OECD Review of Lithuania’s Independent Fiscal Institution 2025

1. Progress since 2019 OECD Review

1.1. Context of current review

Consistent with international best practice and the requirement in Lithuania's legal framework to conduct an independent external evaluation every five years (Law on the National Audit Office (NAO Law) Art. 6.5), the Auditor General and the Director of BMD1 committed to undertaking an independent external evaluation of the BMD (Seimas, 2015[1]), which was conducted in 2019 and was based on the OECD Principles for Independent Fiscal Institutions (OECD, 2014[2]). In 2025, the Auditor General and the Head of BMD requested a second review to assess the BMD’s progress with respect to the recommendations resulting from the 2019 OECD Review.

The 2019 OECD Review identified several challenges that the BMD faced at the time. That review highlighted chiefly the BMD’s limited public identity and visibility, its lack of operational independence, and its struggle to recruit and retain senior staff. To address these challenges, the 2019 OECD review provided several recommendations (OECD, 2019[3]). Those recommendations included:

1. The BMD should become a separate institution.

2. The BMD should have the autonomy to make its own hiring decisions.

3. The BMD should be able to set its own budget, subject to parliamentary approval.

4. The BMD should develop clearer branding in its communications to minimise confusion about its role.

5. The BMD should publish its macroeconomic forecasts, including information on its methodology, and it should assess and publish its forecasting record over time and compared to other institutions.

The BMD and other stakeholders have worked to implement many of the recommendations coming out of the 2019 OECD Review. A broad overview of progress in relation to each recommendation is provided in Table 1 overleaf.

Table 1. How recommendations from the 2019 OECD Review of the BMD have been implemented

1. BMD webpage on macroeconomic forecasts (as of 14 July 2025): https://www.valstybeskontrole.lt/EN/post/17687.

In general, three key observations are made in relation to progress since the 2019 OECD Review:

1. The BMD has enhanced its technical capacity and credibility.

2. Steps have been taken towards greater operational independence for the BMD, but more institutional autonomy is needed.

3. Despite efforts to increase the BMD’s visibility, confusion about its identity and role remains.

Each of these is discussed in more detail below.

1.2. The BMD has enhanced its technical capacity and credibility

The 2019 OECD Review recommended that the BMD expand transparency and strengthen institutional resilience to reinforce its reputation for objective, nonpartisan analysis. Key recommendations included publishing more information on macroeconomic forecasts, addressing staff turnover risks, and enhancing the accessibility of analytical outputs. The review also encouraged the BMD to benchmark its performance against peer institutions to build credibility and ensure alignment with OECD best practice.

Since 2019, the BMD has made good progress in implementing these recommendations, particularly in improving methodological transparency and knowledge management. In September 2023 it began publishing its macroeconomic forecasts with accompanying technical documentation, now released semi-annually or more frequently in exceptional circumstances. It also provides data in Excel format to facilitate external analysis. To mitigate risks from staff turnover, the BMD has institutionalised knowledge-sharing practices, ensured multiple staff can operate each model, and started developing procedural manuals. It has also expanded its use of visualisation tools such as fan charts and heatmaps to make economic data more accessible. Furthermore, the BMD has introduced systematic comparisons of its forecasts with those of the Ministry of Finance and the Bank of Lithuania, publishing selected results that show its accuracy is broadly in line with peer institutions (see, for example, Figure 1). It has also started to assess its forecasts errors relative to peers, albeit on an internal basis for now (see Figure 2).

Additional steps can help the BMD further consolidate its credibility and strengthen its analytical capacity. Publishing its models, along with systematic comparisons of forecasting errors against peer institutions, would build on recent gains in transparency. The forthcoming semi-structural macroeconomic-fiscal model2 promises to be a significant methodological advance, especially when combined with the time-series techniques already in use. In addition, the BMD could have its Advisory Panel review the new model to provide valuable external input to ensure its quality. Taken together, these measures will continue to strengthen the BMD’s role as a credible, independent source of economic and fiscal analysis.

Figure 1. Comparison of BMD and MoF forecasts with peer institutions’ forecasts

Source: (BMD, 2024[4]).

Figure 2. Comparison of BMD forecast errors with that of peer institutions

Source: BMD (unpublished).

