Analytics, Education and Science, EU – Baltic States, Financial Services, Investments, Lithuania, Society, Taxation

Ageing society, lack of investment in research, and a poor share of environmental and property taxes in the country's budget are mentioned among Lithuania's key challenges.

The EC's report stressed that Lithuania has restored a strong economic growth since 2011 and significantly reduced the unemployment level. However, the country is facing certain challenges which could affect Lithuania's economy in the future.

"There means to make the tax system more favourable to growth. Lithuania's tax revenue largely depends on indirect taxes and taxes on labour, while the share of environmental or property taxes remains very small," the document says.

The EC notes that Lithuania's growth potential is facing structural challenges, which arise due to ageing society. The share of working age population is rapidly decreasing which as a result affects the sustainability of the pension system.

The institution also highlights that for Lithuania it is important to improve the regulation of employment relations, reduce the share of population which is at the risk of poverty or social exclusion, and continue integrating the country into European energy markets in order to ensure greater energy supply security.