Bank of Lithuania
2003-12-29

According to the preliminary data, in Q3 2003, the balance of payments current account balance was negative and made up LTL 812.5 million, LTL 2.33 billion from January to September. Compared to Q3 2002, in Q3 2003 the current account deficit (CAD) widened by LTL 635.3 million and amounted to 5.7 per cent of the GDP. The CAD from January to September 2003 made up 5.8 per cent of the GDP.

CAD and CAD to GDP ratio

 

CAD, LTL million

CAD to GDP ratio, %

2002

-2 670.59

-5.3

Q1

-512.58

-4.6

Q2

-792.41

-6.2

Q3

-177.20

-1.3

9 months

-1 482.19

-4.0

Q4

-1 188.40

-8.9

2003

   

Q1

-448.88

-3.7

Q2

-1 069.62

-7.9

Q3

-812.50

-5.7

9 months

-2331.0

-5.8

While the foreign trade deficit contracted considerably from January to September 2003, as compared to the same period of 2002, the widening of the CAD was brought about by a considerable increase of the negative income balance and a decrease of the positive balance of services.

Development of the current account balance, composite balances, including factors influencing development of the account

 

January - September 2003, LTL million

January - September 2002, LTL million

Change, %

Factors

Current account balance

-2 331.00

-1 482.19

57.3

57.3

Trade balance

-2 902.63

-3 202.49

-9.4

-20.2

Balance of services

1 261.39

1 556.29

-18.9

19.9

Income balance

-1 304.10

-480.65

171.3

55.6

Balance of current transfers

614.34

644.66

- 4.7

2.0

Foreign Trade. According to the preliminary data of the Department of Statistics, in Q3 2003, compared to Q2 2003 and Q3 2002, export of Lithuanian goods increased by respectively 13.4 per cent and 11.2 per cent. From January to September 2003, compared to the same period of 2002, export of Lithuanian goods grew by 8.1 per cent. Import of goods increased by 4.3 per cent only during the period under comparison. Such developments were mostly determined by the increased exports and imports of intermediate and investment goods. From January to September 2003, import and re-export of passenger motor cars declined considerably. Excluding petroleum products, export of goods grew by 7.6 per cent and import of goods went up by 3.3 per cent over nine months of this year.

Development of export and import of main groups of goods and determining factors

January-September 2003, compared to January-September 2002, %
 

Export

Import

 

Change

Impact of factors

Change

Impact of factors

Total goods

8.1

8.1

4.3

4.3

Investment goods

23.0

2.5

12.1

2.2

Intermediate goods

10.5

5.1

6.8

3.7

Consumption goods

7.3

2.0

5.3

0.9

Petrol

6.8

0.4

44.1

0.0

Passenger motor cars

-20.7

-1.5

-16.1

-1.3

Other goods

-76.0

-0.4

-61.7

-1.2

Development factors of export of goods by country unions

(by export flows of goods)

 

January
-
September 2003, compared to January
-
September 2002, %

 

 

Total

EU

CEFTA

EFTA

CIS

Other

Russia

Germany

Latvia

Estonia

USA

Impact on export by country

8.1

-3.6

0.2

12.4

-1.9

1.0

-1.5

0.5

1.5

0.8

0.1

Total export

8.1

-7.4

5.0

423.0

-9.4

4.2

-11.2

4.9

16.8

20.0

3.7

Live animals and animal products

0.4

0.2

0.2

0.6

0.2

1.1

0.6

1.4

-0.4

1.7

8.1

Vegetable products

0.9

0.4

1.1

3.9

1.6

0.8

0.7

0.8

0.5

1.5

0.0

Prepared foodstuffs, beverages and tobacco

0.6

0.4

1.7

1.1

2.5

-0.8

3.8

-0.7

-2.2

0.0

-0.2

Mineral products

1.9

-20.9

-7.8

407.7

-2.9

5.3

-0.1

0.0

11.5

3.8

0.0

Products of chemical industries

0.8

1.7

2.0

-1.1

-0.7

0.2

-1.3

0.9

0.9

1.1

4.9

Plastics and articles thereof

0.2

0.6

2.5

0.2

-0.9

-0.1

-1.3

1.4

0.5

0.2

-2.1

Wood and articles of wood

0.6

1.6

-1.3

1.4

0.2

-0.9

0.2

0.9

0.5

1.6

-4.3

Textiles and textile articles

-0.5

-1.1

1.1

2.9

-0.8

0.4

-1.3

-2.0

-0.4

0.4

3.6

Machinery and mechanical appliances

1.5

2.0

5.5

5.4

0.4

-0.2

1.6

-0.2

1.4

0.7

-0.4

Vehicles

0.2

5.4

-2.2

4.0

-8.3

-3.2

-15.3

3.6

2.7

5.2

-7.4

Other goods

1.4

2.3

2.3

-3.1

-0.6

1.5

1.3

-1.1

1.9

3.9

1.5

Development factors of import of goods by country unions

(by import flows of goods and country of consignment)

