2004-10-13
Current account balance. A sizeable contraction of the foreign trade deficit in August 2004 against July resulted in a corresponding decline in the balance of payments current account deficit. In August 2004, the balance of payments current account deficit (CAD) made up LTL 184.4 million. It contracted by as much as LTL 315.4 million compared to July 2004, widening by LTL 242 million year-on-year.
According to the data of the Department of Statistics, in August 2004, compared to July, export of goods increased by 3 per cent, while import of goods decreased by 9.7 per cent. Year on year, however, the growth of the export of the goods was slower than that of import, at 15.1 per cent and 22.4 per cent, respectively.
Compared to July, the growth of the export of services was slower than that of import in August 2004 (15% and 22.4%, respectively), and the positive balance of services went down by LTL 7.3 million to LTL 143 million. Year on year, export of services increased by 12.8 per cent, while import of services grew by 43.9 per cent. The positive balance of services contracted over the period under review by LTL 78.8 million.
Payments to non-residents (on their investment in Lithuania) in August 2004, similar to July, made up LTL 128 million. Owing to a decline of compensation of employees (by LTL 10.4 million), the total negative income balance widened (to LTL 52.1 million). Year on year it contracted by LTL 21.1 million.
A larger part of the funds received from EU structural funds in August 2004 was channelled to investment projects in Lithuania, i.e. they were included in the capital account (rather than the current account) of the balance of payments. As contributions to the EU budget in August remained similar to July, the balance of current transfers contracted by LTL 111.7 million and was negative (LTL -18.7).
Capital and financial account balance. In August 2004 total investment flow abroad by domestic economic entities, excluding reserve assets, and non-resident investment flow in Lithuania showed net inflows (LTL 600.4 million), of which funds (recorded in the capital account) received from the EU structural funds for financing investment projects in Lithuania comprised LTL 14.1 million. In August, funds in the capital account and net foreign direct investment covered 57.4 per cent of the current account deficit.
Foreign direct investment flow in Lithuania was positive in August 2004 (LTL 97.7 million), which was determined by non-resident investment in equity capital and reinvestment. Taking into account foreign direct investment by domestic economic entities, net foreign investment inflows made up LTL 91.7 million in August.
Net portfolio investment flow was positive in August (LTL 338.9 million), which was determined by investment of domestic commercial banks in non-resident debt securities.
The net flow of other investment was also positive in August (LTL 147.1 million). These investment inflows resulted from Bank of Lithuania transactions with non-residents and domestic commercial bank loans received from non-residents.
Reserve assets, whose flow in the balance of payments amounted to LTL 313.5 million in August 2004, increased. The main reason behind the increase was Bank of Lithuania repo transactions with non-residents. Reserves were also pushed up by the appreciation of foreign currencies against the litas (by LTL 13.3 million), the increased value of gold holdings (LTL 10.4 million) due to revaluation and net income of the Bank of Lithuania from foreign exchange investment.
Reserves decreased by LTL 25.8 million due to Bank of Lithuania operations with central government institutions and a decline in commercial bank required reserves in foreign exchange.