Bank of Lithuania

A sizeable increase of exports of goods and services in March 2002 and the decline of foreign debt servicing expenses determined a decrease of the Balance of Payments current account deficit. In March, the current account deficit made up as little as LTL 21.8 million. Compared to February, in went down by LTL 248.5 million, and compared to March 2001, it contracted by LTL 217.4 million. Based on the data for individual months, the current account deficit in January?March 2002 made up LTL 475.3 million (LTL 546.3 million in January?March 2001). According to the preliminary data (with later adjustment of monthly data while compiling the quarterly balance of payments), Q1 2002 current account deficit may amount to 4.3?4.7 per cent of GDP. In Q1 2001 the current account deficit made up 5.1 per cent of GDP.

In March 2002, compared to March 2001, export of goods increased by 14.4 percent, while compared to February 2002 it went up by more than one fifth. The growth of the export of goods was mostly determined by higher growth in the export of vehicles and food products. Imports of goods (at f.o.b. prices) increased by 2.2 per cent and 10.0 per cent, respectively.

Compared to February, export of services increased in March by 17.5 per cent, while import of services increased by 11.4 per cent. Compared to March 2001, export of services decreased by 1 per cent, while import of services increased by 5.9 per cent. The total positive balance of services in March 2002, as compared to February 2002, increased by LTL 31.7 million, and declined by LTL 15.4 million compared to March 2001.

Foreign debt servicing expenses in March 2002 declined by LTL 67.3 million, compared to February 2002. In addition, foreign income of domestic economic entities went up, which pushed down the deficit of the income balance by LTL 82.4 million.

More EU PHARE funds were received in March under various technical assistance projects. The total positive balance of current transfers increased by LTL 14.4 million compared to February.

International liabilities of domestic economic entities declined in March by LTL 491.4 million, while foreign assets (financial claims to non-residents) went down by LTL 366.9 million; therefore, the balance of the capital and financial account was negative and made up LTL 124.4 million.

Lower deposits of domestic banks in foreign banks determined a decline of total foreign investment by domestic economic entities for a third consecutive month. In March such investment decreased by LTL 8.8 million.

Foreign direct investment flow in March made up LTL 190.6 million, and LTL 463.1 million in January through February, which, according to preliminary data, was slightly higher than foreign direct investment during the same period of 2001. Foreign direct investment went up in March following the successful privatisation of the Agricultural Bank.

Portfolio investment inflows were not large and made up LTL 9.5 million. Bank of Lithuania repo transactions with non-residents declined in March 2002 by LTL 581 million, while other non-resident investment in domestic commercial banks went down by LTL 193.6 million. The above factors determined a total negative foreign investment flow in Lithuania.

The decline of repurchase transactions concluded by the Bank of Lithuania also had an impact on the international reserves. In March international reserves went down by LTL 358.2 million, yet during the period from January to March they increased by LTL 219.5 million.