Lithuanian President Gitanas Nauseda confirmed on the morning of July 31 that the Social Democratic Prime Minister Gintautas Paluckas is stepping down, following a series of controversies and possible law infringements.

“About an hour ago, I informed the President that I have decided to resign from the position of Prime Minister. The official procedure for this decision will be initiated shortly. I also announce that I have decided to step down as the leader of the LSDP,” Paluckas said in a statement.

“This government has achieved a lot – even in the face of major challenges, we managed to stay united on key issues,” he added.

Nauseda has not yet named Paluckas’s replacement.

Paluckas has also announced that he is resigning as chairman of the Lithuanian Social Democratic Party (LSDP).

Mindaugas Sinkevicius, the LSDP mayor of Jonava in central Lithuania and one of the stalwarts of the party’s young generation, will step in as the interim chairman.

He is expected to become the LSDP’s leader and form a new Cabinet; however, some sources in the LSDP have hinted that the party will come up with at least two or three candidates for the PM seat.

According to the Law on the Government, when the Prime Minister resigns, the entire government is considered to have resigned as well. This means that the full government formation process, as outlined by law, must be repeated.

“I believe that the ruling coalition will be new, and we will see the right-wing party ‘Dawn of the River Nemunas” out. It will likely be replaced by the “Farmers and Greens Union”, thus securing 75 seats in the 141-seat parliament,” Vytautas Dumbliauskas, a prominent Lithuanian political analyst, told bne IntelIiNews.

As reported by bne IntelliNews, a joint investigation by Siena and Laisves TV has revealed that PM Paluckas has been the subject of multiple probes related to his past business activities.

Currently, the ruling coalition consists of three parties: the LSDP, the Union of Democrats “For Lithuania” and the nationalist-leaning Dawn of the River Nemunas. Together, they control 86 seats in the 141-member Lithuanian parliament, giving them a comfortable governing majority.

Speaking of what toppled Paluckas, one of the key revelations centres on a €200,000 loan that he received from Emus, a company in which he holds a 51% ownership stake. Records show that Emus initially extended a €180,000 loan to Paluckas in 2023, which was later increased to €200,000 in early 2024. The repayment deadline was also extended to 2028 through an amended agreement signed at the end of 2024. While Paluckas's office defended the transaction as both efficient and cost-effective, critics raised concerns over transparency and possible conflicts of interest, Siena and Laisves TV disclosed.

Public scrutiny intensified following earlier disclosures about the Prime Minister’s personal finances. According to LRT.lt, Emus-generated income was used by Paluckas to purchase property abroad, including a 7-hectare plot in Brazil for €180,000 in 2023, and additional real estate in Turkey acquired under similar financial arrangements.

Official tax records show that Paluckas reported €225,600 in outstanding personal loans in 2023, slightly reduced to €224,000 in 2024. His history of borrowing from Emus includes several previous loans: €25,000 in 2018, €78,400 in 2019 and €39,700 in 2020 – all reportedly carrying an 8% annual interest rate, Siena, Laisves TV and, subsequently, LRT.lt said.

Further concerns emerged in May 2025, when Siena and Laisves TV reported that Garnis, a separate company co-owned by Paluckas and associate Milasauskas, received a €200,000 soft loan from Lithuania’s national development bank, ILTE, while Paluckas was in office. Although Emus was ineligible due to its longer operating history, Garnis qualified as a newly established firm. This raised speculation that ILTE funds may have been funnelled to Emus indirectly, a claim that Paluckas denies.

The controversy deepened with revelations that Garnis was the sole bidder in a publicly funded tender, issued by a company registered in 2023 under the name of Paluckas’ sister-in-law. The tender was part of an EU-funded battery systems project, again raising red flags over potential favouritism.

Adding to another scrutiny by Laisves TV and Siena, Paluckas only settled a €16,500 debt to the Vilnius municipality in July 2025, nearly a decade after it was due. The debt, stemming from a case known locally as the “rat scandal”, was supposed to be repaid by the end of 2015. Paluckas claimed he had simply forgotten and issued a public apology.

Lastly, a July 21 report by Redakcija implicated Paluckas in a murky land acquisition deal on Laurų Street in Vilnius, dating back to 2009-2014, further fueling concerns over his business conduct during and prior to his political tenure.

Here is the full statement of Paluckas: “Paluckas released the following statement: “I am immensely grateful to my family, who have been my support, my strength, and my source of stability throughout all the political trials. Watching how the attacks continue and boundaries are crossed – targeting my wife and family – I realise I must act quickly to stop it. I cannot allow those close to me to become hostages of these stories.

“I am human and must admit that I’ve made more than one mistake in my past actions – I once again apologise to everyone for that.

“Still, as Prime Minister, I do not feel that I committed any fundamental violations – I carried out my duties honestly, in the way I understood and was able. My political opponents have had few real criticisms of my work as Prime Minister.
In other words, people are trying to ignore the significant work we have accomplished: pension reform (the second pillar), establishment of the Road Fund, introduction of socially just taxes, beginning to overhaul the energy system, and more.

“These achievements seem to be beyond criticism. What is often brought up instead is my past – in both business and politics.

“As I wrote in a letter to my colleagues, some of the decisions we made clearly triggered reactions from powerful interest groups.

“For example, the tax reforms aimed at greater social justice likely motivated certain groups to discredit me personally by exploiting my past mistakes.

“Seeing how the scandals are being stirred and are dragging down the work of the government, I believe I cannot allow our ruling coalition and Cabinet to become hostages of these controversies.

“Therefore I decided to make a swift and clear decision. Despite stepping down, I will continue to defend my honour and dignity – I await the results of the investigations, which I am certain will separate facts from insinuations.”

Interim leader of the LSDP Mindaugas Sinkevicius stated that the ruling coalition remains unchanged, as none of its members have expressed an intention to withdraw.”

“We did not discuss coalition matters at today’s board meeting. I’ll share our position: following the parliamentary elections, the three parties that received the highest public trust formed a coalition.

“It’s important to emphasize that the coalition was not formed by Saulius Skvernelis, Remigijus Zemaitaitis or Gintautas Paluckas individually, but by three political parties.

“These parties, through their own internal bodies – boards and councils – made the political decision to unite in coalition.

“None of the coalition partners, despite the strong language, ultimatums, or political rhetoric from their leaders, have made a decision to withdraw. That kind of decision is not made unilaterally by party leaders, it is a collective political decision.

“So far, no party has declared any intention or decision to exit the coalition.
Rhetoric can sometimes be sharp, but it doesn’t necessarily translate into actual decisions. That doesn't mean parties won't make decisions in the future – but for now, we believe the coalition is functioning, because no partner has left,” Sinkevicius said, LRT.lt reported.

Parliament Speaker Saulius Skvernelis stated that he does not want to speculate whether he would work alongside "Dawn of Nemunas" (Nemuno aušra), a party he has fiercely criticised for being part of the coalition.

Meanwhile, Remigijus Zemaitaitis, leader of "Dawn of Nemunas," hinted at a "coup" in a Facebook post.

The news of Paluckas stepping down was first reported on early July 31 by the Lrytas.lt news portal.