Following a visit to Lithuania from 6 to 12 September 2016 for consultation on economic developments the IMF has issued a press release setting out its preliminary findings.

Lithuania’s economic activity is expanding and GDP growth is expected to reach around 2.5% in 2016 and rise to around 3% in 2017. This economic performance combined with possible gains from improvement in tax administration could give scope for new initiatives next year including cuts in social contributions and higher allowances under the personal income tax.

The IMF considers that the focus can now shift to structural reforms. These would include tax changes to reduce the tax burden on low wage earners and increase tax revenue from higher income groups, tax on income from capital and tax on wealth. This could reduce income inequality and increase employment. The efforts to strengthen the tax administration should also continue.

The report also emphasizes the importance of education to move the economy towards higher value goods and services. This includes increasing information about job market needs and raising the profile of vocational training. The report emphasizes the importance of innovation in reducing the income gap with Western Europe.