2006-12-15
Deficit of Lithuania’s Balance of Payments Current Account Decreased by 11.4 Per Cent
Current Account Balance. In October 2006, Lithuania’s balance of payments current account deficit (CAD) made up LTL 780.7 million, and compared to September, decreased by LTL 100.7 million or 11.4 per cent. According to preliminary estimates, the CAD in January - October of 2006 accounted for LTL 6.92 billion (LTL 4.1 billion in January - October 2005). The CAD reduction in October was driven by a smaller foreign trade deficit as an increase of the positive balance of services was set-off by a decrease of the positive surplus of current transfers and a rise of income balance deficit.
According to the data of the Department of Statistics under the Government of the Republic of Lithuania, export of goods shrank by 1.5 per cent and import of goods decreased by 4.6 per cent in October, compared to September. In January - October 2006, compared to the same period of 2005, export and import of goods increased by 23.1 per cent and 26 per cent, respectively (in January - September the growth rate of these indicators stood at 25.5% and 28%, respectively).
The growth of the export of goods over the ten months of 2006, was mainly driven by an increase of the export of oil products (21.7 %), vehicles (62.9 %), plastics and articles thereof (71.4 %). Import mostly rose as a result of an increase in import of crude oil and gas (22.2 %), vehicles (48.4 %), electrical machinery and equipment, television video and sound recorders and reproducers and parts thereof (30.1 %).
In January - October 2006, 62.4 per cent of the total export of Lithuanian goods were attributed to the export to the EU Member States, and import from these countries made up 60.9 per cent. Export to the CIS countries amounted to 20.6 per cent and import from them comprised 29.6 per cent. In October, compared with September, import of mineral products (mainly crude oil) dropped by more than a half of million litas, thus driving the ten months deficit of foreign trade with the CIS countries down by LTL 102 million, compared to the trade deficit with the EU Member States. However, lower import of mineral products diminished their export as well.
In October 2006, compared to September, export and import of services grew by 11.7 per cent and 9.6 per cent, respectively. Therefore, the October positive surplus of the services balance grew by LTL 29.7 million and made up LTL 185.4 million. In January - October, export of services increased by 10.5 per cent, and import of services rose by 20.3 per cent, thus the total positive surplus of the balance dropped by LTL 208.5 million.
In October 2006, payments to non-residents (on their investment in Lithuania) made up LTL 248.7 million (LTL 224.9 million in September 2006), and income of domestic economic entities on investment abroad amounted to LTL 78.2 million (LTL 68.9 million in September).
With the rise of payments, the deficit of the balance of investment income increased by LTL 14.5 million. Including a higher positive balance of compensation of employees, the total income balance deficit in October 2006 increased by LTL 8 million, compared to September 2006, and made up LTL 98.2 million. In January - October, the total income balance deficit made up LTL 1.99 billion (LTL 1.55 billion over the same period 2005).
In October 2006, the surplus of the balance of current transfers amounted to LTL 98.1 million (LTL 126.9 million in September). In October, transfers from EU support funds amounted to LTL 43.1 million (down by LTL 51.2 million compared to September). Over the ten months of 2006, these transfers comprised LTL 1.2 billion (LTL 175.3 million more than during the same period in 2005). In October, foreign transfers by individuals made up LTL 108.7 million (they increased by LTL 22.7 million, compared to September), and in January-October these transfers accounted for LTL 803.6 million (LTL 663.5 million in January - October 2005). Over the ten months of 2006, transfers by legal entities contracted by LTL 181.9 million. Therefore, the total surplus of the balance of current transfers in January - October 2006 went up by LTL 60.5 million and made up LTL 1.55 billion (LTL 1.49 billion during the same period of 2005).
Capital and Financial Account Balance. In October 2006, excluding official reserve assets, the flow of investment abroad by domestic economic entities amounted to LTL 154.3 million, and the flow of foreign investment in Lithuania made up LTL 1.28 billion. The net flow of total investment in October (given flows of investment abroad and from abroad) reflected capital inflows - a total of LTL 1.12 billion. During January - October of 2006, total net capital inflows reached the figure of LTL 7.64 billion, of which 95.9 per cent accounted for net inflows of other investment (mainly driven by inflows in monetary financial institutions). In October, capital transfers from EU support funds made up LTL 50.9 million, and in January - October amounted to LTL 620.2 million (LTL 562.9 million over the same period of 2005).
In October 2006, foreign direct investment flow in Lithuania made up LTL 195.8 million, in January - October this flow accounted for LTL 2.5 billion, and compared to the same period last year, increased by LTL 237.1 million. Given foreign direct investment by domestic economic entities, net foreign direct investment flow in Lithuania made up LTL 129.1 million in October, and in January - October this flow accounted for LTL 1.57 billion. Net foreign direct investment was used to finance 22.7 per cent of the CAD.
In October 2006, net portfolio investment flow made up LTL -70.6 million, i.e., reflecting an increase in the foreign assets of this investment. Over the ten months of 2006, net portfolio investment flow amounted to LTL -1.25 billion. The largest portion of this investment abroad flow was attributed to investment of domestic monetary financial institutions.
Net flow of other investment and financial derivatives was positive (LTL 1.07 billion), and in January - October amounted to LTL 7.3 billion, i.e., reflected net inflows.
In October 2006, Lithuania’s official reserve assets increased. The growth of this flow made up LTL 249.5 million in the balance of payments. Official reserve assets were driven up by an increase of currency in circulation and central government deposits with the Bank of Lithuania of LTL 112.9 million and LTL 60.8 million, respectively, as well as by a LTL 34.3 million rise of other monetary financial institution deposits with the Bank of Lithuania. Official reserve assets were also increased by other contributions and Bank of Lithuania external liabilities of LTL 18.6 million and LTL 14.5 million, respectively.
Over the ten months of 2006, the flow of official reserve assets moved these reserves up by LTL 1.19 billion.