1.3. More needs to be done to increase the operational independence of the BMD

Operational independence is essential for an IFI to deliver objective, nonpartisan analysis, and the BMD has taken several positive steps since the 2019 OECD Review. Amendments to the NAO Law in 2021 removed NAO and BMD staff from the civil service framework, giving the institution more flexibility in its recruitment processes and reducing dependence on central government systems. As a result, the BMD can now advertise vacancies directly, speeding up recruitment and improving access to qualified candidates. Management at the BMD report that turnover has also stabilised compared with the period leading up to the last review, supported by better knowledge-sharing and leadership attention to strengthening human resources. The Head of BMD now signs off on reports and presents its findings to parliamentary committees, takes decisions on resources allocated to the BMD, and also oversees some administrative matters such as planning for training and business travel (although these are still subject to approval by the Auditor General). These developments have given the BMD greater operational space and visibility, helping strengthen its institutional continuity and credibility.

Despite this progress, key aspects of operational independence remain constrained by the BMD’s embedded status within the NAO (see Figure 3). Hiring and firing decisions for BMD staff formally rest with the Auditor General, leaving the department without sole authority over its personnel. Salaries are set within NAO-wide parameters, which are among the lowest in Lithuania’s public sector, limiting the BMD’s ability to recruit and retain highly qualified economists in a competitive labour market. Budgetary arrangements have improved somewhat with the introduction of an appeals procedure to the Seimas. However, the BMD’s primary request is filtered through both the NAO and the Ministry of Finance before submission, and its appropriations are not ring-fenced. Reports and parliamentary presentations also continue to be reviewed and, in some cases, formally channeled through NAO leadership, which creates ambiguity about the BMD’s independence and identity. These limitations hinder the BMD’s ability to recruit and retain skilled staff, ensure protected resources, and speak with a clear institutional voice.

Figure 3. The BMD’s embedded status as a department within the NAO

Source: (NAO, 2025[5]).

Greater change is needed for the BMD to serve effectively as Lithuania’s IFI, strengthening Lithuania’s fiscal framework. Establishing the BMD as a fully independent institution with its own legal mandate is the most effective way to address this. Operational independence is a core requirement for an IFI to act as a credible and effective fiscal watchdog, consistent with OECD Principle 2. It enables the institution to make strategic and operational decisions that safeguard its relevance, effectiveness and long-term sustainability. In practice, this includes determining the scope and nature of analytical work, selecting topics, defining key messages, and choosing how findings are communicated. It also allows the IFI to assess and secure the resources needed to fulfil its mandate. Without such independence, neither the legislature nor the public can be assured that the IFI’s analysis is objective, evidence-based, and guided solely by independent professional judgement.

This would need to be accompanied by legal provisions that give the Head of the BMD full hiring authority including the ability to set salaries at levels competitive with peer institutions. These provisions should also ensure that the BMD has its own appropriations commensurate with its mandate, bolstering its independence and stability. As an autonomous institution, the BMD would be able to communicate to parliament and the public on its own and under its own name, further reinforcing its credibility. Over the longer term, these institutional changes are central to ensuring that the BMD has the independence and operational space required to fulfil its IFI mandate.

1.4. Efforts to increase the BMD’s visibility have had mixed results

The BMD has taken some steps to strengthen its visibility since the 2019 OECD Review, while also benefitting from changes that expanded its public role. Changes allowing the Head of BMD to sign off on reports and present findings to parliamentary committees have raised the institution’s profile. At the same time, the BMD has invested directly in its communications capacity - for example, through intensive staff training to make its reports clearer and more accessible (see Box 1).

Box 1. Investments in communications capacity at the BMD

The BMD has made deliberate efforts since the 2019 OECD Review to strengthen its communications skills, recognising that clear and accessible messaging is essential for its analyses to influence debate. A central step was the hiring of a communications coach, who worked intensively with staff to improve the clarity, style, and accessibility of their written outputs. This training helped staff adopt a more audience-focused mindset, moving beyond technical presentation to thinking about how to explain complex fiscal and economic issues in a way that resonates with non-specialist audiences.

This investment has brought about a positive cultural shift within the organisation. Reports are now drafted with a clearer focus on key messages, structured to highlight findings and implications upfront, and presented in a way that facilitates understanding by policymakers, media, and the broader public. Stakeholders confirmed that BMD reports have become more readable in recent years, reflecting both the technical rigour of its analysis and the progress made in its communication practices.

