Lithuanian gov’t collapses after PM resigns over EU funds scandal
Lithuanian Prime Minister Gintautas Paluckas resigned on 31 July 2025 following a wave of corruption allegations, public protests and political pressure from both coalition and opposition parties.
Litany of corruption allegations topples PM
Lithuania’s Financial Crime Investigation Service (FNTT) launched in July a probe into a EUR 200,000 loan granted to a company partially owned by Paluckas. The Special Investigation Service opened a separate inquiry into Paluckas’s links to real estate and the failed startup Sagerta, which went bankrupt in 2023 with unpaid debts exceeding EUR 270,000.
Then on 23 July, the Homeland Union, Liberal Movement and Lithuanian Farmers and Greens Union called for an emergency session in the Parliament to initiate impeachment proceedings. Lithuanian President Gitanas Nauseda urged Paluckas to publicly explain his business ties or resign. House Speaker Saulius Skvernelis said the coalition would collapse if Paluckas refused to step down.
That same day, local media reported that Dankora, a company owned by Paluckas’s sister-in-law, had awarded a EUR 145,200 public procurement contract to Garnis, a battery storage firm in which Paluckas holds a 49% stake. Critics questioned whether the tender terms favoured Garnis, which was the only bidder. Dankora terminated its EU funding agreement on 25 July.
Media investigations also revealed that until July 2025, Paluckas had failed to pay a significant part of a EUR 16,500 fine in connection with a criminal case settled in 2012 for which he received a suspended jail sentence, The New York Times wrote.
Coalition collapsed under weight of allegations
As scandal upon scandal emerged, For Lithuania, a junior partner in his three-member coalition, warned that it would leave the government unless Paluckas resigned. Without For Lithuania, Paluckas's Social Democrats and its other junior coalition party Dawn of Nemunas, would have held only 71 seats in the 141-seat assembly, the thinnest possible majority. Street protests also accelerated Paluckas’s demise.
Paluckas, who became prime minister following the national elections last October, wrote to party members: “I cannot allow our ruling coalition and the cabinet to become hostages to these scandals. Therefore, I have decided to take a quick and decisive decision."
Police conducted coordinated searches at companies linked to Paluckas on 31 July, as well as at his brother’s flat. One business executive was detained. Paluckas announced his resignation later that day.
Caretaker cabinet in place, head of state confirms
The development comes as Lithuania, one of the highest per capita recipients of EU recovery funds, faces renewed pressure to improve transparency in public finance governance. Paluckas’s downfall may delay project-level disbursements already under review by the EC, analysts noted.
Talks to form a new cabinet are expected early this week. From the date of resignation, Nausėda has no more than 15 days to submit a nominee for permanent prime minister to Parliament. Paluckas is currently on holiday, while Lithuanian Finance Minister Rimantas Sadzius serves as acting prime minister. Nauseda said a caretaker cabinet will remain in place until a new coalition is formed.
“I carried out my duties in good faith, but I cannot allow this situation to paralyse the work of the government,” Paluckas told members of the press after tendering his resignation in Vilnius, south-east Lithuania, AP reported.
