The Lithuanian Free Market Institute has released the sixth edition of the Lithuanian Municipal Performance Index (MPI). This year, the capital city of Vilnius has firmly maintained the top ranking, followed by Klaipėda, Šiauliai and Kaunas city municipalities. The Kaunas District Municipality has outperformed other 53 regional administrations.

“Vilnius has claimed the top position for a second year in a row. The capital city has attracted most investment and reduced the numbers of the unemployed and social benefit recipients. Yet, Vilnius is still plagued by a huge debt and may be overtaken by the city of Klaipėda if the latter improves the business environment and attracts more investment,” – says Aistė Čepukaitė, Head of the Municipal Performance Index.

The top three district municipalities have remained relatively stable, with Kaunas forging ahead of Klaipėda, and Druskininkai remaining in the third position. “Although Kaunas District Municipality has come in first, both Kaunas and Klaipėda district municipalities have kept the same pace and successfully exploited the neighbourhood of major cities. A good economic situation fosters prosperity, and these two districts should be proud of being among the few that have a growing population,” – adds Aistė Čepukaitė.

The good news is that most of municipalities have shown positive developments. The number of businesses and sole proprietors has increased. The ranks of jobless people have shrunk, and the number of recipients of entitlement benefits has dropped by over a quarter. Importantly, three in four municipalities have reduced their debt.

However, the MPI suggests that some municipalities are struggling to attract investments. Never before has the socio-economic gap between the municipalities that attract investments and those that do not been so wide. While many municipalities have made huge strides forward in this regard, quite a few are still stagnating. Unemployment rates are up to three times higher in the worst performing municipalities, and the percentage of population dependent on social benefits differs as many as eleven times.

“We should not distinguish between Vilnius and the rest of Lithuania. Our focus should be on economically active and economically stagnant regions. Take the Tauragė district. Located in a corner of Lithuania, it has successfully attracted foreign investment and has outstripped all others in terms of investment per capita. At the same time Ignalina, a municipality located in another corner of the country, fares worst by unemployment. Clearly, investment and economic activity are the drivers of well-being, and municipalities can do a lot to encourage them, from offering a user-friendly website to improving business conditions and reducing red tape,” – President of the Lithuanian Free Market Institute Žilvinas Šilėnas says.

Top city municipalities: Vilnius (68 points out of 100), Klaipėda (62 points), Šiauliai (55 points), Kaunas (48 points), Alytus (32 points) and Panevėžys (23 points).

Top 5 of 54 district municipalities: Kaunas (86 points out of 100), Klaipėda (84 points), Marijampolė (69 points) and Šilutė (69 points).

The 2016 Lithuanian Municipal Performance Index is available (in Lithuanian) at: http://files.lrinka.lt/Savivaldybiu_indeksas_2016/Lietuvos.savivaldybiu.indeksas.2016.pdf

In the index, municipalities score if they:

• do not live beyond their means and ensure efficient management and transparency of public finances;

• ensure freedom of choice and promote competition between service providers;

• decrease the tax burden and create favourable business conditions;

• manage assets effectively and sell assets unrelated to the performance of their core functions;

• engages with the private sector in the performance of their functions;

• reduce the administrative and bureaucratic burden.

In 2014 the LFMI’s Municipal Performance Index won the prestigious $100,000 Templeton Freedom Award which recognizes the most exceptional and innovative contributions to the understanding of free enterprise, and the public policies that encourage prosperity, innovation and human fulfilment via free competition.