The BMD also improved its external visibility through organising a conference on demographic change and fiscal sustainability in 2025, which was well received by stakeholders (see Box 2). These efforts demonstrate the clear potential to enhance the BMD’s public voice.

However, these improvements have been overshadowed by backward steps that continue to blur the BMD’s identity and limit its reach. The modified logo introduced in 2022 is still closely tied to the NAO’s design and has not succeeded in creating a distinctive public identity for the BMD (see Figure 4). More critically, the removal of its independent webpage in 2021, the discontinuation of regular press briefings, and reliance on NAO social media channels have reduced the institution’s visibility compared with the period leading up to the 2019 OECD Review. Parliamentary requests for appearances remain filtered through NAO leadership, and many stakeholders - including parliamentarians - continue to conflate the BMD’s fiscal analysis role with the NAO’s audit function. As a result, the quality of the BMD’s products is often obscured, and its voice as an independent fiscal advocate struggles to cut through.

Figure 4. The current NAO (L) and BMD (R) logos

Source: NAO website.

Box 2. BMD conference on the sustainability of public finances in Lithuania

The BMD organised a conference in April 2025, "Public Finances and Demographic Challenges: How to Prepare for the Future" in co-ordination with the Seimas Committee on Audit and the NAO.

The conference brought together parliamentarians, government officials, academia, and business to discuss long-term fiscal challenges. Experts addressed various factors affecting the sustainability of Lithuania's public finances, including its ageing population, competitiveness, and growing defence spending.

The conference is publicly available in Lithuanian on the Seimas’s YouTube channel where it has received almost 700 views (as of Nov 2025). This success suggests there may be latent public interest in the BMD’s work, particularly when framed around topical and long-term challenges. Such events could be an important mechanism for bolstering the impact of the BMD’s messaging in the future.

It is also noteworthy that stakeholders clearly identified the BMD with the conference, despite the Seimas and the NAO being cited publicly in conference materials (ex. the press release). The English press release acknowledges the Head of BMD as a presenter, the only reference to the BMD’s role. A more publicly acknowledged role for the BMD could help amplify the impact of its work.

The ability to speak clearly is central to any IFI’s effectiveness. A number of these changes that reduced the BMD’s visibility stemmed from leadership decisions of different Auditor Generals over time, underlining the risks of housing the IFI as a department within the NAO.

As a fully independent institution, the BMD would be able to develop a distinct and authoritative public role. A clearer institutional identity, greater independence in communications, and more consistent public engagement — through regular press briefings, standalone web and media presence, and increased visibility for the Head of BMD — which would amplify the reach and impact of its work.

The scope for BMD to enhance its visibility is evident from the OECD’s work on the communications impact of IFIs. Public awareness of its work is relatively low as reflected in the limited media share in Figure 5. In 2023, a modest fraction of online news articles on budget topics referred to its work. Overall media exposure is among the lowest for IFIs. And web search data suggests limited public engagement with it. Specifically, data on the 2023 media coverage in the nation’s top-three online news sites found few articles referring to BMD, while articles specifically on budget and fiscal topics that mentioned BMD were also very low. This low visibility is mirrored in public search behaviour, where it had a “search share” near zero when benchmarked against the “national debt” search topic. Similarly, it registered a non-zero search volume in only 1% of weeks over 2021–2023. As such, the OECD’s work categorises the BMD as falling within a cluster of IFIs notable for having a reasonable communications apparatus but very limited communications impact. To strengthen its impact, the BMD should reinforce its role as a fiscal advocate. This involves undertaking topical analysis and developing a stronger communications culture (see Section 3).

Figure 5. The BMD’s visibility could be markedly improved

Source: OECD Fiscal Advocacy Index 2024, and own workings.

Notes

← 1.  Previously, this department was called the Budget Policy Monitoring Department (BPMD). In 2021, the Department’s name was changed to the Budget Monitoring Department (BMD). That is its current name and thus how it is referred to in this report. Additionally, as discussed below, the evaluation of IFIs embedded in other public institutions such as the one in Lithuania requires examination of the interaction of two entities (here, the BMD and NAO). Because the BMD primarily serves the IFI functions and that department was the focus of the first review, it is also the focus of this second review except where otherwise noted.

← 2.  This is being developed by an external consultant through the EU’s technical support instrument.