Travel TipsLithuania

ECONOMY

Lithuania has historically been the least developed of the Baltic republics, with a smaller industrial base and greater dependence on agriculture, prior to rapid industrialization during the Soviet era. Sugar beet, cereals, potatoes and vegetables are the main crops. Electrical, electronic and optical goods and light machinery are the main industrial products. Food processing is also an important industry, with an ample supply of agricultural products from Lithuania’s own farming and fisheries sector and more recently from Russia. Timber production has expanded on the back of growing trade links with Scandinavia. Lithuania’s other major economic asset is the Baltic’s only naturally ice-free port (other than Kaliningrad) at Klaipeda. Lithuania is a founder member of the regional cooperation organization for Baltic littoral states, the Council of Baltic Sea States. The government has largely completed the dismantling of the old Soviet-style command economy, introducing a market system and liberalizing foreign trade. Domestic political factors stalled some parts of the otherwise rapid privatization program, especially the key energy industries as well as the finance and banking sector. Action in the energy field is further complicated by the fact that 80 per cent of Lithuania’s energy comes from nuclear power (the highest figure of any country in the world): the government plans to reduce the percentage but faces major problems regarding waste disposal and alternative energy sources. Further privatizations of state assets, principally in the banking and transport sectors were completed in 2002.
Lithuania’s trade patterns have gradually shifted during the 1990s towards the West, and the European Union now accounts for just under half of all Lithuanian trade. Some 30 per cent of import trade and 20 per cent of export trade is conducted with partners in the former Soviet Union, principally the Russian Federation and Latvia. Lithuania has recovered from the serious knock-on effects of the 1998 Russian financial crisis and is now growing fairly quickly at around 6 per cent annually. The country joined the IMF and World Bank in 1992, as well as the European Bank for Reconstruction and Development as a Country of Operation. A convertible currency, the Litas, was introduced in 1993. Membership of the European Union has been a high priority for Lithuania since independence. Accession negotiations began in October 1999 and progressed well. Following a 90 per cent endorsement in a national referendum held in May 2003, Lithuania – along with nine other countries, including both its Baltic neighbors – joined the EU on May 1 2004.