 

January
-
September 2003, compared to January
-
September 2002, %

 

 

Total

EU

CEFTA

EFTA

CIS

Other

Russia

Germany

Latvia

Estonia

USA

Impact on import by country

4.3

1.5

1.0

-0.1

1.0

0.8

-0.6

-0.2

0.3

0.5

0.8

Total import

4.3

3.1

11.4

-3.2

4.0

5.9

-2.9

-1.2

7.1

17.7

58.6

Live animals and animal products

0.1

-0.2

0.4

0.2

-0.1

1.4

0.0

-0.1

0.6

3.4

1.7

Vegetable products

0.3

0.1

0.1

0.1

0.9

0.2

1.1

-0.3

-0.4

-1.1

2.7

Prepared foodstuffs, beverages and tobacco

0.2

0.3

0.3

-0.2

0.0

0.5

0.1

0.2

-0.8

1.8

0.0

Mineral products

1.6

0.0

-0.1

-0.1

6.8

-0.2

-5.3

0.1

-0.9

-0.6

0.6

Products of chemical industries

0.3

0.3

-0.4

0.9

0.6

0.2

1.0

0.9

0.1

0.6

-2.0

Plastics and articles thereof

0.3

-0.1

1.4

0.2

0.1

1.6

0.0

0.5

0.7

0.7

5.6

Wood and articles of wood

0.3

0.2

0.9

-1.1

0.2

0.4

-0.1

0.2

0.9

0.7

-0.2

Textiles and textile articles

-0.1

-0.6

0.6

0.6

-0.3

1.2

-0.1

-0.4

-1.1

0.6

0.9

Machinery and mechanical appliances

2.2

2.4

2.8

5.5

0.3

3.7

0.5

3.1

-0.1

3.1

-2.8

Vehicles

-0.1

0.3

-0.4

-8.0

-0.1

0.4

-0.1

-5.9

3.3

4.5

47.9

Other goods

-0.8

0.5

5.8

-1.3

-4.3

-3.5

0.1

0.5

4.8

4.0

4.2

Services. While, compared to Q2 2003, export of services increased by 8.8 per cent during Q3 2003, it declined by 8 per cent in comparison with Q3 2002. Compared to the same period last year, from January to September 2003 export of services declined by 8.9 per cent, while import of services contracted by 2.7 per cent. The total positive balance of services amounted to LTL 428.7 million in Q3 2003 (LTL 597.1 million in Q3 2002) and stood at LTL 1.26 billion from January to September 2003 (LTL 1.56 billion in H1 2002).

This decline was determined by the contraction of exports of travel, construction and transport services. From January to September 2003 transport and travel services accounted for 47.2 and 35.5 per cent of the total export of services, respectively. Over nine months of this year, compared to the same period last year, export of sea transport services declined by 15.7 per cent, railway transport by 5.5 per cent, pipe transport by 8.4 per cent, while export of road transport services grew by 14.1 per cent, and air transport by 4.5 per cent. Compared to January - September 2002, over nine months of 2003 the number of foreigners visiting Lithuania declined by 8.9 per cent, while the number of Lithuanian residents leaving the country by 2 per cent. The positive travel balance made up LTL 367.5 million (LTL 504.9 million in H1 2002).

Income. The negative income balance in Q3 2003 made up LTL 279 million, LTL 1.3 billion from January to September 2003. Compared to the relevant periods of 2002, the negative income balance in Q3 2003 widened by LTL 216.3 million (by a factor of 4.5), and by as much as LTL 823.5 million, or nearly by a factor of 2.7, over nine months. The exceptional characteristic of the income balance in the third quarter of the year was a sharp increase in non-resident reinvestment (which is recorded in the current account of the Balance of Payments as payments to non-residents, and is reflected in the financial account as part of foreign direct investment). Compared to Q3 2002, non-resident reinvestment increased by LTL 197 million (nearly by a factor of 4.3). The increased reinvestment shows that the profitability of foreign direct investment companies has gone up.

The increase of the negative income balance from January to September 2003 was determined by dividends paid to non-residents in the first half of this year for foreign direct investment and the increased reinvestment.

Current transfers. The balance of current transfers was positive from January to September 2003 and stood at LTL 614.3 million, of which LTL 139.6 million in Q3 2003 (LTL 644.7 million from January to September 2002).

Capital and financial account.

The capital and financial account balance in Q3 2003 made up LTL 719.5 million, LTL 1.89 billion from January to September 2003.

Investment abroad. Investment abroad by Lithuanian economic entities went up in Q3 2003 by LTL 631.5 million, and LTL 759.6 million over nine months (respectively, LTL 241.5 million and LTL 140.7 million in 2002). In Q3 2003 loans granted by domestic commercial banks and commercial bank time deposits in foreign banks went up by LTL 176.4 million and balances on correspondent accounts with foreign banks by LTL 212 million. From January to September bank investment abroad went up by LTL 362.4 million. Investment abroad by other Lithuanian economic entities increased in Q3 2003 by LTL 301.4 million, increasing by LTL 397.2 million from January to September 2003.

