Lithuania needs to increase the borrowing capacity of its municipalities for public investment to bring in as much benefit for the country's economy as possible, the Organization for Co-cooperation and Development says.
OECD: Lithuania needs to boost municipal borrowing capacity
© DELFI / Josvydas Elinskas

Presenting the OECD's recommendations for Lithuania, Hansjorg Blochliger, head of Iceland, Lithuania and Russia country desk at OECD, said the country's public investment levels are still very low.

"Local government institutions within the OECD usually account for two thirds of investments on average, and it stands at 40 percent in Lithuania, which is too low. (…) More of good local-level investments would contribute to general economic growth," he said during a remote presentation.

Meanwhile, Camila Vammalle, a senior economist and policy analyst at the OECD, said Lithuanian municipalities now lack capacity to generate fiscal independence and increase public investment and expenditure, and also have little possibility to save.

"Local government institutions in Lithuania have very restricted ability to borrow, they are subject to very tight fiscal rules, leading to a lack of ability and capacity to generate addition revenue," she said.

The OECD recommends to the Lithuanian government to harmonize the existing rules and renounce the net borrowing limit and separate current and capital accounts. It also advices to increase municipalities' revenue by handing them over the real estate tax for residential properties, allow introducing additional residential income tax rates and accordingly reduce the national income tax rate.

It is prohibited to copy and republish the text of this publication without a written permission from UAB „BNS“.

President critical of preparations for EUR 2.2b EU support

Lithuanian President Gitanas Nauseda is critical of preparations in the country to qualify for EU...

Jurkonis. Everything you think you knew about politics is wrong: using political capital for good

We can’t escape the word politics, but do we really understand its various meanings?

Shopping centers to reopen, excluding weekends

The Lithuanian government made a decision on Thursday to allow all stores at shopping centers to...

Shops allowed in malls to open on weekdays

The Lithuanian government decided in principle on Wednesday to allow all shops located in malls to...

Skuodis: Rail Baltica should have a direct access to Vilnius and Kaunas airports

Minister of Transport and Communications Marius Skuodis initiates discussions on the connection of the...

Top news

Eight candidates apply for Lithuania's EU General Court position

Eight candidates have submitted their applications to represent Lithuania at the European Union's...

Turkish intern plans to settle down in Vilnius after graduation

Mihriban Usta from Turkey’s Black Sea city of Trabzon bubbles with enthusiasm, despite the pandemic...

President critical of preparations for EUR 2.2b EU support

Lithuanian President Gitanas Nauseda is critical of preparations in the country to qualify for EU...

5th of population has received at least one vaccine doze

Almost a fifth of Lithuania's population has received at least one doze of a coronavirus vaccine,...

Simonytė on church services: we must try not to worsen situation

Lithuanian Prime Minister Ingrida Simonyte on Friday thanked the Catholic Church for helping to bring...