Last May, the Lithuanian government approved the integrated plan New Generation Lithuania, which envisages reforms and investments for development as a country with high added value. Finance Minister Gintarė Skaistė notes that this decision will allow the necessary reforms that the Council of Europe has been talking about for almost a decade to be undertaken. “The approval of the integrated plan “New Generation Lithuania” by the government lays the foundations for faster creation of high added value, digitalization, green course, provision of better education, health and social services, as well as for building a more equitable and resilient country. We have ambitious goals that we have incorporated into the government program and the action plan, while the funds from the plan will contribute to achieving these goals” said Finance Minister Gintarė Skaistė.
Based on the proposals received from the social and economic partners during the consultations, the plan was updated by integrating investments in the cultural and educational sectors, and additional funds for self-government needs. Of these resources, EUR 30 million is earmarked for digitization and greater accessibility of cultural resources by giving priority to the selection of cultural heritage sites preserved in memory institutions. 20 mln for the development of digital educational content and resources to enable personalized distance learning not only in a pandemic situation. A further €30 million will be allocated to improve municipal public services and infrastructure. In addition, 6.3 million will be allocated to sequencing studies of the entire human genome of the representative sample of the Lithuanian population. At the same time, it is noted that most of the 300 proposals received during the consultation have already been funded from other sources, and the measures have already been provided for in reforms or other instruments in the implementation of the government program.
The results show a strong impact of the plan’s measures on national GDP: faster real growth will be ensured in the period 2022-2026, on average 1.7% or 825 million per year. During the implementation of the plan (2021-2026) with the funds of the “New Generation Lithuania” channeled to the national economy, 4.2 billion GDP will also be created. It is estimated that every euro invested will generate a real GDP return of 1.9 euros. The planned reforms and investments will also help to improve climate change indicators, while in the medium to long term they will have a positive impact on the labor market and poverty reduction. The employment rate is estimated to increase by 1.6 p.p. in 2025, the unemployment rate will decrease by 2.0 p.p., while youth unemployment (15-24 years of age) will decrease by 2.3 p.p. compared to the baseline scenario. The main reason for better indicators is the reform of active labor policy measures. These reforms will have a long-term impact on the ability to find and keep a job, so performance indicators will be better for the entire forecast period (by 2040). In addition, the at-risk-of-poverty rate is expected to decrease by 1% in 2025 and by 1.3% by 2040.
At the same time, Finance Minister G. Skaistė noted that although the investments of 2.225 billion euros allocated to the New Generation Lithuania national plan are significant for changes in the country, they will not be the only ones. The plan represents only about one-seventh of the total amount of €16 billion under the Next Generation EU package, including funding instruments such as REACT-EU and the European Agricultural Fund for Rural Development.
The European Economic Recovery and Resilience Fund awards Lithuania grants €2.225 billion which will be used for seven pillars:
• green transition
• digital transformation
• healthcare
• social affairs
• research and innovation
• education
• public governance
The green transition and digital transformation are priorities for the WHOLE EU, to which each Member State must allocate at least 37% and 20% of the Fund’s assistance, respectively. Recognizing the importance of these priorities, New Generation Lithuania allocates even more funds for green transformation and digitalization, 43% and 33% respectively.
In this context, the Green Building Transition measures as part of the National Resilience and Recovery Plan aim to increase the speed of the building renovation process by leveraging digitalization, a broader integrated approach to housing, and ecological transformation. In total, €217.8m will be allocated from EU funding, €51.6m from national budgets, €103.2m from EU alternative financial instruments, €93m from private companies. Lithuania will implement the following policies to ensure accelerated renovation of buildings and a sustainable urban environment:
• investments for the restructuring of the IT system
• State aid to companies for the use of wood materials and green building components
• modernization of condominiums with greater energy efficiency
Finally, the development of sustainable electricity aims to promote the production, transmission, and use of electricity consumption using the most cost-effective technologies, improving institutional mechanisms, and providing incentives for investment by businesses and citizens. Lithuania will implement €242.39 million from EU funding, €157.44 million from private entities, and €55.716 million from the national budget. Planned investments include onshore solar and wind farms, a solar power park, and storage facilities. Greenhouse gas emissions are expected to decrease by 22.6 t/mln of GDP in 2025 and will continue to decline over time.