OREANDA-NEWS. July 18, 2008. Current account balance. In May 2008, the deficit in the current account of the country’s balance of payments was LTL 1,.15 billion, showing a slump of 4.6 percent compared to April, reported the press-centre of Bank of Lithuania.

A decrease in the deficit on foreign trade balance and in the surpluses on the balances of services and current transfers contributed to the decrease of CAD. CAD was pushed up by a 68.2 percent growth in the income balance deficit (because of the dividend pay out announcements in the Lithuanian enterprises).

In January-May 2008, CAD amounted to LTL 6.6 billion and was 13.9 percent above the figure for the corresponding period in 2007.

As reported by the Statistics Department under the Government of the Lithuanian Republic, in May 2008 compared to April the same year, export and import of goods decreased 7 percent and 8.5 percent, respectively. In May, the year-on-year export and import of goods went up respectively by 25.6 percent and 10.2 percent.

In January-May 2008, export and import of goods respectively made up 33.1 and 24.9 percent. In January-May 2008, export of goods to the EU Member States accounted for 61.7 percent of the Lithuanian export of goods, and import of goods accounted for 58.9 percent. The growing turnover with the CIS countries added to increase in the share of these countries in the gross foreign trade. It accounted for 23.4 percent of the country's total export of goods, and import of goods from these countries made up 33 percent.

In January-May 2008, the main Lithuania’s export partners were Russia (15.2 %), Latvia (11.3 %), Germany (7.7 %), and Denmark (5.6 %), while the main import partners were Russia (29.2 %), Germany (12 %), Poland (9.8 %), and Latvia (5.3 %).

The growth of the export of goods during this period was mainly driven by an increase in the export of mineral products (2.3 times), fertilisers (91.8 %), and grain (10.4 times). The growth of import was driven by an increase in import of mineral products (2 times), ground vehicles (5.6 %) and mechanical equipment (6.7 %).

In May 2008 compared to April, export of services increased by 4.8 percent, while import of services went down by 1.6 percent; consequently, in May the total surplus of the positive balance of services increased by LTL 51.1 million or 35.8 percent. In May, increase in the surplus on gross service balance was fuelled by a drop in negative travel balance by LTL 44.7 million. In January-May 2008, compared to the same period in 2007, export of services increased by 7.3 percent and import of services grew by 10.1 percent, while total surplus of positive balance of services went down by 4.6 percent.

In May 2008, payments to non-residents (on their investment in Lithuania) made up LTL 637.9 million, while the income of domestic economic entities from investment abroad made up LTL 130.9 million. In May, the deficit on the balance of investment income formed LTL 507 million, an increase of 64.5 percent month on month. In May 2008, the balance of compensation of employees was positive (+) and gross deficit of income balance made up LTL 465 million (in April 2008 it equalled to LTL 276.4 million). In January-May 2008, gross income balance deficit was LTL 1.7 billion, an increase of 5.1 percent year on year.

In May 2008, the surplus on the balance of current transfers amounted to LTL 154.8 million (in April 2008, it equalled to LTL 120.3 million). In January-May, the surplus on current transfer balance was nearly the same as the balance for a respective period in 2007 amounting to LTL 1 billion.

In the first five months of 2008, the year-on-year increase in transfers from the EU support funds was 20.6 percent, while remittances by individuals went up by 3.2 percent. During the period under comparison, the Lithuanian contributions to the EU budget increased by 40.4 percent, while remittances of private individuals from Lithuania went up by 16.7 percent.

Capital and financial account balance. In May 2008, gross investments outflow by domestic economic entities, excluding official reserve assets, contracted by LTL 197.4 million, while gross inflow of foreign investments in Lithuania was LTL 553.6 million; eventually the net flow of total investments (taking into account investment flows/inflows) was positive at LTL 751 million.

In January-May, gross outflow of investments equalled to LTL 982.8 million, while gross inflow of foreign investments in Lithuania made up LTL 2.9 billion. Year on years gross outflow by country’s economic agents went down by LTL 500 million, a slump of 33.7 percent, while gross foreign investment inflow (revenues) decreased by LTL 2.4 billion or 38.4 percent.

In May, non-repayable capital transfers made up LTL 30 million (LTL 1.1 billion in January-May 2008); in the corresponding period a year ago they amounted to LTL 494.8 million.

In May 2008, foreign direct investment inflow (revenues) in Lithuania reached LTL 175.9 million. Taking into account foreign direct investment outflow by domestic economic entities, net foreign direct investment flow made up LTL 120.7 million in May, a month-on-month decrease of LTL 104.4 million.

In January-May 2008, foreign direct investment inflow in Lithuania was LTL 1.2 billion litas, a decrease of 35.4 percent year on year. In January-May this year, foreign direct investment was used to finance 17.9 percent of CAD, while the share of CAD financing by foreign direct investment together with non-repayable capital transfers made up 35.2 percent (respectively 31.5 and 42.7 percent in corresponding period in 2007).

In May 2008, net flow of portfolio investment was positive (+) at LTL 78.3 billion, while in January-May 2008 the flow was negative (-) at LTL 668.3 million as a result of an increase in portfolio investment outflow and a decrease in liabilities to non-residents.

In March 2008, the net flow of other investments and financial derivatives was positive (+) at LTL 552 million, showing foreign capital inflow in Lithuania. In January-March 2008, the net flow of this type of investments was also positive (+) and reached LTL 2.9 billion. However, compared to January-May 2007, net flow of other investments decreased by LTL 1.8 billion. A decrease of the flow of these investments in MFIs was the major reason behind a drop of this type of investments.

At the end of May 2008, official reserve assets made up LTL 15.2 billion; they went down by LTL 1 billion or 3.8 percent over the month.

The decrease in reserve assets was driven by decrease of the central government and other MFIs’ deposits with the Bank of Lithuania respectively by LTL 453.2 million and LTL 401.6 million. Official reserve assets were also pushed down by a decline in currency in circulation and other factors of LTL 208.7 million and LTL 45.7 million, respectively.