The International Monetary Fund (IMF) is urging Lithuania to increase taxes, warning that without additional revenue the country’s budget sustainability could be at risk, particularly as defence spending rises and the population ages, according to the business daily Verslo Žinios.
The IMF estimates that Lithuania collects one of the lowest shares of tax revenue in the European Union, at 22.3 percent of gross domestic product (GDP), compared with an EU average of 26.1 percent. The fund also says Lithuania has an untapped tax potential of up to 9 percent of GDP that could be realised through reforms to the tax system.
Planned government changes starting in January 2026 are expected, in the IMF’s assessment, to generate about 0.6 percent of GDP in additional revenue.
The IMF’s recommendations highlight concerns over maintaining fiscal stability as the country faces rising defence costs and demographic shifts, including an ageing population that could increase social spending in the coming years.
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