The principal changes in the Bank of Latvia's assets and liabilities on the 31 January 2007 balance sheet as compared to 31 December 2006 and the reasons for these changes.

• An increase of 13.9 million lats or 0.5% in foreign assets as a result of an increase in the balance of the government funds in the Bank of Latvia's foreign assets, as well as in the gold price, with the latter contributing to the growing value of the gold reserves of the central bank. The change in the lats equivalent of financial derivatives had a reducing effect.

• A drop of 10.8 million lats or 7.8% in foreign liabilities due to the decrease in the European Commission funds in foreign currency with the Bank of Latvia and the increase in the lats equivalent of financial derivatives.

• A rise of 51.7 million lats or 4.1% in domestic liabilities as a result of a 181.8 million lats increase in the government funds with the Bank of Latvia and 125.7 million lats and 3.5 million lats decrease in the respective balances of the credit institutions' funds and other financial institutions' funds with the Bank of Latvia.

• On the liabilities side of the balance sheet, the amount of lats in circulation was decreased by 26.3 million lats or 2.4% mainly due to the above changes.

• A decrease of 1.0 million lats in the capital and reserves as the revaluation account balance changed due to securities market value and exchange rate fluctuations.

Vilnis Purvins
Head of the Macroeconomic Analysis Division
Monetary Policy Department
Bank of Latvia