Balance of Payments of the Republic of Lithuania, September 2008 (key indicators)

(key indicators)

Current Account Balance. In September 2008, the deficit on the current account of the country’s balance of payments (CAD) amounted to LTL 838.4 million. According to preliminary estimates the CAD for Q3 2008 was LTL 2.17 billion accounting for 7.2% of the GDP (in Q2 2008 CAD was LTL 4.8 billion or 16.8% of GDP).

In January-September 2008, CAD made up LTL 11.56 billion (an increase of LTL 921.9 million or 8.7% year on year). A four-quarter (Q4 2007 to Q3 2008) moving sum for CAD was LTL 15.25 billion or 13.8% of GDP.

In September 2008, a month-on-month increase in export and import of goods was 5.1% and 9.5%, respectively, while a year-on-year increase made up 40.8% and 25.6%, respectively, as reported by the Department of Statistics under the Government of the Republic of Lithuania. In nine months of 2008, export and import of goods went up respectively by 33.8% and 23.6% year on year (excluding mineral products the increase of export and import of goods made up 16.2% and 4.8%).

Export was increasing in January-September 2008 mainly as a result of growing export of processed oil lubricants and lubricants received from bitumen minerals (2.4 times), fertilisers (97.9 %), and grain (2.6 times). While import growth was driven mainly by an increase in import of crude oil and natural gas (2.5 times), railway locomotives, carriages and railcars and their parts (5 times), and fertilizers (2.4 times).

In January-September 2008, export of Lithuanian goods to the EU Member States accounted for 61.1% of total Lithuanian export of goods, while import from these countries made up 56.5% of total import of goods. Export to CIS countries accounted for 24.5% of total export, and import of goods accounted for 35 per cent of total import.

In January-September 2008, the Lithuania’s main export partners were Russia (15.4%), Latvia (11.5%), Germany (7.2%), and Poland (5.8%), while the main import partners were Russia (31.2%), Germany (11.8%), Poland (9.9%), and Latvia (5.1%).

In September 2008, a month-on-month increase in export of services was 0.6%, while import of services went up by 7.3% (year on year, export of services grew by 15.9% and import of services went up by 41.9 %). In January-September 2008, a year-on-year increase in export of services was 6.5% and import of services jumped by 19.1%. During the reviewed period, gross surplus on the balance of services contracted by 58.5%.

In September 2008, payments to non-residents (for their investments in Lithuania) made up LTL 381.2 million, and the income of domestic economic entities on investment abroad made up LTL 159 million. In September, the deficit on the balance of investment income stood at LTL 222.2 million. Gross income balance deficit was LTL 229.9 million, the negative compensation income balance included (in August 2008, the deficit made up LTL 253.6 million). January to September 2008, gross income balance deficit made up LTL 3.35 billion, a year-on-year increase of 2.7%.

In September 2008, the balance of current transfers posted a surplus of LTL 300.2 million (LTL 247.2 million in September 2007). Surplus on the balance of current transfers for the period from January to September 2008 made up LTL 2.04 billion (LTL 2.14 billion in corresponding period of 2007).

In January-September 2008, transfers from the EU support funds grew by 0.9% year on year, and remittances by individuals went down by 0.3%. Transfers from the EU support funds accounted for 37.2% of total current transfers, and remittances by individuals accounted for 54.8%. During the reviewed period, Lithuania’s contributions to the EU budget soared by 21%, while remittances by individuals from Lithuania went up by 8%.

Capital and financial account balance. In September 2008, outflow of investment by domestic economic entities, excluding official reserve assets, made up LTL 90.96 million, while investment inflow was LTL 1.27 billion; consequently, the net flow of total investment (investment outflow and inflow included) was positive at LTL 1.18 billion. In January-September, gross investment outflow equalled to LTL 3.15 billion, while gross investment inflow made up LTL 10.33 billion. A year-on-year gross outflow of investment by domestic economic entities went down by LTL 1.52 billion or by 32.6%, while gross investment inflow decreased by LTL 4.34 billion or 29.6%.

In September, non-repayable capital transfers made up LTL 67.6 million, while non-repayable capital transfers in January to September 2008 made up LTL 1.66 billion (in January-September 2007 they amounted to LTL 1.23 billion).

In September 2008, the inflow of foreign direct investment reached LTL 158.1 million. Including the outflow of foreign direct investment by domestic economic entities (LTL 60.3 million) the net foreign direct investment flow in September was positive at LTL 97.8 million. In January-September 2008, foreign direct investment inflow reached LTL 2.56 billion, a decrease of 34.9% year on year. In January to September 2008, foreign direct investment was used to finance up to 15.4% of CAD (up to 29.7% together with non-repayable capital transfers).

The net portfolio investment flow in September 2008 was negative at LTL 14.4 million. In January-September 2008, the negative net flow of this type of investment amounted to LTL 1.16 billion, a year-on-year slump of LTL 1.38 billion due to a decrease in investments into debt and equity securities of non-residents.

In September 2008, the net flow of other investment and financial derivatives was positive at LTL 1.1 billion. The positive net flow showed that investment inflow exceeded investment outflow. This became possible due to the net investment inflow within MFIs. In January-September 2008, the net flow of these investments was positive, i.e. it showed the capital inflow of LTL 6.57 billion. The year-on-year positive net flow of other investments for the first nine months of the year however went down by LTL 2.86 billion mainly because of a decrease in liabilities of other domestic sectors and MFIs, as well as an increase in assets of MFIs.

At the end of September 2008, official reserve assets made up LTL 15.6 billion (EUR 4.5 billion). During the September they increased by LTL 90.6 million or 0.6%.

The growth of official reserve assets was driven by the growth of central government deposits with the Bank of Lithuania and other factors respectively by LTL 457.4 million and LTL 149.9 million.

The growth of official reserve assets was pushed down by a slump of LTL 409 million in deposits of other MFIs with the Bank of Lithuania and a decrease of LTL 84.7 million in currency in circulation, as well as by a fall of LTL 23.1 million in external liabilities of the Bank of Lithuania.