IMF gives Lithuania pat on back

  • 2003-06-19
  • Baltic News Service

The International Monetary Fund has given good marks to Lithuania's economic performance but warned the government that delays in reforming the healthcare system, as well as tackling social inequality and the shadow economy, may lead to serious troubles in the long run.
"Lithuania's economy is functioning well, and the outlook is good if the right policies are implemented in the future," IMF official Patricia-Alonso-Gamo said at a press briefing on June 13.
"At the same time, it has to be underlined that there are a number of areas in Lithuania which cause concern and can give rise to serious problems in the future," she said.
Alonso-Gamo pointed to the rapidly widening development gap between the capital Vilnius and other regions of the country as one of the most worrying problems. She urged the government to pay more attention to this problem, in particular high level of unemployment in the country.
The IMF official also criticized the country's authorities for their unwillingness to start real reforms in the healthcare and pension system. "Lithuania has taken only its first steps in this direction, and what it has done so far can hardly be called a pension reform. It seems that short-term arguments have prevented the government from launching a real reform," she said.
Alonso-Gamo noted that Estonia was planning to earmark between 1 percent and 1.5 percent of GDP annually for its pension reform, while Lithuania's planned annual allocations for this purpose accounted to just 0.1 percent of GDP.
The head of the IMF mission also pinpointed the problem of budget revenue collection shortfalls, noting that estimates of the shadow economy's share of Lithuania's GDP ranged between 10 percent and 15 percent.
"The problem lies not only in revenue collection, but also in the efficiency of revenue distribution, particularly in the social security or health sectors," Alonso-Gamo said.
Alonso-Gamo headed the IMF mission which came to Lithuania on June 3 to assess the country's economic performance and outlook for the next few years. The IMF team wrapped up their 10-day visit on June 13.