Preliminary data show the CAD amounting to 10.4 per cent of GDP during the nine months of 2006

Current Account Balance. In September 2006, the balance of payments current account deficit (CAD) made up LTL 881.3 million, showing an increase of LTL 16.2 million (1.9%), compared to August. According to preliminary estimates, the CAD made up LTL 2.29 billion (10.6% of the GDP) in Q3 2006, while in the period from January to September it comprised LTL 6.1 billion (10.4% of the GDP) (in the period from January to September 2005 the CAD was LTL 3.5 billion or 6.9% of the GDP). Compared to August 2006, the positive surplus of the balance of services decreased in September by LTL 148.8 million (mostly due to lower revenue from tourism), which determined the increase of the current account deficit. The increase of the CAD in Q3 and over the nine months this year was mostly determined by the higher foreign trade deficit.

According to the data of the Department of Statistics, export of goods went up by 1.5 per cent, while import of goods declined by 1.4 per cent in September, compared to August. From January to September 2006, export of goods increased by 25.5 per cent, while import grew by 28 per cent, compared to the same period of 2005.

The growth of the export of goods over the nine months this year was mainly driven by an increase in the export of oil products (31.7 %), vehicles (62.8 %), plastics and articles thereof (70.2 %). Import mostly rose as a result of an increase in the import of crude oil and gas (31.7 %), vehicles (48.7 %), electrical machinery and equipment, television video and sound recorders and reproducers and parts thereof (31.5 %).

Export to the EU Member States made up 62.4 per cent of the export of goods of Lithuania in January-September, while import from these countries made up 59.8 per cent. Export to the CIS countries made up 20.2 per cent, and import comprised 30.8 per cent. The deficit of foreign trade with the CIS was LTL 1.0 billion higher than the deficit of the trade with the EU countries.

In September 2006, compared to August, export and import of services decreased by 25.1 per cent and 13.9 per cent, respectively. The surplus of the balance of services decreased by LTL 148.8 million in September and amounted to LTL 155.7 million. From January to September export of services increased by 11.6 per cent, import of services grew by 20.8 per cent, and the total surplus of the positive balance declined by almost LTL 135 million.

Payments to non-residents (on their investment in Lithuania) made up LTL 224.9 million in September 2006 (LTL 278.5 million in August 2006), while the income of domestic economic entities on investment abroad made up LTL 68.9 million (LTL 69.8 million in August). As a consequence of a decline of payments to non-residents, the investment income balance deficit decreased by LTL 52.6 million. The total deficit of the income balance, including a higher positive balance of compensation of employees, decreased by LTL 54.1 million to LTL 90.3 million in September 2006, compared to August. For the period from January to September the total deficit of the income balance made up LTL 1.9 billion (LTL 1.5 billion over the same period of 2005).

The surplus of the balance of current transfers stood at LTL 126.9 million in September 2006 (LTL 149.2 million in August). In September, transfers from EU support funds made up LTL 94.3 million (up by LTL 73.5 million, compared to August). Over the nine months of 2006, these transfers made up LTL 1.14 billion (LTL 151.7 million more than during the same period a year ago). Foreign transfers by natural persons amounted to LTL 86 million in September (down by LTL 26.6 million, compared to August), and to LTL 694.9 million from January to September (LTL 577.5 million from January to September 2005). Both in September and over the nine months this year transfers by legal persons declined by more than 50 per cent. Therefore, the total surplus of the balance of current transfers in January-September 2006 went up by LTL 22.2 million only and stood at LTL 1.46 billion (LTL 1.4 billion during the same period of 2005).

Capital and Financial Account Balance. In September 2006, the investment flow abroad by domestic economic entities, excluding official reserve assets, decreased by LTL 992.3 million, and foreign investment in Lithuania rose by LTL 509.9 million. The total net investment flow (both outward and inward investment) showed capital inflows of LTL 1.5 billion in September. Over the nine months of the year, total net capital inflows made up LTL 7.1 billion, of which 88.3 per cent consisted of net other investment inflows (mostly inflows in monetary financial institutions). Capital transfers from EU support funds made up LTL 97.6 million in September 2006, and LTL 568.2 million in January-September (LTL 531.3 million over the same period of 2005).

Foreign direct investment flow in Lithuania amounted to LTL 276.5 million in September 2006. For the period from January to September this investment flow made up LTL 2.3 billion and was higher than the flow in the same period last year by LTL 68.2 million. Taking into account foreign direct investment by domestic economic entities, net foreign direct investment flow made up LTL 211.6 million in September 2006, and LTL 1.45 billion from January to September. Net foreign direct investment was used to finance 23.5 per cent of the CAD.

Net portfolio investment flow made up LTL 125.7 million in September 2006, marking an increase in the foreign assets of this portfolio. Over the nine months of this year net portfolio investment flow made up LTL -1.2 billion. Most of this investment abroad was accounted for by investment by monetary financial institutions.

The net flow of other investment and financial derivatives was positive in September (LTL 1.4 billion), and during the period from January to September amounted to LTL 6.3 billion, showing net inflows. The flow of other investment was positive, determined by an increase of time deposits of non-resident monetary financial institutions in domestic commercial banks.

Official reserves assets increased in September 2006. The flow of this increase in the balance of payments stood at LTL 577.9 million. The increase of official reserves assets was affected by higher central government deposits with the Bank of Lithuania and currency in circulation of LTL 374.8 million and LTL 144.5 million, respectively, in addition to other monetary financial institution deposits with the Bank of Lithuania, which went up by LTL 95.8 million.

The official reserves assets were pushed down by the decline of other factors and Bank of Lithuania external liabilities of LTL 33.4 million and LTL 10.4 million, respectively.

Over the nine months of this year the flow of international reserves increased these reserves by LTL 937.4 million.