2025-12-10
A group of experts from the Organization for Economic Cooperation and Development (OECD) conducted a review of Lithuania's independent fiscal institution, whose functions are performed by the National Audit Office. The purpose of the OECD's reviews of independent fiscal institutions is to assess the performance of independent fiscal institutions in accordance with applicable OECD principles and to provide recommendations for their further development. This is the second such assessment – the first was conducted in 2019. The National Audit Office has been performing the functions of the fiscal institution since 2015, and the Budget Monitoring Department is responsible for their implementation.
To ensure the sustainability of public finances and stable economic development, the Budget Monitoring Department carries out the assessment and endorsement of the macroeconomic forecasts of the Ministry of Finance, assesses compliance with fiscal discipline rules, and prepares independent macroeconomic and fiscal projections. It also assesses the long-term sustainability of public finances and identifies risks and potential challenges to general government finances. The Department increases fiscal transparency through its opinions and reports, promoting discussion on public finance issues and informing the public about the challenges and benefits of fiscal policy.
The OECD notes that significant progress has been made over the past five years: strengthened analytical capacity has enabled the regular publication of macroeconomic forecasts, and reports and opinions have become clearer and more comprehensible. These changes have strengthened the technical credibility of the Budget Monitoring Department and laid the groundwork for stronger fiscal surveillance. However, core previous recommendations related to strengthening institutional independence and visibility have so far been only partially implemented.
“Lithuania’s Budget Monitoring Department has improved its analytical capacity since the last OECD review, but its impact remains constrained by its institutional setup. With rising fiscal pressures, now is the time to strengthen its independence and visibility as a fiscal advocate that empowers public understanding and informs political debate on budgetary choices“, noted Scherie Nicol, head of the OECD review team.
The functioning of the fiscal institution within the National Audit Office still results in an unclear distinction between fiscal oversight and audit functions, and stakeholders often perceive the institution primarily as an auditor rather than a defender of fiscal interests. According to the OECD, this limits the independence, visibility, and impact of the fiscal institution.
"In order to maximize the institution's potential, it is necessary to ensure that it is clearly perceived as the main defender of fiscal interests, rather than just an auditor. This is a strategic step in the evolution of the institution, which will strengthen the independence, visibility, and impact of the fiscal institution in key fiscal policy discussions," stressed Auditor General Irena Segalovičienė.
The Auditor General also adds that one of the strategic goals is to strengthen the independent fiscal institution. "Fiscal discipline in public sector finances is a real factor determining our ability to finance defence, social services, and long-term commitments. Therefore, a strong fiscal institution is not an option but a necessity for Lithuania," says Ms Segalovičienė, emphasizing that this is the responsibility of the entire state.
The OECD notes that Lithuania's public finance situation has become significantly more challenging since 2019. Geopolitical challenges have prompted commitments to increase defence spending, while demographic changes and healthcare needs continue to put structural pressure on public finances. In this changing context, Lithuania, like all EU Member States, must transpose the updated 2024 EU Economic Governance Directive into national law by the end of 2025. It strengthens the role of independent fiscal institutions and sets higher requirements for their independence, legal establishment, and resources.
Even before the publication of the OECD review report, the necessary steps were taken to strengthen the functions of the independent fiscal institution. First of all, by amending the national legal framework.
"Amendments to the Constitutional, Fiscal Governance, and National Audit Office Laws will more clearly define the duality of our functions. The National Audit Office, as the supreme audit institution, is also an independent fiscal institution. Consolidating this status in law is a necessary step towards transparency, authority, and resistance to political cycles," says the Auditor General.
The OECD report also notes that the current funding of the independent fiscal institution is insufficient, with staff salaries remaining uncompetitive.
"To effectively perform the functions of a fiscal institution - ensuring the accuracy of macroeconomic and fiscal forecasts, analysing the sustainability of public finances, monitoring compliance with fiscal discipline rules, and providing timely opinions – sufficient resources are necessary," noted the Auditor General.
The insights and recommendations of the OECD experts will be presented and discussed today in the Seimas at a joint meeting of the Committees on Audit and Budget and Finance.