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Toward A Sustainable and Inclusive Consolidation in Lithuania: Past Experience and What is Needed Going Forward

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  • Ms. Nan Geng

Abstract

This paper reviews Lithuania’s fiscal consolidation since 2009, assesses the contribution of revenue and expenditure to the consolidation, evaluates the quality of measures, and draws lessons for the future. It finds that, despite having the lowest revenue-to-GDP ratio in the EU, Lithuania’s fiscal adjustment has so far relied mainly on expenditure measures, with the quality of measures deteriorating over time. The analysis also suggests that Lithuania’s tax system, in comparison with other EU countries and regional peers, is skewed toward labor and consumption taxes, and plays a more limited role in income redistribution, especially in the upper income brackets. The paper argues therefore that there is ample scope to implement high quality revenue measures in order to complete the fiscal adjustment in the medium term in a sustainable and inclusive manner.

Suggested Citation

  • Ms. Nan Geng, 2013. "Toward A Sustainable and Inclusive Consolidation in Lithuania: Past Experience and What is Needed Going Forward," IMF Working Papers 2013/157, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/157
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    References listed on IDEAS

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    1. Mr. John Norregaard, 2013. "Taxing Immovable Property Revenue Potential and Implementation Challenges," IMF Working Papers 2013/129, International Monetary Fund.
    2. Andrew G. Berg & Jonathan D. Ostry, 2017. "Inequality and Unsustainable Growth: Two Sides of the Same Coin?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 792-815, November.
    3. Mr. Mark A Horton & Mr. George C. Tsibouris & Wojciech Maliszewski & Mr. Mark J Flanagan, 2006. "Experience with Large Fiscal Adjustments," IMF Occasional Papers 2006/003, International Monetary Fund.
    4. Mrs. Delia Velculescu, 2010. "Some Uncomfortable Arithmetic Regarding Europe’s Public Finances," IMF Working Papers 2010/177, International Monetary Fund.
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    Cited by:

    1. DUMITRESCU, Bogdan Andrei, 2015. "An Optimality Assessment Of The Fiscal Consolidation Process Initiated By Romania In 2010," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 19(1), pages 8-20.

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