Balance of Payments of the Republic of Lithuania, december 2008 (key indicators)

(key indicators)

Current Account Balance. In December 2008, the deficit on the Current Account of the Balance of Payments (CAD) made up LTL 851.4 million widening by LTL 212.6 million (33.3%) compared November, and narrowing by LTL 232.6 million or 21.5% year on year. The CAD increase was largely driven by an increase in foreign trade deficit. Preliminary data showed that in January-December 2008, CAD made up LTL 14.5 billion or 13 percent of GDP.

In December 2008, according to the data of the Department of Statistics under the Government of the Republic of Lithuania export and import of goods went down month on month respectively by 15% and 9.3%. Compared to December 2007, export and import decreased respectively by 3.2% and 8.8%, respectively. In January-December 2008, export and import of goods went up respectively by 28.4% and 18% year on year (excluding mineral products, export and import of goods increased respectively by 11.6% and 0.2 %).

In January-December 2008, export of goods was increasing largely due to growing export of processed oil lubricants and lubricants received from bitumen minerals (2.5 times), fertilisers (65.1%), and grain (2.1 times). The import growth however was supported by increasing import of crude oil and natural gas (2.4 times), calcium phosphate and unprocessed sulphur (3.8 times), railway locomotives, carriages and railcars and their parts (3.4 times).

In January-December 2008, export of goods to EU countries and CIS countries grew respectively by 19.6% and 35.5% compared to corresponding period in 2007. At the same time, import of goods from EU countries went down by 1%, while import from CIS countries went up by 83.8%.

In December 2008, foreign trade balance was LTL 1.1 billion, while in January-December 2008, it made up LTL 17.1 billion, a year-on-year decrease of LTL 1.2 billion or 6.5%.

In December 2008, export of services decreased by 3.4% month on month, while import of services went up by 0.1% (year on year, export and import of services declined respectively by 16% and 14.2 %). In January-December 2008, export of services increased by 3.2% year on year, and import of services jumped by 15.6%. During the reviewed period, gross surplus on the balance of services contracted by nearly LTL 1 billion.

In December 2008, payments to non-residents for their investments in Lithuania made up LTL 343 million, and the income of domestic economic entities from their investment abroad made up LTL 150.9 million. In December, the deficit on the investment income balance stood at LTL 192.1 million. Considering the positive balance of compensation of employees, the same month gross income balance deficit was LTL 176.6 million (in November 2008 it was LTL 217 million). In January-December 2008, total income balance deficit made up LTL 4.3 billion, an increase of 4.5% compared to corresponding period in 2007. The deficit increase was mainly driven by an increase in the deficit of other investment income by LTL 736.4 million.

In December 2008, the balance of current transfers posted a surplus of LTL 133.8 million (in November 2008, it was 167.8 million). Surplus on the balance of current transfers for the period from January to December 2008 made up LTL 2.4 billion (in corresponding period in 2007 it was LTL 2.9 billion).

Compared to corresponding period in 2007, the January-December 2008 transfers from the EU support funds went down by 20.4%, and remittances by individuals went up by 1.6%. Transfers from the EU support funds accounted for 31.7% of total current transfers, and remittances by individuals accounted for 60.2%. During the reviewed period, Lithuania’s contributions to the EU budget grew by 24.3%, and remittances by individuals from Lithuania hiked by 5.3%.

Capital and financial account balance. In December 2008, investment by domestic economic entities abroad, excluding official reserve assets, contracted by LTL 952.6 million, while gross inflow of foreign investment in Lithuania was LTL 366 million. Eventually, the net flow of total investment (including investment outflow and inflow) showed capital inflow of LTL 1.3 billion. In January-December 2008, gross investment outflow made up LTL 1.7 billion, while gross foreign investment inflow made up LTL 12 billion. A year-on-year, the gross flow of investment by domestic economic entities abroad went down by LTL 5.8 billion (4.4 times), while gross foreign investment inflow - LTL 11.1 billion or 48.1%.

In December, net flow of non-repayable capital transfers made up LTL 122.2 million, while in January to December 2008, it was LTL 2 billion (in January-December 2007 the flow made up LTL 1.7 billion).

In December 2008, flow of foreign direct investment in Lithuania (inflow) amounted to LTL 147.6 million. Including the outflow of foreign direct investment by domestic economic entities (which went down by LTL 50 million) net foreign direct investment inflow in December made up LTL 197.6 million. In January-December 2008, foreign direct investment inflow made up LTL 3.7 billion, a decrease of 27.5% year on year. In January-December 2008, net foreign direct investment flow made up LTL 2.6 billion. During the reported period, foreign direct investment was used to finance up to 18.2% of CAD (31.9%, if non-repayable capital transfers included).

In December 2008, net portfolio investment flow was positive at LTL 314 million showing gross inflow of this type of investment. In January-December 2008, portfolio investment flow was positive at LTL 464.7 million (in corresponding period in 2007 it was negative at LTL -743.3 million). Increase of portfolio investments in December 2008 was driven by non-resident investments into Lithuanian collective investment funds, while in January-December the increase was driven by a slump in resident investments into foreign debt securities.

In December 2008, the net flow of other investments and financial derivatives was positive standing at LTL 807.1 million. The major reason for that was a decrease in external assets and an increase in liabilities of central government and MFIs. In January-December 2008, net flow of these investments also was positive, i. e. showed capital inflow of LTL 7.2 billion. However, compared to January-December 2007, positive net flow of other investments and financial derivatives went down by LTL 5.6 billion.

At the end of December 2008, official reserve assets made up LTL 15.8 billion (EUR 4.6 billion). In December, they increased by LTL 960 million or 6.5%.

MFI deposits with the Bank of Lithuania, which grew by LTL 978 million, pushed official reserve assets up. Official reserve assets also climbed because of a hike of LTL 89 million in net currency in circulation and an increase in BoL’s external liabilities and other factors respectively by LTL 31.8 million and LTL 9.3 million. At the same time, the growth of official reserve assets was contained by a slump of LTL 148 million in central government deposits with the BoL.