OREANDA-NEWS. April 18, 2008. In February 2008, the deficit in the current account of the country’s balance of payments (CAD) was LTL 807,5 million, showing a slump of 40,7 per cent compared to January, and an decrease of 31,1 per cent compared to February 2007. A decrease in foreign trade deficit by LTL 181,5 million and an increase by LTL 335 million the surplus in the balance of current transfers contributed to the decrease of CAD, reported the press-centre of Bank of Lithuania. 

In January-February 2008, CAD amounted to LTL 2,2 billion, 8,7 percent above the figure for corresponding period in 2007.

According to the data of the Department of Statistics under the Government of the Republic of Lithuania, in February 2007, export of goods increased by 13,3 per cent and import of goods went up by 4,5 per cent month on month, and 46 and 27,2 per cent year on year.

In January-February 2008, annual growth of export and import of goods made up 33,2 per cent and 26,6 per cent, respectively. Export to the EU states accounted for 65 per cent, nearly two thirds of the Lithuanian export of goods, while import accounted for 61,6 per cent. Export to the CIS countries accounted for 22,2 per cent and import from these countries accounted for 29,7 per cent.

The export growth during this period was mainly driven by an increase in the exports of process oil and lubricants received from bitumen minerals (2,5 times), fertilizers (62,6%), and grain (7,3 times). Import mostly rose as a result of an increase in import of crude oil and natural gas (86,3%), ground vehicles (24,4%), electrical machinery and equipment and their spare parts (22,6%).

In January-February 2008, the main Lithuania’s export partners were Russia (14,8%), Latvia (12,8%), Germany (8,5%), and Denmark (6,5%), while the main import partners were Russia (25,9%), Germany (12,6%), Poland (9,8%), and Latvia (5,7%).

In the first two months of 2008, the top positions on the goods export list were occupied by mineral products (22,4%), machinery, mechanical and electrical equipment (11%), output of chemical industries and related industries (8,8%). The largest share of the import of goods during this period was made of mineral products (25%), machinery and mechanical and electrical appliances (15,3%), and vehicles and associated transport equipment (14,6%).

Compared to January 2008, export of services increased by 7,6 per cent, while import of services went down by 0,7 per cent; consequently the total surplus of the positive balance of services increased by LTL 56,6 million or 41 per cent. Year on year, export of services grew by 12,8 per cent, while import of services grew by 18,8 per cent; eventually the total surplus of positive balance of services went down by 1,4 per cent.

In January-February 2008, compared to the same period in 2007, export of services increased by 13,6 per cent and import of services grew by 11,3 per cent, and the total surplus of positive balance of services went up by 22,3 per cent.

In February 2008, payments to non-residents (on their investment in Lithuania) made up LTL 411,7 million, while the income of domestic economic entities on investment abroad made up LTL 150,5 million. In February, the deficit in the balance of investment income formed LTL 261,2 million, a decrease of 5,7 percent month on month and an increase of 29,2 per cent year on year.

In February 2008, the balance of compensation of employees was positive at LTL 2,8 million, while gross deficit of income balance made up LTL 258,5 million (in January 2008 it it was LTL 240,4 million, while in February 2007 it amounted to LTL 169,1 million).

In February 2008, the surplus in the balance of current transfers amounted to LTL 353,1 million (in January 2008, it was LTL 18,1 million, while in February 2007 it amounted to LTL 86,9 million). That significant increase in surplus was determined a boost in transfers from the EU support funds.

In February, transfers from EU support funds went up 7,3 times compared to January 2008 or 2,4 times year on year. At the same time, transfers by individuals grew by 18,1 per cent month on month and by 14,9 per cent year on year.

In the first two months of 2008, the year-on year increase in transfers from the EU support funds was 36.1 percent, and remittances by individuals went up by 14,9 percent.

Capital and financial account balance. In February 2008, the flow of investments abroad by domestic economic entities, excluding official reserve assets, showed a decrease to LTL 174,4 million. The inflow of foreign investments also showed a decrease of investments (LTL -807,8 million); as a result, the net total investment flow (taking into account investment flows/inflows) was negative at LTL -633,5 million.

In February, non-repayable capital transfers made up LTL 149,3 million (LTL 284,9 million in January 2008, and LTL 72,3 million in February 2007).

In February 2008, foreign direct investment inflow in Lithuania reached LTL 243,5 million. Taking into account a decrease of foreign direct investment by domestic economic entities, net foreign direct investment flow made up LTL 191,9 million, a month-on-month increase of LTL 185,1 million. In January-February 2008, foreign direct investment flow in Lithuania was LTL 379,6 million litas, a decrease of 48,3 per cent year on year.

In February 2008, net portfolio investment flow was negative at LTL -336,5 million. This was mostly influenced by a decline in liabilities.

In February 2008, the net flow of other investments and financial derivatives was negative at LTL -488,9 million, a decrease of LTL 1 billion compared to January 2008 and 1,4 billion compared to February 2007. A decrease in the net flow of this type of investments was mainly driven of a decrease in liabilities of the domestic MFIs and the Bank of Lithuania.

At the end of February 2008, official reserve assets made up LTL 16,1 billion (EUR 4,7 billion or USD 7,1 billion). In February, they decreased by LTL 1,8 billion, i.e. 10,2 percent.

The decline of reserve assets was driven by the decrease of central government deposits with the Bank of Lithuania and of external liabilities of the Bank of Lithuania respectively by LTL 985,2 million and LTL 936,7 million. Official reserve assets were also pushed down by a decrease LTL 14,6 million in deposits of other MFIs with the Bank of Lithuania.

Meanwhile, the narrowing of official reserve assets was offset by a rise of LTL 68,8 million in cash in circulation and an increase of LTL 33,3 million in other factors.