Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for the Republic of Lithuania (long-term local- and foreign-currency issuer and senior unsecured debt ratings: A+/Stable; short-term local- and foreign-currency issuer ratings: S-1+/Stable) on 3 February 2026.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

Lithuania’s A+ credit ratings are supported by several credit strengths, including: i) its strong institutional set-up, anchored by euro-area and NATO memberships, alongside a solid track record of policy continuity, which ensure a robust framework for fiscal and economic policy making while mitigating external security risks; ii) improved economic resilience and a strong medium-run growth outlook, supported by strengthening external buffers, increasing economic diversification and sizable EU-fund allocations, underpinning expectations of continued convergence of income levels towards euro-area averages over the coming years; and iii) a sound fiscal position with moderate public debt levels, underpinning strong debt affordability despite additional fiscal costs related to increased defence spending commitments.

The main challenges to the ratings are: i) exposure to external shocks, given the Lithuanian economy’s comparatively small size, still comparatively moderate income levels, elevated openness and border with Kaliningrad and Belarus; and ii) adverse demographic trends and high defence spending commitments that add long-term pressures to the fiscal trajectory.

After experiencing a strong rebound in 2024 (real growth of 3.0%), the Lithuanian economy continued to expand rapidly last year, with growth estimated at 2.7%. The strong momentum was driven by domestic demand, with household consumption benefitting from high wage growth and growing employment, in part supported by still-elevated net migration flows. Investment was also particularly robust, including strong growth in business investment in transport equipment and ICT, alongside high public investment. Growth is expected to outpace peer economies over the medium term, at 3.3% this year and 2.7% in 2027. Consumption will benefit from continued income expansion, driven by high wage growth and pension revaluations, alongside a temporary boost from recent reforms allowing households to withdraw savings from second-pillar pension funds. Investment activity will be boosted by sizeable public sector allocations – primarily in defence and infrastructure – and large EU fund inflows, ahead of the completion of the NextGenerationEU programme and in line with the ramp-up in executions in Cohesion Funds allocated under the 2021-27 Multiannual Financial Framework.

The fiscal deficit stood at an estimated 2.2% of GDP in 2025, up from 1.3% in the previous year, although remaining below initial government estimates (3.0% of GDP). This rise follows from higher spending on social transfers and public sector wages, alongside higher allocations to military spending. Scope expects the fiscal deficit to widen again over the coming years, to 2.6% of GDP this year, and to 2.9% of GDP in 2027-28, before gradually narrowing in subsequent years. This deterioration will be driven by rapidly growing government spending, particularly on defence (which is expected to rise to 5.4% of GDP in 2026, from about 3.9% last year) and investment. These pressures will only be partly offset by a set of revenue-raising measures implemented to fund this ramp-up in expenditure, including a reform of the personal income tax framework and hike in the corporate income tax rate and excise duties. After rising to an estimated 39.1% last year (up 1.1pps year-on-year), the debt-to-GDP ratio is expected to remain on a steady upwards trajectory over coming years, rising to around 47% by end-2030.

The Stable Outlook reflects Scope’s view that the risks Lithuania faces over the next 12 to 18 months are balanced.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. Convergence towards euro-area income levels progressed significantly, such as via material progress in economic diversification and productivity growth;
    
2. The external position remained on an improving trajectory, such as via sustained current account surpluses, further enhancing economic resilience; and/or
    
3. Fiscal fundamentals improved materially, placing the debt-to-GDP ratio on a solid declining trajectory over the medium run.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Geopolitical risks increased, undermining macroeconomic stability;
    
2. Fiscal fundamentals weakened materially, resulting in a significant rise in the debt-to-GDP ratio over the medium run;
    
3. Macroeconomic imbalances increased, weakening growth prospects; and/or
    
4. External and/or financial sector vulnerabilities increased substantially.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Brian Marly, Senior Analyst

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