Yesterday, Auditor General Irena Segalovičienė, together with her team and the Minister of Finance, Taurimas Valys, discussed how to maintain sustainable public finances in the face of rising defence and social spending, as well as other state needs.

“Public needs are growing faster than our financial capacity. It is therefore becoming increasingly important not only to have the funds for new priorities, but also to make better use of what we already have. Every new long-term commitment must be assessed in relation to its source of funding and its impact on public finances in the future,” says Auditor General Irena Segalovičienė.

One of the main topics of the meeting was fiscal discipline and the rise in public debt. According to the National Audit Office’s assessment, debt may grow from 39.6 percent to 55.3 percent of GDP by 2029. As it approaches the 60 percent threshold, the state’s ability to respond to future economic or geopolitical shocks diminishes.

Long-term defence funding was also discussed, along with the National Audit Office’s recommendation that the strategic continuity of defence funding beyond 2030 must be clearly embedded in national legislation to ensure the sustainability of development and the confidence of partners. The use of EU funding was also addressed – a loan of EUR 6.375 billion is earmarked for the national defence system for the period 2026–2030. Long-term clarity regarding defence funding would allow for better planning of major acquisitions and the funding of other areas of government.

At the meeting, the Auditor General expressed her hope for more proactive government measures to improve the efficiency of the public sector by making better use of existing state resources – ranging from the centralisation of general functions and the management of state assets to the simplification of financial reporting. The meeting also addressed the status of implementation of the National Audit Office’s recommendations to the Ministry regarding the management of reserves. By the end of the year, the Ministry of Finance has undertaken to establish common principles for their creation and management – how much is required, what risks they are intended to protect against, and how their accumulation should be balanced with borrowing.

An important topic discussed at the meeting was the quality of the state's data, as without reliable data it is difficult to expect high-quality, data-driven decisions or to assess whether the state's planned initiatives are delivering the expected results.

It was agreed at the meeting to continue cooperation in finding solutions to reconcile the state's growing needs with the long-term sustainability of public finances and the more efficient use of state resources.

The storm that swept through at the weekend, and whose effects are still being felt, serves as a reminder of how important it is to be prepared for emergencies. Audits carried out by the National Audit Office and subsequent monitoring of the recommended changes show that preparedness has improved in recent years, but there is still important work to be done – ranging from the modernisation of electricity networks and risk assessment to the readiness of the national reserve and emergency services.

“An emergency very quickly reveals whether what we have planned actually works in practice. What matters then is not the number of plans and documents, but whether the infrastructure is reliable, whether the authorities are acting in a coordinated manner, and whether help reaches people in time. That is why we must address weaknesses in advance, rather than when we are already having to deal with the consequences of a crisis,” says Auditor General Irena Segalovičienė.

Preparation starts with a resilient infrastructure

A reliable electricity supply is essential for the functioning of many vital state and public services – the operation of telecommunications, water supply, healthcare and other vital services depends on it.

An audit carried out by the National Audit Office in 2023, entitled “Management of the Electricity Sector”, revealed that, during the period audited, around a quarter of the assets used in electricity transmission and distribution had been in use for longer than their specified useful life. Operating such infrastructure increases the likelihood of faults and defects.

Infrastructure modernisation was also delayed. 37.5 percent of transmission network and 61.5 percent of distribution network modernisation and construction projects were not completed on time.

Energy Distribution Operator AB (ESO) has been advised to modernise key elements of the distribution network more promptly, reduce the duration and frequency of prolonged power cuts, and better manage the risks of delays in infrastructure projects. These changes are expected in 2027–2028.

Institutions need to know what to prepare for and how to act

In the event of an emergency, it is important that institutions have assessed the greatest threats in advance, are fully aware of their responsibilities and are prepared to act cooperatively.

The 2022 audit, "Preparedness of Institutions to Respond to Emergencies", revealed a lack of inter-agency coordination and a need for a higher-quality assessment of potential hazards and emergencies.

Following the implementation of the audit recommendations, the responsibilities of the institutions have been more clearly defined, the role of the National Crisis Management Centre in coordinating preparedness for crises and emergencies has been established, and procedures for the preparation and updating of crisis management plans have been laid down. However, there have been delays in drawing up the National Risk Analysis Methodology, which would ensure the consistent identification and assessment of high and very high-risk threats.

During an emergency, it is important to know who needs what kind of assistance

In the event of a disruption to communications or other essential services, some members of the public may require assistance. To ensure that this assistance reaches those who need it, it is important to identify in good time who requires help and to involve NGOs and volunteers in this process, who could help to provide it.

The 2025 audit by the National Audit Office, "Preparation of Citizens of the Republic of Lithuania for Civil Resistance", showed that preparations for this are still insufficient. At national level, there is a lack of coordination in the mobilisation of NGOs and volunteers, while at municipal level there is a lack of specific action plans for assistance and data on residents who would require help in the event of a crisis, emergency or mobilisation.

