Economic reform in Lithuania had been introduced during the first half of 1990s. The main aim of the government was to control the prices and restructuring in the banking sector. In addition to that, the the government introduced the Litas as the country’s new currency.
Reasons Behind the reform:
The rate of inflation was very high in Lithuania because of the rise in price control.
The Lithuanian government’s expenditures were increasing and also it went beyond the amount of the government revenues.
Wages decreased by 30% in 1992 compared to the previous year.
Privatization: The Lithuanian government started the economic reform through privatization. During the period 1992 – 94, almost half of the medium and large size enterprises had been identified for privatization. The government introduced a law on initial privatization in 1991 which had been revised many times in 1993.
Price Restructuring: The government started to withdraw the compensation for the pensioners so that it could reduce the inflation rate. Government support for public transportation and utilities had also been stopped.
Land reform: Privatization in the rural area was the most difficult job for the government due to the fear of loosing land among the people of that sector. So the government adopted land reform as a measure of the economic reform.
Fiscal Policy reform: The government begun to eliminate the subsidies by introducing several new taxes and a new system for tax collection.
Banking Sector Reform: The government started the banking sector reform as an economic reform measure.
Last Updated on : 26th June 2013