In March 2004, the Balance of Payments current account balance was negative amounting to LTL 531.8 million. Compared to February 2004, the current account deficit (CAD) widened by LTL 237.1 million, and compared to March 2003, it improved by LTL 159.3 million. The CAD widening resulted from the expansion of the export of goods and the increase of the negative income balance. According to the available monthly balance of payments data, the Q1 2004 CAD made up LTL 928.7 million, or 7 per cent of the expected GDP of the period1 (in Q1 2003 the CAD made up 3.8% of GDP).
According to the data of the Department of Statistics, in March 2004, compared to February, export of goods increased by 5.2 per cent, while import of goods grew by 12.1 per cent. In March 2004, compared to the same period last year, export of goods increased by 14.7 per cent, while import grew by 10.3 per cent. In Q1 2004 (year-on-year) the export and import of goods went up by respectively 8.5 and 11.3 per cent (21% and 9.6%, respectively, in Q1 2003). Faster growth of the import of goods and the widening of the foreign trade deficit were determined by a marked increase in the import of investment and consumer goods.
Compared to February, export of services increased in March by 23 per cent, while import of services increased by 36.1 per cent. The positive balance of services decreased by LTL 3.5 million and amounted to LTL 128.4 million. Compared to March 2003, export of services increased by 7.2 per cent, while import of services grew by 14.1 per cent. The positive balance of services contracted over the period under review by LTL 11.4 million.
In March 2004, compared to February 2003, payments to non-residents on their investment in Lithuania went up by LTL 106.8 million. In March 2004, compared to February 2003, interest payments on Government securities grew by LTL 62 million. Reinvestment by foreign direct investors went up during the period under review. Owing mostly to the above changes, the overall negative income balance amounted to LTL 169.8 million in March. Compared to February, it rose by LTL 98 million, and compared to March 2003, it went down by LTL 212.2 million.
The balance of current transfers was positive in March 2004 at LTL 75.4 million, up by LTL 26.9 million compared to February. Year-on-year it was higher by LTL 28 million.
The positive capital and financial account balance made up LTL 493.5 million in March 2004. Foreign assets of domestic economic entities (financial claims to non-residents), excluding international reserves, grew in March by LTL 340.9 million, while international financial liabilities went up by LTL 1.4 billion.
In March 2004 foreign assets of the Government increased by LTL 552.5 million, foreign assets of domestic commercial banks declined by LTL 84.8 million (mostly due to the decline of time deposits with foreign banks). Foreign assets of other sectors decreased by LTL 126.7 million.
Foreign direct investment flows in Lithuania were positive amounting to LTL 300.4 million in March 2004. This was mostly brought about by the inflows from the privatisation of AB Lietuvos Dujos and higher non-resident reinvestment.
Similar to March last year, a Government Eurobond issue was distributed in March this year, resulting in LTL 1.4 billion portfolio investment flows in Lithuania. Other investment flows were negative (LTL -297.2 million). This investment declined due to lower investment in the banking sector as a result of a decrease in non-resident deposits and balances on correspondent accounts.
The positive international reserve flows in the balance of payments were LTL 602.6 million in March 2004. The main reason behind the increase was the inflows from EUR 600 million ten-year Eurobond placement in international markets into central government accounts at the Bank of Lithuania. The reserves also increased due to the net purchase of foreign exchange of LTL 27.6 million from commercial banks, an LTL 27.4 increase of commercial bank required reserves in foreign currencies and the net income from Bank of Lithuania investment of foreign exchange.