2006-09-12
Current Account Balance. In July 2006 the balance of payments current account deficit (CAD) made up LTL 542.1 million showing an increase of LTL 194.9 million (56.1%) compared to June. According to preliminary estimates, the CAD in January-July 2006 made up LTL 3.9 billion (LTL 2.7 billion in January-July 2005). Compared to June 2006, the foreign trade deficit decreased by LTL 135.3 million in July, but a rather substantial decrease (of about 3.2 times) in the surplus of the balance of current transfers and the increase of the income balance deficit by a factor of 1.5 determined the widening of the current account deficit.
According to the data of the Department of Statistics, in July export of goods decreased by 7.2 per cent and import of goods by 9.5 per cent compared to June. Regardless of the above, from January to July 2006 export of goods increased by 29.7 per cent, while import grew by 29.8 per cent compared to the same period of 2005.
The growth of the export and import of goods over the seven months this year was mainly driven by an increase in the export of oil products (48.1 %), vehicles (58.5 %), plastics and articles thereof (72.9 %). Import expanded as a result of an increase in the import of crude oil and gas (47.1%), vehicles (47.1 %), electrical machinery and equipment, television video and sound recorders and reproducers and parts thereof (39%).
Export to the EU Member States made up 62.7 per cent of the export of goods of Lithuania in January-July, while import from these countries made up 59.8 per cent. Export to the CIS countries made up 19.3 per cent, and import comprised 31.2 per cent.
In July 2006, compared to June, export and import of services increased by 9.3 per cent and 7.6 per cent, respectively. The surplus of the balance of services increased by LTL 33 million to make up LTL 281 million in July. In January-July, the export of services expanded by 13.2 per cent and the import of services by 23.6 per cent, therefore the overall positive surplus of the balance of services declined by LTL 113.1 million.
Payments to non-residents (on their investment in Lithuania) made up LTL 303.8 million in July 2006 (LTL 205.2 million in June 2005), while the income of domestic economic entities on investment abroad made up LTL 68.9 million (LTL 56.6 million in June). As payment growth was higher, the deficit of the balance of investment income increased by LTL 86.3 million. Including a higher positive balance of compensation of employees, the total income balance deficit was LTL 177.1 million in July 2006, and LTL 1.3 billion in January-July (LTL 1.2 billion over the same period in 2005).
The surplus of the balance of current transfers stood at LTL 135.6 million in July 2006 (LTL 432.7 million in June). In July, transfers from EU support funds made up LTL 37.5 million (down by LTL 291.8 million compared to June). This was a factor that determined the overall decrease of the surplus of current transfers in July. Transfers by natural persons were higher by LTL 10.5 million in July. In January-July 2006 the surplus of the balance of current transfers was LTL 1.2 billion (LTL 1 billion in January-July 2005).
Capital and Financial Account Balance. In July 2006, the investment flow abroad by domestic economic entities, excluding official reserve assets, increased by LTL 593.4 million, and the foreign investment flow in Lithuania made up LTL 1.1 billion. The total net investment flow (both outward and inward investment) showed capital inflows of LTL 459.2 million in July. Over the seven months of the year, total net capital inflows made up LTL 4 billion, of which 71.6 per cent consisted of net other investment inflows (mostly inflows in monetary financial institutions). In July 2006, capital transfers from EU support funds made up LTL 88.7 million, amounting to LTL 430.4 million from January to July (LTL 397.6 million over the same period of 2005).
Foreign direct investment flow in Lithuania made up LTL 364.3 million in July 2006. Compared to June, direct investment flow in Lithuania increased by LTL 60.7 million. During the period from January to July, this flow amounted to LTL 1.6 billion (LTL 1.9 billion from January to July 2005) Taking into account foreign direct investment by domestic economic entities, net foreign direct investment flow made up LTL 295.7 million in July 2006, and LTL 1.2 billion from January to July.
Net portfolio investment flow showed net investment inflows of LTL 104.5 million in July 2006, as foreign investment by Lithuanian economic entities decreased.
The net flow of other investment and financial derivatives was positive in the period under review (LTL 59 million), and during the period from January to July amounted to LTL 2.9 billion.
International reserves increased in July 2006. The flow of this increase in the balance of payments stood at LTL 89.2 million. International reserves expanded as a result of an increase of currency outside the Bank of Lithuania and other factors by respectively LTL 249.2 million and LTL 22.4 million, in addition to a rise in deposits of other MFIs with the Bank of Lithuania of LTL 22.4 million.
International reserves were pushed down by a contraction in Bank of Lithuania external liabilities and central government deposits with the Bank of Lithuania of LTL 121.0 million and LTL 70.4 million, respectively.