Balance of Payments of the Republic of Lithuania, September 2007 (key indicators)

Current account balance. In September 2007, the deficit in the current account of the country’s  balance of payments was LTL 956.9 million, showing an increase of 57.3 percent compared to June, and an increase of 8.3 percent compared to September 2006. In September 2007, the growth of CAD was the result of an increase in foreign trade deficit and a one third decrease in the balance of current transfers.

January-September 2007, CAD amounted to LTL 8.9 billion (according to preliminary estimate it accounted for 12.7% of GDP) and was 47 percent above the figure for corresponding period in 2006. The increase was a result of the growth of foreign trade deficit by LTL 2.1 billion to account for three thirds of the gross increase in CAD.

In September 2007, according to the preliminary data of the Department of Statistics under the Government of the Republic of Lithuania, export of goods went down by 5.9 percent, while import of goods by 3 percent month on month.

In January-September 2007, the year-on-year rise in export and import of goods was higher respectively 10 percent and 14.9 percent, while foreign trade deficit widened by 29.1 percent to make up LTL 28.8 billion . Export growth was driven by an increase in export of plastics and plastic articles (86.8%), fertilisers (44.2%), ground vehicles (28.5%), machinery and mechanical appliances (24.6%). Meanwhile, import growth was driven by an increase in import of ground vehicles (45.3%), organic chemical products (by 2.7 times) and electric machinery and equipment (20.2%).

In January - September 2007, export of Lithuanian goods to the EU25 Member States grew by 14.3 percent, while import from these countries increased by 28.1 percent. Export to the CIS countries went up by 28.5 percent, while import from them decreased by 14 percent.

In January-September 2007, the main Lithuania’s export partners were Russia (14.1 %), Latvia (13.1 %), Germany (10.7 %), and Poland (6.5 %), while the main import partners were Russia (19.0 %), Germany (14.9 %) and Poland (10.4 %).

In September 2007, month-on-month export of services decreased by 19.1 percent, while import of services decreased by 25.4 percent. The total positive surplus in the balance of services went up only by 0.3 percent to LTL 257.3 million. In January-September 2007, as compared to the same period in 2006, export of services increased by 7.7 percent, while import of services grew by 19.7 percent. The positive surplus on the balance of services in January-September 2007 declined by LTL 432.6 million or 19.8 percent.

In September 2007, payments to non-residents on their investment in Lithuania made up LTL 442 million, while the income of domestic economic entities on their investment abroad made up LTL 112.5 million. In September, the investment income balance deficit equalled to LTL 329.6 million, down by 4.8 percent compared to August. Since the positive labour income balance decline in August was LTL 76.6 million, the gross deficit of the income balance for the month grew by 22.9 percent to LTL 321.6 million.

In January-September 2007, the year-on-year increase in the income balance deficit was 42 percent up to LTL 2.8 billion .

In September 2007, surplus in the balance of current transfers amounted to LTL 245.3 million compared to LTL 350.3 million in August the same year. The narrowing of the surplus came as a result of a decrease of LTL 88.9 million in the transfers from the EU support funds.

In January-September 2007, positive surplus on the balance of current transfers went up by LTL 523.3 million or by 32.6 percent to LTL 2.1 billion year on year. Over the reported period, transfers from the EU support funds grew by 19.9 percent, while remittances by individuals went up by 37.3 percent.

Capital and financial account balance. In September 2007, an increase was registered in the investments of domestic economic entities abroad, the flow of which excluding official reserve assets made up LTL 1.5 billion . Foreign investment flow in Lithuania equalled to LTL 1.8 billion, because of which net flow of total investments taking into account outward and inward investment flows formed LTL 253.6 million only.

In January-September 2007, the outward investment flow equalled to LTL 4.4 billion, while the inward investment flow was LTL 14.5 billion. As compared to January-September 2007, outward investment flow grew by 59.6 percent, while inward investment flow went up by 51.1 percent. In September, non-repayable capital transfers made up LTL 73.8 million, while in January-August they formed LTL 1.1 billion (in January-September non-repayable capital transfers made up LTL 602.5 million ).

In September 2007, foreign direct investment flow in Lithuania reached LTL 400.9 million. Taking into account foreign direct investment by domestic economic entities, in September net foreign direct investment flow made up LTL 320.8 million. Meanwhile, January-September foreign direct investment flow in Lithuania reached LTL 3.8 billion (LTL 2.2 billion in corresponding period in 2006), while their net flow was LTL 3.1 billion litas (accounting for 4.4% of GDP according to preliminary estimate).

The net investment portfolio flow was negative both in September and January-September 2007, amounting to LTL 304.1 million and LTL 2.7 billion, respectively .

The net flow of other investments and financial derivatives was positive both in September, when it made up LTL 236.9 million, and January-September, when it made up LTL 9.7 billion. In January-September 2007, the net flow of other investments increased by 52.2 percent year on year. The increase of liabilities of domestic MFIs had the largest impact on the total positive flow of this type of investment. The net flow of investment of this sector reached LTL 7.7 billion in January-September 2007, an increase of more than 2 times compared to the corresponding period in 2006.

In September 2007, official reserve assets decreased and their flow in the balance of payments made up LTL 599.3 million. Official reserve assets went down when the Bank of Lithuania paid back LTL 263.2 million borrowed under repurchase agreements transactions as well as a decrease of LTL 563.5 million in the deposits of other MFIs with the Bank of Lithuania.

The official reserve assets grew as a result of an increase in central government deposits with the Bank of Lithuania and currency in circulation of LTL 112.8 million and LTL 70.5 million, respectively, in addition to an increase in other factors of LTL 52.6 million.