Like many Eastern European countries, Lithuania experienced a household credit boom in the long period preceding the global financial crisis. By the end of 2007, mortgage loans in Lithuania reached 20 percent of GDP, issued mostly in foreign currencies, with 59 percent of low-income households holding such loans.
... See More + Inadequate financial consumer protection left the majority of middle- and low-income borrowers highly vulnerable. The EU Consumer Policy strategy 2007-2013 aims to strengthen consumer protection and financial literacy, emphasizing financial education. Lithuania adopted its own Strategy for Consumer Protection 2007-10 to bridge the gap with the EU standards. Even though Lithuania has already established a basic framework for financial consumer protection, making it comprehensive and effective requires strengthening in many areas. This World Bank's diagnostic review is presented in two volumes. Volume I gives an overview of Lithuania's financial sector and its consumer protection landscape and then sets out the key findings and recommendations of the Review. Volume II provides an assessment of the Lithuanian consumer protection framework and practices compared to the template of good practices for three main segments of the financial sector—banking (including mortgage lending), securities, and insurance. In light of the early development of the pension sector, no specialized review was conducted for private pensions.
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Like many Eastern European countries, Lithuania experienced a household credit boom in the long period preceding the global financial crisis. By the end of 2007, mortgage loans in Lithuania reached 20 percent of GDP, issued mostly in foreign currencies, with 59 percent of low-income households holding such loans.
... See More + Inadequate financial consumer protection left the majority of middle- and low-income borrowers highly vulnerable. The EU Consumer Policy strategy 2007-2013 aims to strengthen consumer protection and financial literacy, emphasizing financial education. Lithuania adopted its own Strategy for Consumer Protection 2007-10 to bridge the gap with the EU standards. Even though Lithuania has already established a basic framework for financial consumer protection, making it comprehensive and effective requires strengthening in many areas. This World Bank's diagnostic review is presented in two volumes. Volume I gives an overview of Lithuania's financial sector and its consumer protection landscape and then sets out the key findings and recommendations of the Review. Volume II provides an assessment of the Lithuanian consumer protection framework and practices compared to the template of good practices for three main segments of the financial sector—banking (including mortgage lending), securities, and insurance. In light of the early development of the pension sector, no specialized review was conducted for private pensions.
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Since the establishment of Lithuania's independence, the country achieved substantial progress in transforming its local governments into independent units of Government: structural reforms to prod intergovernmental relations were made in 1994 and 1997, and will continue in 2002.
... See More + Nevertheless, several issues remain, requiring particular attention from the Government. First, revenue and expenditure assignment between levels of government, and the degree of central regulation over local finance, needs to be reviewed. Local governments face fiscal constraints, for revenues are centrally collected, and distributed at centrally determined rates. And, although local governments have nominal authority over their expenditures, major items (salaries and welfare payments) are subject to Government control, resulting in local governments being faced with running arrears, or borrowing from the Government or private lenders. Although high per capita jurisdictions are required to share revenues with poorer counterparts, it is not clear that distribution mechanisms actually allocate revenues as needed. Upcoming reforms are likely to change this, but a greater change in the revenue distribution criteria, would be by funding delegated functions, but distributing according to sector-specific indicators of need, as well as budgeting financial availability. Second, financing capital investment may be improved by a greater fiscal autonomy to local governments, and mostly, by improving the quality of financial information, with reforms that include the separation of current, and capital accounts, and the adoption of accrual accounting for expenditures.
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Pre-2003 Economic or Sector Report 23716 MAY 01, 2002
Knowledge is increasingly crucial for productivity, competitiveness, and growth. While Lithuania has a well-established culture of valuing knowledge, it is using its knowledge assets-human resources, education systems, researchers and entrepreneurs, and so on-below capacity, and so forgoing opportunities to compete internationally as well as potential growth and income.
... See More + In recent years Lithuania has made progress in a few areas of the knowledge-based economy, particularly in terms of improving the economic and institutional regime and developing infrastructure for information and communications technology. But less progress has been made on improving education systems, and Lithuania has performed poorly in advancing its systems for innovation. The challenge for Lithuania is to develop new engines of growth and to diversify economic activities. Key to improving competitiveness are the systematic generation, use, and communication of knowledge throughout the economy and society-not just in high-tech sectors but also in areas such as textiles, wood processing, and agribusiness. And not just among the educated elite, but among the general population. The ability to network within and outside Lithuania, supported by Internet access, will become increasingly important to accessing and using knowledge.
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