Development since the 1990s Economy of Lithuania

the modern skyline of vilnius financial centre @ night

reforms since mid-1990s led open , rapidly growing economy. open global trade , investment, lithuania enjoys high degrees of business, fiscal, , financial freedom. lithuania member of eu , wto, regulation relatively transparent , efficient, foreign , domestic capital subject same rules. financial sector advanced, regionally integrated, , subject few intrusive regulations.

one of lithuania s important reforms privatization of state-owned assets. first stage of privatization being implemented between 1991 , 1995. citizens given investment vouchers worth €3.1 billion in nominal value, let them participate in assets selling. october 1995, used follows: 65% acquisition of shares; 19% residential dwellings; 5% agricultural properties; , 7% remained unused. more 5,700 enterprises €2.0 billion worth of state capital in book value sold using 4 initial privatization methods: share offerings; auctions; best business plans competitions; , hard currency sales.

the second privatization step began in 1995 approving new law ensured greater diversity of privatization methods , enabled participation in selling process without vouchers. between 1996 , 1998, 526 entities sold more €0.7 billion. before reforms, public sector totally dominated economy, whereas share of private sector in gdp increased on 70% 2000 , 80% in 2011.

monetary reform undertaken in nineties improve stability of economy. lithuania chose currency board system controlled bank of lithuania independent of government institution. on 25 june 1993, lithuanian litas introduced freely convertible currency, on 1 april 1994 pegged united states dollar @ rate of 4 1. mechanism of currency board system enabled lithuania stabilize inflation rates single digits. stable currency rate helped establish foreign economic relations, therefore leading constant growth of foreign trade.

by 1998, economy had survived years of uncertainty , several setbacks, including banking crisis. however, collapse of russian ruble in august 1998 shocked economy negative growth , forced reorientation of trade russia towards west.

share of private sector in gdp

lithuania invited helsinki eu summit in december 1999 begin eu accession talks in 2000.

after russian financial crisis, focus of lithuania s export markets shifted east west. in 1997, exports soviet union s successor entity (the commonwealth of independent states) made 45% of total lithuanian exports. share of exports dropped 21% of total in 2006, while exports eu members increased 63% of total. exports united states made 4.3% of lithuania s exports in 2006, , imports united states comprised 2% of total imports. foreign direct investment (fdi) in 2005 €0.8 billion.

on 2 february 2002 litas pegged euro @ rate of 3.4528 1, remained until lithuania adopted euro in 2015. lithuania close introducing euro in 2007, inflation level exceeded maastricht requirements. on january 1, 2015, lithuania became 19th country use euro.

the vilnius stock exchange, renamed nasdaq omx vilnius, started activity in 1993 , first stock exchange in baltic states. in 2003, vse acquired omx. since 27 february 2008 vilnius stock exchange has been member of nasdaq omx group, world s largest exchange company across 6 continents, on 3,800 listed companies. market cap of vilnius stock exchange €3.4 billion on 27 november 2009.

during last decade (1998–2008) structure of lithuania s economy has changed significantly. biggest changes recorded in agricultural sector share of total employment decreased 19.2% in 1998 7.9% in 2008. service sector plays increasingly important role. share of gdp in financial intermediation , real estate sectors 17% in 2008 compared 11% in 1998. share of total employment in financial sector in 2008 has doubled compared 1998.