2025-04-30
With an ageing population and a shrinking national population (2.6 million people are projected to be in Lithuania in 2050), there are inevitable challenges arising from the necessity to meet the needs of an ageing population, while at the same time maintaining the sustainability of public finances. The impact of demographic change on public finances was discussed today by representatives of the Lithuanian public sector, academia and business, policy makers and implementers at a conference organised by the Seimas Committee on Audit and the National Audit Office entitled "Public Finances and Demographic Challenges: How to Prepare for the Future?". Experts analysed the factors affecting the sustainability of Lithuania's public finances, the challenges of demographic change, competitiveness and the importance of a fiscal structural plan.
Opening the conference, Artūras Skardžius, Chairman of the Seimas Committee on Audit, stressed that "The rapid ageing of the population is not a statistic on a chart. It is a growing long-term commitment of the state to its citizens. In order to provide quality social and medical services to the growing elderly population in twenty or thirty years' time, we need to find solutions today that will increase state revenues, stimulate economic growth and labour productivity. This is the only way to avoid an unmanageable increase in public debt”.
"We are already experiencing the consequences of the changing demographic structure - the declining number of pupils is leading to a reorganisation of the school network, there is a shortage of health sector staff, and rapidly rising pension costs are making it difficult to cover the needs for quality public services with limited budgetary resources. Two major initiatives with a future dimension are particularly hotly debated: the reform of the second pillar of pension provision and the tax changes that are trying to find their shape. It is essential that public commitments are made in a responsible way - based on data-driven assessments, debate and long-term solutions. This is the only way to ensure that future generations will have access to quality public services and that social and economic shifts will not be shocking", said Mindaugas Macijauskas, Auditor General.
In the long term, demography is one of the most important determinants of Lithuania's economic development and general government finances. Rising pension and healthcare costs will increase pressure on public debt and pose risks to the sustainability of the country's public finances. If age-related liabilities are covered only by debt, it is projected to rise to almost 80% of GDP in 2050. This was revealed by an assessment of the sustainability of general government finances in 2025-2050 carried out by the National Audit Office, implementing the function of the fiscal institution.
This and other risks to sustainable public sector finances, as well as an analysis of the sustainability of public sector finances in 2025-2050, were presented at the conference by Jurga Rukšėnaitė, the Head of the Budget Monitoring Department of the National Audit Office. She stressed that not raising revenues in compliance with national fiscal discipline rules would reduce the quantity and quality of public services and worsen social sustainability. Structural reforms are needed to finance ageing-related liabilities, to boost investment, labour productivity and mitigate the impact of changing demographics.
Prof. Dr. Domantas Jasilionis, Head of the Demographic Research Centre at Vytautas Magnus University, spoke at the conference about the changes in Lithuania's demography and the challenges it poses. Demographic scenarios related to the possible impact of immigration and technological progress were presented, and possible public policy guidelines for more sustainable demographic and economic changes in the future were discussed.
Simonas Krėpšta, Member of the Board of the Bank of Lithuania, analysed competitiveness as a tool for a strong economy. The speaker stressed that competitiveness is perhaps the most important measure of an economy, helping to have economic growth without additional labour force or tools, which is particularly important given the geopolitical situation and uncertainties in the world.
The Minister of Finance, Rimantas Šadžius, presented to the conference the first-ever Medium-Term Fiscal Structural Plan, which commits Lithuania to a sustainable management of government expenditure. At the same time, the plan includes the Government's reforms and investments aimed at strengthening Lithuania's social and economic resilience and increasing its competitiveness.
A video of the conference is available in Lithuanian on the Seimas website and on the Seimas YouTube account "Open Seimas".