Evaluation of the Impact of Structural Reforms on Lithuania’s Macroeconomic Indicators

Clients: The Chancellery of the Government of Lithuania and the Ministry of Finance, 2018/05 – 2018/09

In 2018, responding to the constraints on Lithuania’s economic growth, the 17th Government initiated 6 structural reforms aimed at revising the education system, health care, the tax system, the innovation policy, the principles to reduce the shadow economy and the pension system. The aim of this evaluation was to quantify the impact of this structural reform package on the macroeconomic indicators of the Lithuanian economy and on the implementation of the Operational Program of the EU Funds Investment for 2014-2020. First, the impulses of individual reforms to the economy were identified and quantified. The quantification of the indicators of the impact of structural reforms was carried out on the basis of scientific research, experience of other countries and statistical analysis of Lithuania’s economic indicators. The analysis of the impact of the reforms on the country’s economy was performed using the econometric modelling method. It is estimated that the largest relative effect of the reforms implemented by the Government on GDP (in nominal terms) will be achieved around 2025-2027, when the reforms will lead to about 2% higher GDP growth or more than EUR 1.2 billion higher GDP than in the non-reform scenario.