Balance of Payments of the Republic of Lithuania, January 2004
In January 2004, the Balance of Payments current account balance was negative amounting to LTL 102.3 million. Compared to December 2003, the current account deficit (CAD) contracted by LTL 480.7 million, and compared to January 2003, it widened by LTL 290.9 million. These changes were determined by varying developments in the import of goods.
According to the data of the Department of Statistics, in January 2004, compared to December 2003, export of goods increased by 0.8 per cent, while import contracted by as much as 23.7 per cent. Compared to the same period last year, in January 2004 export of goods increased by 1.3 per cent, while import grew by 8.2 per cent.
Compared to December 2003, export of services decreased in January by 23.4 per cent, while import of services went down by 38.6 per cent. The positive services balance increased by LTL 14.9 million. Compared to January 2003, export of services increased in January 2004 by 27.4 per cent, while import of services declined by 6.4 per cent. The positive balance of services improved over the period under comparison by LTL 96.8 million. Fast overall services export growth in January (compared to January 2003) was determined by the increased scale of railway transport services export.
Payments to non-residents (on their investment in Lithuania) in January 2004 exceeded the income from Lithuania’s investment abroad by LTL 71.6 million. The positive labour income balance amounted to LTL 17.3 million. For the above reasons, the overall income balance was negative and amounted to LTL 54.3 million in January. Compared to December 2003, in went up by LTL 33.8 million, while compared to January 2003, it contracted by LTL 1.8 million.
The balance of current transfers was positive in January 2004 and stood at LTL 39 million and differed only slightly from January 2003 (LTL 42.1 million). Compared to December 2003, this balance declined by LTL 149.3 million. The latter development is related to seasonal factors, as payments from EU financial support funds, increased transfers to different domestic public organisations, communities and representations of foreign firms go up at the end of the year.
The positive capital and financial account balance made up LTL 356.3 million in January 2004. Foreign assets of domestic economic entities (financial claims to non-residents), excluding international reserves, grew in January by LTL 436.7 million, while international financial liabilities went up by LTL 628.9 million. The balance of capital transfers amounted to LTL 7 million in January.
Foreign assets of domestic commercial banks increased by LTL 280.5 million in January 2004. The largest increase was recorded in commercial bank deposits and correspondent account balances with foreign banks. Foreign assets of other sectors went up by LTL 156.2 million.
Foreign direct investment flows were negative in Lithuania and amounted to LTL -19.5 million in January 2004, which was determined by the decline of the equity holdings by non-residents (due to a sale of non-resident equity holdings).
On the other hand, non-resident portfolio investment flows amounted to LTL 417 million in January. The growth of the investment portfolio (LTL 287.8 million) was determined by the distribution of long-term debt securities among non-residents by domestic economic (non-banking) entities. Other investment flows amounted to LTL 254.5 million in January in Lithuania. The growth of this investment was determined by investment in the banking sector as a result of an increase in non-resident deposits and balances on correspondent accounts.
The negative international reserve flows in the balance of payments were LTL 157.1 million in January 2004. The main reason behind the decrease was net purchase of the foreign exchange by commercial banks from the Bank of Lithuania of LTL 246.5 million. Reserves were pushed up by a LTL 41.2 million increase in commercial bank required reserves in foreign exchange, Bank of Lithuania operations with central government institutions and net inflows of the Bank of Lithuania from investment in foreign currencies.