VILNIUS, Nov. 24 (Xinhua) -- Lithuania's fiscal position is expected to worsen in 2026, with both the deficit and public debt projected to increase due to rising defense and social spending, the International Monetary Fund (IMF) warned on Monday.
According to the Baltic News Service (BNS) report, the IMF suggested that Lithuania seek sustainable revenue sources and further strengthen its multi-tier pension system.
Looking ahead, Lithuania will continue to face fiscal pressures stemming from unfavorable demographic trends, defense requirements, and the green transition, the IMF said in its statement.
These challenges highlight the need to preserve fiscal space by effectively mobilizing sustainable revenue sources and improving spending efficiency to maintain debt sustainability. The IMF noted that strengthening the financial and social stability of the multi-pillar pension system will be vital in addressing adverse demographic developments.
Lithuania's banking sector remains resilient, with capital and liquidity ratios well above regulatory requirements, strong deposit growth, and expanding loan portfolios. Bank profitability is solid, despite a slight decline, and asset quality remains high, with non-performing loans at historic lows, according to the IMF.
The non-bank sector in Lithuania is relatively small but has been expanding, particularly with the rapid growth of fintech activities. The IMF stressed that effective supervision of higher-risk fintech institutions remains a priority.
In October, the IMF projected that Lithuania's GDP would grow by 2.9 percent next year and 2.7 percent this year.
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