This Selected Issues paper examines the reasons behind Lithuania’s low tax-GDP ratio relative to the European Union (EU). At end-2015, Lithuania had nearly the lowest tax-GDP ratio in the EU, along with Bulgaria and Romania. The tax revenue shortfall relative to the EU is for the most part attributable to weak tax administration and tax policy, with the structure of the economy playing a secondary role. The second largest contribution to the tax revenue shortfall relative to the EU comes from social security contributions. The shortfall is driven primarily by the structure of the economy, and to a smaller extent by tax administration.
In Lithuania, the case for complementing the on going fiscal adjustment with revenue measures is strong. In addition to supporting the adjustment, options to raise revenue need to be tailored to enhance growth and export competitiveness. International and empirical evidence suggest important scope for revenue-enhancing tax reforms in Lithuania. Lithuania is in a position to rebalance growth towards exports. Executive Directors suggest a broad tax reform strategy that could raise revenue and tax new revenue sources while supporting growth, competitiveness, and equity to substantially bolster revenues.
Traditional fiscal indicators focused on measures of current deficits and debt miss the potentially important implications of current policies for future public finances. This could be problematic, including in the case of Europe, where population aging is expected to pose additional fiscal costs not captured by such indicators. To better gauge the state of public finances in the EU27 countries, this paper derives forward-looking fiscal measures of intertemporal net worth both directly from the European Commission’s Aging Working Group’s long-run indicators and using a comprehensive public-sector balance sheet approach. These measures could be used as an "early warning" mechanism and also as a communication device with the public. Current estimates indicate that, on existing policies, the intertemporal net worth of the EU27 is deeply negative, even in excess of its GDP level, and is projected to worsen further over time. This suggests that Europe’s current policies need to be significantly strengthened to bring future liabilities in line with the EU governments’ capacity to generate assets.
The current cyclical upswing underscores the potential of the Polish economy with regard to EU accession and in the face of favorable global growth prospects. The current juncture offers good opportunities to lock in improved economic performance. Uncertainties remain regarding reducing the deficit and stabilizing public debt. Restructuring in industries exposed to foreign competition needs to be expanded to the economy more generally. With a reform agenda in place, euro adoption would be an additional impetus for trade, investment, and growth.
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
This report provides the details of the IMF's projections and estimates on Estonia's basic data; gross domestic product by expenditure, origin, and income approach; real gross domestic product by origin; employment by sector; balance of payments; foreign direct investment inflows and outflows by countries; foreign direct investment outflows and inflows by sectors during 1996–2000; maturity and currency composition of deposits and loans; general government revenue and expenditure during 1996–2001; gross external debt; foreign assets; net external debt during 1997–2000, and so on.