OREANDA-NEWS. January 19, 2009. Current Account Balance. In November 2008, the balance of payments current account deficit (CAD) made up LTL 638.8 million. Compared to October, it went down by LTL 87.5 million or 12.1 per cent, and, compared to November 2007, it contracted by LTL 911.4 million or almost 2.4 times. It was determined by a lower foreign trade deficit, reported the press-centre of Bank of Lithuania.

In November 2008, according to the data of the Department of Statistics under the Government of the Republic of Lithuania, export and import of goods shrunk by 12.8%, compared to October, whereas, export grew by 17.2 per cent and import declined by 7.2 per cent year on year. In January-November 2008, compared to January-November 2007, export and import of goods grew respectively by 31.3 per cent and 19.3 per cent (excluding mineral products, export and import grew respectively by 13 per cent and 0.4 per cent).

The largest contribution to the export growth in January-November 2008 was made by an increase in the exports of processed oil lubricants and lubricants received from bitumen minerals (2.7 times), fertilisers (82.7%), and grain (2.2 times). Import growth was driven by an increase in the imports of crude oil and natural gas (2.6 times), natural calcium phosphates and unprocessed sulphur (3.7 times), railway locomotives, carriages and railcars and their parts (3.4 times), and fertilizers (2 times).

In January-November 2008, export of Lithuanian goods to the EU Member States accounted for 60.4 percent of total export of goods, while import from these countries made up 56.9 percent of total import of goods. The export of the CIS countries made up 25.4 per cent of total export, whereas their import of goods comprised 34.5 per cent.

In January-November 2008, the main Lithuania’s export partners were Russia (15.8 %), Latvia (11.6 %), Germany (7.2 %), and Poland (5.8 %), while the main import partners were Russia (30.5 %), Germany (11.7 %), Poland (10.1 %), and Latvia (5.2 %).

The export of services declined by 7 per cent and the import of services went down by 7.5 per cent in November 2008, compared to October (compared to November 2007, the export of services declined by 12.5 per cent and the import of services went down by 5.1 per cent). In January-November 2008, the export of services increased by 5 per cent, and the import of services went up by 18.5 per cent, compared to the respective period of 2007. The total positive surplus of the balance of services for this period declined by LTL 970.3 million.

Payments to non-residents (on their investment in Lithuania) made up LTL 402.5 million in November 2008, while the income of domestic economic entities on their investment abroad made up LTL 171.1 million. The investment income balance deficit was LTL 231.4 million in November. The total deficit of the income balance, considering the positive balance of compensation of employees, made up LTL 217 million in November 2008 (LTL 150.5 million in October 2008). In January-November 2008, the total income balance deficit made up LTL 4.1 billion and was 8.4 per cent higher than that of the respective period of 2007.

In November 2008, the surplus of the balance of current transfers amounted to LTL 167.8 million (LTL 70.3 million in October 2008). The total surplus of the balance of current transfers for the period from January to November 2008 made up LTL 2.3 billion (LTL 2.6 billion in the respective period of 2007).

In January-November 2008, the transfers from the EU support funds declined by 16.1 per cent, whereas remittances by individuals went up by 2.3 percent, compared to the respective period of 2007. Transfers from the EU support funds accounted for 31.8 per cent and remittances by individuals made up 52.2% of total current transfers. Lithuania’s contributions to the EU budget went up by 24.1 per cent and remittances by individuals from Lithuania grew by 5.6 per cent during the review period.

Capital and financial account balance. In November 2008, the investment flow abroad by domestic economic entities, excluding official reserve assets, recorded an increase in foreign assets and stood at LTL 66.9 million, whereas the foreign investment flow in Lithuania recorded a decline in liabilities and made up LTL -1.19 billion.

Therefore, the total net investment flow (both outward and inward investment) was negative and made up LTL -1.26 billion. In January-November 2008, the total investment flow abroad amounted to LTL 2.64 billion, while the foreign investment flow in Lithuania made up LTL 11.61 billion. Compared to January-November 2007, the total investment flow abroad by domestic economic entities declined by LTL 2.71 billion (2 times), while the total foreign investment flow in Lithuania (inflows) went down by LTL 8.28 billion (41.6 per cent).

The net flow of non-repayable capital transfers made up LTL 112.4 million in November and LTL 1.85 billion in January-November 2008 (LTL 1.66 billion in January-November 2007).

In November 2008, foreign direct investment flow in Lithuania (inflows) amounted to LTL 91.5 million. Taking into account foreign direct investment by domestic economic entities (their flow made up LTL 47.3 million), the net foreign direct investment flow was positive in November at only LTL 44.1 million.

In January-November 2008, the foreign direct investment flow in Lithuania amounted to LTL 3.54 billion, a decrease of 20.7%, compared to the respective period of 2007. The net foreign direct investment flow amounted to LTL 2.44 billion in January-November 2008. In January-November 2008, foreign direct investment was used to finance 17.9 per cent of the CAD, whereas foreign direct investment together with the non-repayable capital transfers covered 31.5 per cent of the CAD.

In November 2008, net portfolio investment flow was positive (recorded total inflows of this investment) and made up LTL 85.6 million. In January-November 2008, the positive net flow of this investment made up LTL 150.8 million (the net flow of this investment was negative in January-November 2007 and stood at LTL -444.2 million).

The net flow of other investment and financial derivatives was negative in November 2008 and made up LTL -1.39 billion. It was determined by the decline in the liabilities of other sectors and monetary financial institutions and the increase of the short-term foreign assets of monetary financial institutions. In January-November 2008, the net flow of this investment was positive, i.e. it showed capital inflows, which made up LTL 6.4 billion. However, compared to January-November 2007, the positive net flow of other investment declined by LTL 5.2 billion.

At the end of November 2008, official reserve assets made up LTL 14.8 billion (EUR 4.3 billion). In November, they decreased by LTL 1.8 billion, i.e. by 10.6 per cent.

Official reserve assets declined due to a decrease in deposits of other MFIs and central government with the Bank of Lithuania respectively by LTL 1,140.4 million and LTL 463.1 million. A decrease of LTL 123.3 million in currency in circulation and a drop of LTL 54.2 million in external liabilities of the Bank of Lithuanian contributed to the decline in official reserve assets too. The decrease in official reserve assets was slightly offset by other factors that increased by LTL 28.8 million.