It has been recommended that the Office of the Government draw up a nationwide plan specifying the tasks for which, the methods by which, and the timing for which NGOs and volunteers would be engaged, so as to ensure that the public receives the necessary assistance. Whether the changes resulting from the audit have delivered the expected outcome will be assessed in 2028.

The national reserve must be built up after assessing real threats, and both municipalities and the public must be prepared for crises

It is important to properly assess potential threats when determining what stocks the state needs to build up.

An audit completed this year, entitled "Formation, Accumulation and Management of State Reserve", showed that the state reserve is not being established with sufficient regard to the threats posing the greatest risk. The requirement for reserves is not based on specific management scenarios. Consequently, in a critical situation, some of the accumulated reserves may be insufficient or may not meet a specific need. Furthermore, the audit revealed that the system does not ensure that, when necessary, reserves are delivered promptly to where they are most needed.

The National Audit Office recommended linking the reserve requirement to the highest risk threats and their scenarios. It must be clear what stocks are required, in what quantities and for what situations, who is responsible for them, and how their logistics will be ensured. Major changes are expected by the end of 2026.

The audit also showed that, in the event of a crisis, municipalities, which are closest to the public, play a vital role. Under the proposed model, residents themselves should provide for their own essential supplies for the first three days; on days 4–6, municipalities should take responsibility for supplying residents; and thereafter, the national reserve would be utilised. However, not all municipalities have assessed how much stock would be required for this. It is important that residents know what they need to provide for themselves, and that municipalities are prepared to ensure the supply of essential resources to residents.

The preparedness of the fire and rescue services remains inadequate

In many emergency situations, the assistance of the fire and rescue services is required. For example, the assistance of firefighters may be required to rescue people and their property from the consequences of storms, such as accidents caused by fallen trees, fires caused by lightning strikes and other dangerous situations. It is therefore important that there are sufficient firefighters, and that they are properly trained and equipped. However, monitoring of the implementation of the National Audit Office’s recommendations shows that challenges remain in this area.

Between 2020 and 2025, the proportion of on-duty shifts of firefighters in the State Fire and Rescue Service meeting the requirements increased from 19 percent to 25 percent. The proportion of firefighters capable of carrying out all firefighting and rescue operations rose from 52 percent to 57 percent over the same period. The proportion of firefighting and rescue equipment meeting the requirements did not increase – it stood at 62 percent in 2020 and 60 percent in 2025.

The National Audit Office has recommended that the Ministry of the Interior and the Fire and Rescue Service strengthen the human resources and organisational structure of their forces, and improve their equipment, in order to ensure constant readiness to carry out firefighting and rescue operations. The implementation of these recommendations is behind schedule.

The protection of critical infrastructure is also being assessed

The continuity of operations in the energy, communications and other critical infrastructure sectors is one of the most important prerequisites for national resilience. Disruptions to these sectors can hamper vital state functions.

It is therefore extremely important to know in advance what needs to be protected, from which threats, and what measures are required to ensure that protection. This is precisely what the National Audit Office is currently assessing in its audit entitled “Organisation of the Physical Protection of Objects Important for Ensuring National Security". The audit is also examining who is responsible for the protection of these objects and whether the security measures in place adequately address the identified threats. The audit findings are scheduled to be published in early 2027.

• In 45 percent of the assessed cases involving the procurement of armaments and military equipment, decisions were actually taken by advisory bodies reporting to the Minister of National Defence, whose members are not legally required to declare any private interests as participants in the procurement process.
• When assessing procurements carried out under exceptions (worth EUR 3.4 billion), in 53 percent of cases the staff involved in the procurements did not indicate their participation in a specific procurement in any form in their declarations.
• The aim is for all final decisions to be taken only by authorised bodies, for consultation periods to be reduced to 35 working days, and for 100 percent of those influencing procurement to properly declare their private interests.

With Lithuanian defence funding reaching record highs and contracts worth EUR 8.7 billion having been signed for the procurement of armaments for the period 2023–2025, the National Audit Office emphasises that, as the budget grows, so too must the standards for transparency in procurement. The audit "Acquisitions of Armaments and Military Equipment’ has shown that, in the acquisitions of armaments and military equipment, it is essential to strengthen the prevention of conflicts of interest and to clearly define who makes the final decisions on contracts worth billions.
  
“In the procurement of armaments and military equipment, the pace of processes must go hand in hand with transparency. When those who actually determine the course of procurement fail to declare their private interests, there is a direct risk of bias. This weakens the system itself. The recommendations we have made are important for ensuring citizens’ trust in the state: it is essential to draw a clear line between advisory and decision-making functions and to introduce a 100-percent declaration of private interests in procurement,” says Auditor General Irena Segalovičienė.
  
