The global economic upturn and Lithuania’s local policy response are driving the country’s own economic recovery, with the real GDP expected to increase by 2 percent in 2010, according to the International Monetary Fund. However, the country’s fiscal deficit is still high and public debt is rapidly increasing in volume. Lithuania needs to address three key policy challenges in order to make its growth sustainable in the medium term. These challenges include securing fiscal sustainability, enhancing the resilience of the country’s banking system, and generating growth and more jobs.