lv

Press Release of December 29, 2000

 
In the third quarter of 2000, the deficit of the balance-of-payments current account was 63.4 million lats or 5.8% of the GDP (compared to 75.5 million lats or 7.0% of GDP according to the adjusted data for the second quarter of 2000). The decrease in the deficit of the current account over the corresponding period of last year can be attributed to the improved balances of income and services.

 

Year-on-year, the export of goods increased by 11.1%, while imports rose by 9.9%. Exports rose for all major categories of goods. The negative balance of goods, primarily in the category of mineral products, increased by 12.1 million lats as a result of the sharp rise in the import of such products in turn caused by the escalating prices of oil products. The ratio of the negative balance of goods to GDP improved slightly.

In the third quarter of 2000, the positive balance of services reached 66.2 million lats and covered 39.5% of the negative balance of goods. Year-on-year, the increase, caused by the improved transport and other service balances, amounted to 13.8 million lats. The positive balance of transport services grew by 4.5 million lats. The negative balance of travel increased by 7.9 million lats due to the increase in expenditure by Latvian residents abroad. The balance of other services improved by 17.1 million lats becoming positive, primarily as a result of the increase in the amount of communication and financial services provided.

In the third quarter of 2000, the balance of income became positive reaching 21.8 million lats. It was attributable to both the increase in income received by Latvian residents from abroad and the low non-residents' income from direct investments. The income received from abroad reached 36.2 million lats, while the non-residents' income in Latvia amounted to 14.3 million lats, with investments in Latvian credit institutions prevalent.

The positive balance of current transfers reached 16.0 million lats and covered 9.6% of the negative balance of goods.

In the third quarter of 2000, the positive balance of capital and financial accounts amounted to 65.4 million lats and covered the deficit of the current account.

In the third quarter of 2000, non-residents' direct investments in Latvian businesses increased by 51.2 million lats and mostly took the form of investment in financial intermediation, real estate transactions and manufacturing.

In the third quarter of 2000, residents continued to increase their investments in foreign securities, and, as a result, the negative balance of the portfolio investment account reached 31.3 million lats. Latvian residents increased their investments in foreign debt securities. The inflow of short-term foreign capital in the form of portfolio investments in Latvia remained slight.

Latvian residents increased their investments abroad by 36.1 million lats in the form of other investment, while other investment by non-residents in Latvia rose by 83.6 million lats. During this period, the non-residents' deposits attracted in Latvian banks rose by 79.0 million lats and other liabilities – by 31.7 million lats, primarily due to the growing amount of funds under their management. At the same time, the long-term funds attracted from foreign credit institutions diminished due to credit repayment (by 27.2 million lats). The Latvian credit institutions increased their deposits with foreign banks by 70.1 million lats, mainly in the form of demand deposits. The Latvian credit institutions invested part of the attracted funds in non-residents' securities, thus ensuring an appropriate term and currency structure of assets and liabilities.

The enterprise sector increased its foreign liabilities, in the form of other investments, by 8.8 million lats and decreased its foreign assets by 4.0 million lats. The principal transactions were related to trade credits.

Overall, in the third quarter of 2000, the volume of foreign currency inflow was more than sufficient to cover the transactions on the current account, resulting in a positive balance of payments. Reserve assets increased by 2.3 million lats, and the Bank of Latvia repaid the IMF loan.


Latvia's balance of payments 
3rd quarter of 2000

(in thousands of lats)                                                                                                           

 

2000

 

1st quarter*

2nd quarter*

3rd quarter

CURRENT ACCOUNT

-36 304

-75 533

-63 425

  Goods

-111 605

-157 936

-167 548

    Credit (export)

296 341

316 229

311 235

    Debit (import)

-407 946

-474 165

-478 783

  Services

76 950

76 172

66 229

    Credit (export)

174 087

188 236

190 725

    Debit (import)

-97 137

-112 064

-124 496

  Income

-13 121

-6 508

21 849

    Credit

23 900

33 816

36 185

    Debit

-37 021

-40 324

-14 335

  Current transfers

11 471

12 740

16 044

    Credit

26 510

25 182

34 842

    Debit

-15 038

-12 442

-18 798

CAPITAL ACCOUNT

3 000

4 826

2 866

    Credit

3 563

5 094

3 454

    Debit

-563

-268

-588

FINANCIAL ACCOUNT

31 687

62 317

62 577

  Direct investment

49 632

52 625

48 620

    Abroad

-2 126

-2 341

-2 589

    In Latvia

51 758

54 966

51 209

  Portfolio investment

-61 565

1 640

-31 323

    Assets (investment in foreign securities)

-70 964

-2788

-38243

      Equity securities

-3 210

-1 036

-4 923

      Debt securities

-67 754

-1 751

-33 321

          Bonds and promissory notes

-79 681

-16 314

-33 482

          Money market instruments

11 922

14 946

-271

          Financial derivatives

5

-384

433

    Liabilities (foreign investment in Latvian securities)

9 399

4 428

6 921

      Equity securities

2 588

4 349

-3 185

      Debt securities

6 811

79

10 105

          Bonds and promissory notes

6 843

2 416

11 290

          Money market instruments

14

-2 329

-1 085

          Financial derivatives

-46

-8

-100

  Other investment

56 796

-3 751

47 579

    Assets (Latvia's loans to foreign countries etc.)

-50 272

-87 171

-36 064

    Monetary authorities

13 334

1 473

824

      General government

-619

356

-578

      Banks

-65 166

-91 728

-40 291

      Other sectors

2 179

2 728

3 981

    Liabilities (foreign loans to Latvia etc.)

107 068

83 419

83 643

      Monetary authorities

-2 269

-1 637

-2 287

      General government

-351

-567

-6 368

      Banks

100 868

56 695

83 523

      Other sectors

8 819

28 929

8 775

RESERVE ASSETS

-13 176

11 803

-2 299

Net errors and omissions

1 617

8 390

-2 018

* Data have been revised.