LFMI Releases 2015 Lithuanian Municipality Index


In late 2015, the Lithuanian Free Market Institute released the 2015 edition of the Templeton Freedom Award Winning Lithuanian Municipal Performance Index, generating about 100 media hits on the day of the launch and another 100 over the next three days. For a fifth year in a row LFMI has ranked Lithuanian local administrations to show which municipalities are best and which are worst in serving their citizens, fostering good governance and providing conditions to attract investment and create prosperity. This year the capital city of Vilnius has topped the ranking, and the city port of Klaipėda has come out second. The Kaunas and Klaipėda regional municipalities have outperformed the remaining 54 regional local administrations.

For the first time Vilnius claimed the first position from the city of Klaipeda, albeit by a very narrow margin. According to President of the Lithuanian Free Market Institute Žilvinas Šilėnas, the main reason why Vilnius ranked first is because of its attractiveness to investors and business. Vilnius attracted more foreign investments, while the statistics for Klaipėda have slightly dropped. A low unemployment rate was another significant factor, as is the fact that Vilnius appeared to be the only city whose population had increased. Despite all this, Vilnius is plagued by a sizeable debt if compared with other Lithuanian cities, and this must be a primary concern for the city’s administration if the aim is to maintain favorable conditions for further development.

Last year’s index revealed some positive aspects in the work of local administrations. For one thing, the amount of people who received entitlement benefits lowered by a quarter. The 2015 index also recorded an 8 percent increase in the number of economic entities per 1,000 people and a 1.3 percent increase in the number of construction permits per 1,000 citizens. Importantly, municipalities also reported a 13 percent growth in the number of people who have obtained business licenses.

The results could have even be better but the majority of local administrations continued to struggle in attracting investments. Surprisingly, while the population declined country-wide, local administrations boosted the numbers of employees. In 2014 there were 7.15 municipal administration employees per 1,000 citizens, and the 2015 index recorded an increase to 7.34. Another concern is that local administrations still prefer to provide such services as garbage collection, administration of apartment buildings, public transportation and others through municipally-owned companies. And this led to a loss of 5.4 mln euros for local administrations.

The Lithuanian Free Market Institute (LFMI) has published its 2014 Templeton Freedom Award winning Lithuanian Municipality Index since 2011. The Index measures the level of economic freedom, service provision and local administration efficiency in Lithuanian municipalities based on a total of 65 indicators. The Index has become an important research- and evidence-based tool to drive pro-market policy reforms at the local government level in Lithuania.

Full report in Lithuanian http://www.llri.lt/lietuvos-savivaldybiu-indeksas-2015