisms. Defense spending has been increased in light of rising threats from Russia.

Despite a discrepancy between existing goals and policies, Lithuania falls into the upper-middle ranks (rank 13) with regard to environmental policies. Its score on this measure is unchanged relative to its 2014 level.

The country’s greenhouse-gas emission reduction target is only 9% by 2030. Longer-term goals are more ambitious, but existing policies are deemed insufficient to reach them. Environmental protection expenditure is well below the EU average.

About 25.5% of energy was produced from renewable sources in 2019. Regulatory and financial incentives are provided for wind and solar power, with a 100% renewables goal set for 2050. Tax policy is used in only a limited way to address pollution and climate change externalities.

Progress has been made in reducing reliance on landfills and increasing recycling. However, waste generation is expanding. Water supply and sewage infrastructures are improving, but a significant share of the population still lives in facilities lacking connection to wastewater treatment plants.

With free and fair electoral procedures, Lithuania receives a high overall ranking (rank 10) with regard to democracy quality. Its score on this measure has declined by 0.1 point relative to its 2014 level.

Campaign-finance laws have been tightened, with stricter penalties for illegally obtained funds, new limits on cash funding, and tighter limits on expenditures and advertising. State funding provides the largest share of party revenue. Early voting was extended and drive-through voting implemented during a pandemic-era parliamentary election.

Gaining access to government information and data has been problematic. Court rulings have extended journalists’ right to access non-classified information. Media-ownership concentration has increased over the last several years. The state provided financial assistance to the media during the pandemic, but this was not distributed “fairly and transparently.”

Civil rights are officially protected, but the migrant crisis at the Belarus border led to accusations of human rights abuses. Protest frequency increased in 2021, with large gatherings opposing vaccination policies and same-sex partnerships. Courts have upheld the right to hold LGBTQ+ events over prominent politicians’ objections. Corruption remains a concern.

Showing significant institutional-reform ability, Lithuania scores well (rank 9) with regard to executive capacity. Its score on this measure is unchanged relative to its 2014 level.

Strategic planning has been streamlined, and the PMO’s office strengthened. A Strategic Analysis center helps the government generate evidence for policymaking. However, major policy initiatives are usually driven by intraparty agreements. Line ministries have considerable autonomy, but work collaboratively with the prime minister’s office.

RIAs are treated as a formality, with little impact. Challenges in managing COVID-19 exposed digitalization flaws. Public consultation is currently routine, but often superficial. Successive governments experienced difficulties in communicating a coherent strategy on the coronavirus and other serious policy issues.

The persistence of crises has pushed the government’s agenda of structural reforms into the future. Nonetheless more attention is being paid to monitoring implementation of the government program. Policymakers did not internalize pandemic lessons well enough to prepare for successive waves. A broad reform of the public administration is in the planning stages.

With a mixed record on oversight issues, Lithuania falls into the middle ranks internationally (rank 20) in the area of executive accountability. Its score on this measure has improved by 0.4 points since 2014.

Citizen policy knowledge is not highly developed, although public-education campaigns and efforts to improve information availability are ongoing. Voter turnout races are low and declining. While the state-funded media produces some high-quality analysis, the media are in general distrusted. Internet-based sources have expanded coverage, but are also used to spread disinformation.

While parliamentarians have considerable resources and strong formal oversight powers, the quality of laws suffers due to high number of laws passed. The audit office suffers from a lack of operational independence. The several ombuds offices have taken an increasingly proactive approach to human-rights violations, and the data-protection authority is both independent and effective.

Key political parties have shifted to increasingly democratic means of selecting candidates and making decisions. Interest groups generally have limited ability to formulate well-crafted policies.