Lithuania plans to reduce account deficit

  • 1998-07-23
VILNIUS (BNS) – The board of the Bank of Lithuania approved a joint plan of the government and the central bank July 20 to reduce the deficit in the country's balance of payments.
The plan foresees specific measures influencing export and import as well as steps helping to improve the capital account, the central bank's public relations office said.
One of the main goals is to limit the volume of foreign currency borrowing by companies, the Policy Department director of the Bank of Lithuania, Gitanas Nauseda, told BNS. For this to become possible, the central bank is planning to propose amendments to the laws on foreign currencies and on the corporate profit tax.
If the amendments are passed, all companies except banks will be allowed to take loans in foreign currencies only for international settlements and payments. In addition, a tax would be levied on the interest paid by the country's enterprises to foreigners.
The deficit of Lithuania's current account amounted to 13.5 percent of the Gross Domestic Product in the first quarter of this year and reached 1.241 billion litas ($31 million).
Lithuania's current account deficit stood at 10.3 percent of the GDP (9.9 pct in first quarter) last year and at 9.2 percent in 1996.