2004-09-10
A sizeable widening of the foreign trade deficit in July 2004 widened the balance of payments current account deficit respectively. In July 2004, the balance of payments current account deficit (CAD) made up LTL 499.8 million. It went up by LTL 300.1 million compared to June 2004, widening by LTL 221.3 million year-on-year.
According to the preliminary data of the Department of Statistics, in July 2004, compared to June, export of goods (calculated according to a special system) decreased by 3.6 per cent, while import of goods went up by 16.9 per cent. Compared to the same period last year, the export growth was higher than the import growth. This growth made up 20.1 per cent and 17.9 per cent, respectively.
Compared to June 2004, both export of services and import of services increased in July by 6.7 per cent. The positive services balance increased by LTL 9.6 million and amounted to LTL 150.3 million. Year-on-year, export of services increased by 6.9 per cent, while import of services grew by 31.2 per cent. The positive balance of services contracted over the period under review by LTL 60.6 million.
In July 2004, compared to June, payments to non-residents on their investment in Lithuania went down by LTL 85.1 million and amounted to LTL 128.1 million. This decrease was determined by the decline of dividend payments to non-residents on foreign direct investment in the private sector. The total income balance was negative in July 2004 at LTL 47.6 million. Compared to June, it declined by LTL 88 million, and compared to July 2003, it went up by LTL 57 million.
In July 2004 the first inflows from the EU structural funds were received, therefore, the positive balance of current transfers went up by LTL 84.8 million compared to June (at LTL 93 million).
Capital and Financial Account Balance. In July 2004, excluding reserve assets, total investment flows abroad by domestic economic entities (LTL 172.6 million) reflected net payments, and non-resident investment flows in Lithuania (LTL 535.4 million) reflected total net inflows, of which, funds (recorded in the capital account) received from the EU structural funds for financing investment projects in Lithuania comprised LTL 245.7 million. In July, funds in the capital account and net foreign direct investment covered 65.9 per cent of the current account deficit.
Foreign direct investment flows in Lithuania were positive in July 2004 (LTL 101.4 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 direct investment inflows made up LTL 83.5 million in June.
Net portfolio investment flows were negative in July (LTL -160.6 million), which was determined by investment of domestic commercial banks in non-resident debt securities, same as in June.
Net other investment flows were positive in July (LTL 203.6 million). Inflows of this investment were determined by the decline in foreign assets of domestic economic entities (by LTL 185.6 million), while other investment flows in Lithuania (liabilities) went up by LTL 18 million only.
International reserves increased in July 2004. Their flows in the balance of payments stood at LTL 329.6 million. The reserves were mainly pushed up by Bank of Lithuania operations with central government institutions (LTL 329.5 million) and net inflows from investment in foreign currencies. A factor reducing international reserves was the net sale of foreign exchange to commercial banks by the Bank of Lithuania of LTL 35.9 million.