OREANDA-NEWS. December 17, 2008. Current Account Balance. In October 2008, the deficit on the Current Account (CAD) of the Balance of Payments made up LTL 726.4 million narrowing by LTL 112.1 million (13.4%) compared to September and by LTL 323.1 million (30.8%) compared to October 2007.   The CAD decrease was largely driven by a decrease in the foreign trade deficit, reported the press-centre of Bank of Lithuania.

In October 2008, according to the data of the Department of Statistics under the Government of the Republic of Lithuania, export and import of goods contracted respectively by 9.3% and 11.7% month on month, but grew by 23.9% and 8.8% year on year. In ten months of 2008, export and import of goods went up respectively by 32.8% and 22.1% year on year (excluding mineral products, the increase of export and import of goods respectively made up 15.1% and 2.8 %).

The increase of export of goods in January-October 2008 was fueled by the growth in export of processed oil lubricants and lubricants received from bitumen minerals (2.5 times), fertilisers (91.1%), and grain (2.4 times). The import growth however was supported by the increase in import of crude oil and natural gas (2.6 times), railway locomotives, carriages and railcars and their parts (4.4 times), and fertilizers (2.3 times).

In January-October 2008,  Lithuanian’s export of goods to the EU Member States accounted for 60.8% of total Lithuanian export of goods, while import from these countries made up 56.9% of total import of goods (throughout January to September they made up 61.1% and 56.5%, respectively). The country’s export to CIS countries accounted for 25.1% of total export, and import of goods accounted for 34.5% of total import (respectively 24.5% and 35% in January-September).

In January-October 2008, Lithuania’s main export partners were Russia (15.6%), Latvia (11.6%), Germany (7.3%), and Estonia (5.8%), while the main import partners were Russia (30.6%), Germany (11.8%), Poland (10.1%), and Latvia (5.2%).

In October 2008, a month-on-month decrease in export of services was 20.3%, while import of services went down by 26.3% (year on year, export of services declined by 1.9% and import of services by 2.3%). In January-October 2008, a year-on-year export of services increased by 5.7%, while import of services jumped by 16.9%. During the reviewed period, gross surplus on the balance of services contracted by LTL 717.4 million.

In October 2008, payments to non-residents for their investments in Lithuania made up LTL 360.3 million, and the income of domestic economic entities on investment abroad made up LTL 163.7 million. In October, the deficit on the investment income balance stood at LTL 196.6 million. Including positive balance of compensation of employees, the same month gross income balance deficit was LTL 150.5 million (LTL 229.9 million in September 2008). In January-October 2008, total income balance deficit made up LTL 3.5 billion, a decrease of 1% compared to the corresponding period in 2007.

In October 2008, the balance of current transfers posted a surplus of LTL 70.3 million (LTL 300.2 million in September 2008). Total surplus on the balance of current transfers for the period from January to October 2008 made up LTL 2.1 billion (LTL 2.5 billion in the corresponding period of 2007).

Compared to the corresponding period of 2007, the January-October 2008 transfers from the EU support funds went down by 12.9%, and remittances by individuals went up by 0.5%. Transfers from the EU support funds accounted for 34.2% of total current transfers, and remittances by individuals accounted for 58.1%. During the reviewed period, Lithuania’s contributions to the EU budget soared by 24.1%, and remittances by individuals from Lithuania hiked by 8.9%.

Capital and financial account balance.  In October 2008, investment outflow by domestic economic entities, excluding official reserve assets, made up LTL 376.7 million reflecting a slump in foreign assets, while investment inflow was LTL 1.8 billion reflecting an increase in liabilities. Consequently, net flow of total investment (investment outflow and inflow included) was positive at LTL 2.2 billion.

In January-October 2008 gross investment outflow amounted to LTL 2.8 billion and gross investment inflow to LTL 12.1 billion. Compared to January-October 2007, gross outflow of domestic economic agents’ investment declined by LTL 1.4 billion or 34.2%, while gross investment inflow decreased by LTL 6.4 billion or 34.4%.

In October, there was no non-repayable capital transfers registered, while in January-October 2008 they amounted to LTL 1.7 billion (LTL 1.4 billion in January-October 2007).

In October 2008, foreign direct investment inflow made up LTL 183 million. Including foreign direct investments by domestic economic entities (LTL 122 million ) net foreign direct investment flow in October was positive and made up LTL 61 million.

In January-October 2008, foreign direct investment inflow amounted to LTL 2.7 billion, a decrease of 35.3% year on year. During the reviewed period, net foreign direct investment flow made up LTL 1.8 billion. In January-October 2008, foreign direct investment was used to finance up to 14.9% of CAD (and 28.5% with non-repayable capital transfers included).

In October 2008, net portfolio investment flow was positive at LTL 1.1 billion showing gross inflow of this type of investment. Meanwhile, in January-October 2008, portfolio investment flow was negative at LTL 65.9 million, a decrease of LTL 607.7 million year on year.

In October 2008, net flow of other investments and financial derivatives was positive at LTL 1 billion. Positive net flow showed that investment inflow exceeded investment outflow. This became possible due to positive net investment flow within MFIs. In January-October 2008, net flow of these investments also was positive showing capital inflow of LTL 7.6 billion. Compared to January-October 2007, positive net flow of other investments however went down by LTL 4.1 billion.

At the end of October 2008, official reserve assets made up LTL 16.6 billion (EUR 4.8 billion). During October, they increased by LTL 981.9 million or 6.3%.

Official reserve assets were pushed up by a hike of currency in circulation and other factors respectively by LTL 618.9 million and LTL 215.5 million. Also, official reserve assets were pushed up by external liabilities of the Bank of Lithuania, and central government and MFI deposits with the Bank of Lithuania respectively by LTL 85 million, and LTL 31.5 million and LTL 30.9 million.