Members of decision-making bodies do not declare any private interests in procurement
  
According to the audit findings, 45 percent (14 out of 31) of the defence procurement decisions analysed involved advisory bodies reporting to the Minister of National Defence – the Defence Resources Council, the Armaments and Military Equipment Group and the Defence Resources Group. It was found that the Defence Resources Agency (GRA), when carrying out procurements, follows the protocol decisions of the aforementioned bodies in the absence of a legal act adopted by the Minister or his authorised representative.
  
These advisory bodies have no legal decision-making powers – their sole purpose is to make recommendations and draw conclusions. The practice of basing final procurement decisions solely on their protocol decisions is inconsistent with the principles of public administration: they are actually being granted a decision-making function which they do not possess, while the additional round of consultations significantly prolongs the already critical timeframe for the acquisition of armaments and military equipment.
  
Furthermore, although members of these advisory bodies have a direct influence on the outcomes of procurement, they do not declare any private interests as participants in the procurement process, as no such obligation is provided for in the legislation applicable to them. This creates risks of bias and a lack of transparency.
  
Challenges also arise due to the timeframes for coordinating decisions: in as many as 42 percent of the procurement cases analysed, coordination with ministry departments, advisory groups and other institutions took between 30 and 374 days. The incomplete regulation of the functions of entities involved in the procurement process in internal legislation, the actual granting of decision-making powers to advisory groups, and the fragmentation of responsibilities significantly determine the duration of strategically important procurement processes and delay the procurements themselves.
  
It is essential to strengthen the efficiency of internal control
  
Gaps in transparency were also identified within the contracting authorities themselves. Between 2023 and 2025, the GRA’s armaments procurement under exemptions accounted for 40 percent of the total value of contracts and amounted to EUR 3.4 billion. Although all GRA staff are required to declare any private interests, an audit of these procurements revealed that in 53 percent of cases, individuals involved in the procedures did not disclose their actual involvement in a specific procurement in any form, while as many as 74 percent of them directly drafted the applications to initiate the procurement. There were also instances where confidentiality undertakings were signed belatedly – after the procedures had already commenced. A similar situation, where staff failed to disclose their involvement, was also recorded in 14 out of the 21 standard public procurement contracts assessed.
  
When carrying out strategically important, high-value defence procurements and in order to avoid delays in the process, it is essential to ensure efficient control of the contracting authority’s existing internal procedures. All persons influencing the process must declare any potential conflicts of interest – not only those directly carrying out the procurement, but also those preparing, coordinating requirements or taking decisions.

Strengthening internal control is essential when documenting key procurement decisions. Although no significant breaches were identified, 38 percent (8 out of 21) of procurements were found to contain high and medium significance non-conformities. During the preparatory stage, market research is often not carried out or documented (surveys are frequently conducted verbally), which raises doubts as to whether market alternatives were properly assessed, funds were rationally planned and the impartiality of decisions was ensured.

During the contract award and performance stages, there were instances where contracts were performed for some time without the mandatory bank guarantees or letters of guarantee, thereby exposing the contracting authority to unjustified financial risk and failing to ensure the state’s financial protection.

Recommendations: shorter deadlines and 100 percent declaration of private interests
  
To ensure that the highest standards of transparency are maintained within the national defence system and that procurement is organised more operatively, the National Audit Office has made the following specific recommendations:

• It has been recommended that the Ministry of National Defence clearly distinguish between the competences and responsibilities of advisory bodies and those authorised to take decisions and establish the procedure and timeframes for coordinating decisions. The aim is for all final decisions to be taken solely by the bodies authorised to do so, while shortening the coordination process so that it lasts no longer than 35 working days.
• To increase transparency, avoid conflicts of interest and the risk of bias in decisions taken, the Ministry has also been recommended to define the group of other persons involved in the procurement process or who may influence its outcome, and to establish measures for the prevention and control of conflicts of interest applicable to them in armaments procurement (including procurements carried out under exceptions). It is anticipated that, once these recommendations have been implemented, 100 percent of those involved in procurement and related decision-making will have duly declared their private interests.
• The Defence Resources Agency has been recommended to strengthen procurement controls and ensure that the process complies with the principles and requirements of public procurement. For every procurement of armaments and military equipment, a commitment has been made to carry out and document a market analysis or market consultation, ensuring an assessment of developments in the specific sector or technologies, as well as other alternatives available on the market, potential suppliers and prices. At the same time, priority is given to written supplier enquiries to ensure the traceability and soundness of decision-making.

Part of this audit report is classified in accordance with the Republic of Lithuania Law on State and Official Secrets. The full audit report has been submitted to decision-makers authorised to access this information.