2026-04-01
The National Audit Office, as an independent fiscal institution (IFI), presented its assessment of the economic development scenario for 2026–2029—published by the Ministry of Finance on 24 March 2026—to the Seimas Committee on Budget and Finance today and provided its own projections. Although the current impact of the war in Iran on inflation remains limited, it is important to prepare in advance so that targeted support measures can be implemented if necessary.
As the conflict in Iran enters its fifth week and shipping traffic through the Strait of Hormuz has virtually come to a standstill, energy prices remain high. According to the IFI’s assessment, since the planned 2026 budget deficit is close to the limit allowed by fiscal discipline rules, the government’s ability to implement broad-based interventions has narrowed. If the situation remains unfavourable and support measures are needed, they must be as targeted as possible. In the planned 2026 budget, fiscal space has already been largely exhausted, and the scope for implementing large-scale fiscal support measures—such as tax cuts or compensation for all consumers, similar to those applied in 2022–2023—is limited.
“Given the high level of uncertainty in the energy markets, we must prepare targeted measures in advance, rather than costly, horizontal solutions. Limited fiscal space dictates the need to focus assistance on the most vulnerable households and energy-intensive businesses, ensuring the best possible cost-benefit ratio,” says Auditor General Irena Segalovičienė. According to her, when considering possible decisions to reduce excise duty rates, it is advisable to simultaneously seek mechanisms that would ensure the benefits of the reduced excise duty directly reach end consumers, rather than becoming an additional source of profit for participants in the supply chain.
Lithuania could implement targeted compensation measures, utilizing existing support schemes, for the most vulnerable households or provide temporary relief for energy-intensive businesses to avoid a significant decline in competitiveness. Support measures must also be designed in such a way as to encourage consumers to use energy resources efficiently.
“It is important to note that although energy prices are currently high, the projected inflation rate remains lower than the average wage projection. Together with rising social benefits, this suggests that household purchasing power will increase, thereby reducing the need for broad-based compensation measures,” notes Jurga Rukšėnaitė, Head of the Fiscal Monitoring Centre.
“It is important to note that although energy prices are currently high, the projected inflation rate remains lower than the average wage projection. Together with rising social benefits, this suggests that household purchasing power will increase, thereby reducing the need for broad-based compensation measures,” notes Jurga Rukšėnaitė, Head of the Fiscal Monitoring Centre.