Lithuania's government needs to focus on investment and structural reforms to sustain the competitiveness of the economy, reduce unemployment and support growth in the near term, a report from the International Monetary Fund (IMF) said.
Following a review mission to the country, a team of IMF officials said the government needs to to shift the composition of fiscal adjustment to the revenue side, and stressed the importance of high quality measures to ensure sustainability while reducing income inequality.
The IMF forecasts that Lithuania's economy will expand 3 percent in 2013, which is slightly weaker than the 3.6 percent growth estimated for 2012. Inflation is seen moderating to 2.7 this year from last year's rate of 2.9 percent.
The team observed that the country has made significant progress in reducing macroeconomic imbalances over the past five years, and the economy is on the recovery path. Robust exports, combined with private consumption and a spike in agricultural production led to strong growth in 2012.
The country's budget for 2013 underlines the need to support the ongoing recovery with further reduction in fiscal deficit and financial consolidation, the lender noted.
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