Foreign Investment in Lithuania. Total foreign investment flows in Q3 2003 were positive (LTL 1.62 billion) and over nine months they made up LTL 3.26 billion. Compared to nine months of 2002, foreign investment flows went up by LTL 1.35 billion. The rise in foreign investment was determined by increased portfolio investment and other investment in Lithuania.

Development of the capital and financial account and composite balances, including factors influencing development of the account

 

January - September 2003, LTL million

January - September 2002, LTL million

Change, %

Factors

Capital and financial account balance (with errors and omissions)

2 331

1 482.19

57.3

57.3

Capital account balance

161.69

169.93

-4.8

-0.6

Direct investment

310.31

1 993.59

-84.4

-113.6

Portfolio investment

739.78

35.43

1988.0

47.5

Financial derivatives

-65.14

-9.67

573.6

-3.7

Other investment

1 510.84

-256.12

-689.9

119.2

Reserve assets

-764.23

-1 154.79

-33.8

26.4

Errors and omissions

437.75

703.82

-37.8

-18.0

Foreign direct investment flows in Q3 2003 were negative and made up LTL 672.7 million (the first case in the accounting practice of foreign direct investment in Lithuania). It was determined by other capital changes of foreign direct investment. In one case, a loan was repaid to a direct investor and in other case, due to changes of shareholders, a loan obtained earlier from a foreign investor was reclassified from foreign direct investment to other foreign investment. Due to large negative flows in the third quarter, foreign direct investment flows in Lithuania from January to September 2003 made up only LTL 405.9 million (LTL 2.02 billion from January to September 2002). Inflows classified as foreign direct investment from privatisation over nine months of 2003 made up only LTL 0.3 million (LTL 187.7 million over nine months of 2002).

On 30 September 2003, accumulated foreign direct investment in Lithuania stood at LTL 13.3 billion (EUR 3.85 billion), or LTL 3,852 (EUR 1,115) per capita.

From January to September 2003 the largest foreign direct investment flows went to telecommunications (LTL 169.9 million), production of wood and wooden articles (LTL 128 million), financial intermediation activities (LTL 118.3 million), electricity, gas and water activities (LTL 116 million) and the real estate operations (LTL 107.7 million).

On 30 September 2003 the processing industry accounted for 30 per cent of total foreign direct investment in Lithuania, retail and wholesale trade for 18.6 per cent, transport, storage and long distance communications for 17.4 per cent and financial intermediation for 15.7 per cent.

The largest investors by country were Denmark (17.4 % per cent of total investment), Sweden (15.5%), Germany (10.2 %), the USA (8.6 %), Finland (8.5 %) and Estonia (7.7 %). EU investors accounted for 63.2 per cent of total investment, EU candidate countries for 12.9 per cent.

Portfolio investment. Portfolio investment flows in Lithuania in Q3 2003 were negative and stood at LTL 65.1 million. However, the placement of the new Government Eurobond issue in Q1 2003 determined the fact that portfolio investment flows in Lithuania from January to September stood at LTL 609.2 million.

Other foreign investment.

Debt to non-residents for goods and services increased in Q3 2003 by LTL 183.4 million and from January to September it stood at LTL 344.6 million. Non-resident deposits in domestic commercial banks amounted to LTL 235 million in Q3 and LTL 385.7 million from January to September.. During the period under review foreign loan flows increased considerably more. Net foreign loan flows in Q3 2003 were positive (more foreign loans were received) and stood at LTL 1.7 billion and LTL 1.45 billion from January to September.. Loans received by commercial banks and loans received by other sectors (due to the above-mentioned loan reclassification from foreign direct investment to other investment) comprised the largest share of these flows.

International reserves. International reserve flows in Q3 2003 were positive (LTL 319.7 million) and from January to September 2003 they amounted to LTL 764.2 million. Operations with central government institutions over nine months of 2003 (mostly inflows from the placement of the Government Eurobond issue) increased international reserves by LTL 335 million and repurchase transactions with non-residents by LTL 274 million. In addition, net purchase of foreign exchange by the Bank of Lithuania from commercial banks was LTL 70.4 million over the period under review due to higher demand for litas.

Errors and omissions in the balance of payments from January to September 2003 made up LTL 437.8 million (from January to September 2002 this item stood at LTL 703.8 million).

International investment position of the Republic of Lithuania. On 30 September 2003, total foreign financial assets of the country made up LTL 15.4 billion, and total international financial liabilities amounted to LTL 33 billion. The negative international investment balance made up LTL 17.6 billion. From January to September 2003, total foreign assets increased by LTL 1.41 billion, international financial liabilities went up by LTL 1.92 billion, and the negative international investment balance went up by LTL 515.5 million. At the end of September 2003 the international financial liabilities of the country were distributed as follows: other investment (42.6 %), foreign direct investment (40.3 %), portfolio investment (17 %) and financial derivatives (0.1 %).