2006-10-13
Current Account Balance. In August 2006 the balance of payments current account deficit (CAD) made up LTL 865.2 million widening by LTL 323.1 million (59.6%) compared to July. According to preliminary estimates, the CAD in January-August 2006 made up LTL 5.3 billion (LTL 3.14 billion in January-August 2005). Compared to July 2006, foreign trade deficit increased by LTL 393 million in August and determined the widening of the CAD. Positive changes in other items of the current account balance offset only insignificantly the higher trade deficit.
According to the data of the Department of Statistics, in August export of goods increased by 7.1 per cent, while import rose by 14.1 per cent compared to July. From January to August 2006 export of goods increased by 28.3 per cent, while import grew by 29.8 per cent compared to the same period of 2005.
The growth of the export of goods over the eight months this year was mainly driven by an increase in the export of oil products (40.9%), vehicles (63%), plastics and articles thereof (72.3%). Import mostly rose as a result of an increase in the import of crude oil and gas (36.1%), vehicles (49.5%), electrical machinery and equipment, television video and sound recorders and reproducers and parts thereof (35.5%).
Export to the EU Member States made up 62.4 per cent of the export of goods of Lithuania in January-August, while import from these countries made up 59.6 per cent. Export to the CIS countries made up 19.7 per cent, and import comprised 31.5 per cent. The deficit of foreign trade with the CIS was nearly LTL 1.4 billion higher than the deficit with the EU countries.
In August 2006, compared to July, export and import of services increased by 6 per cent and 4.9 per cent, respectively. The surplus of the balance of services increased by LTL 23.5 million in August and amounted to LTL 304.5 million. From January to August export of services increased by 13.8 per cent, import of services grew by 22.5 per cent, and the total surplus of the positive balance declined by LTL 57.2 million.
Payments to non-residents (on their investment in Lithuania) made up LTL 278.5 million in August 2006 (LTL 303.8 million in July 2006), while the income of domestic economic entities on investment abroad made up LTL 69.8 million (LTL 68.9 million in July). As a consequence of a decline of payments to non-residents, the investment income balance deficit decreased by LTL 26.3 million. The total deficit of the income balance, including a higher positive balance of compensation of employees, decreased by nearly LTL 32.7 million to LTL 144.4 million in August 2006. For the period from January to August the total deficit of the income balance made up LTL 1.8 billion (LTL 1.3 billion over the same period of 2005).
The surplus of the balance of current transfers stood at LTL 149.2 million in August (LTL 135.6 million in July). Transfers from EU support funds made up LTL 20.8 million (down by LTL 16.7 million compared to July). Over the eight months of 2006, these transfers made up LTL 1 billion (LTL 216.3 million more than during the same period a year ago). Foreign transfers by natural persons amounted to LTL 112.6 million, and to LTL 608.9 million from January to August (LTL 498.4 from January to August 2005). The total surplus of balance of current transfers for the period from January to August 2006 made up LTL 1.3 billion (LTL 1.2 billion over the same period of 2005).
Capital and Financial Account Balance. In August 2006, the investment flow abroad by domestic economic entities, excluding official reserve assets, increased by LTL 925.5 million, and foreign investment in Lithuania rose by LTL 1.5 billion. The total net investment flow (both outward and inward investment) showed capital inflows of LTL 621 million in August. Over the eight months of the year total net capital inflows made up LTL 5.02 billion. In August 2006, capital transfers from EU support funds made up LTL 14 million, and LTL 471.7 million in January-August (LTL 390.2 million over the same period of 2005).
Foreign direct investment flow in Lithuania amounted to LTL 332.7 million in August 2006. For the period from January to August this investment flow was LTL 2.02 billion and was nearly the same as the flow in the same period last year (LTL 2.04 billion). Taking into account foreign direct investment by domestic economic entities, net foreign direct investment flow made up LTL 246.2 million in August 2006, and LTL 1.23 billion from January to August.
Net portfolio investment flow was negative in August 2006 (LTL 1.06 billion) owing to a high investment flow abroad (LTL 925.7 million) and a decline of liabilities to non-residents. Most of this investment abroad was accounted for by investment by monetary financial institutions.
The net flow of other investment and financial derivatives was positive in August (LTL 1.43 billion), and during the period from January to August amounted to LTL 4.84 billion, showing net inflows. The positive flow of other investment was determined by an increase of time deposits of non-resident monetary financial institutions in domestic commercial banks.
Official reserve assets went down in August 2006. The flow of this decrease in the balance of payments stood at LTL 191.6 million. The international reserves were pushed down by the contraction in central government deposits and other monetary financial institution deposits with the Bank of Lithuania of LTL 336.8 million and LTL 67.4 million, respectively.
The factors increasing official reserve assets were higher Bank of Lithuania external liabilities and other factors of LTL 98.8 million and LTL 54.6 million, respectively, in addition an increase of currency in circulation of LTL 49.7 million.