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Wednesday, 25.05.2016, 04:21
World Bank advises Bank of Lithuania to focus on long term investment
However, they also recommended to prolong the investment horizon and to reduce the orientation to the short-term financial results of the Bank of Lithuania, writes LETA/ELTA.
According to the experts of the World Bank, if the direction of the management of foreign reserves does not change, the possibility to gain higher returns on investment will be declining.
The main conclusion of the World Bank is clear. The pursuit of short-term profit which is indicated in annual reports excludes the possibility of earning much more. Therefore it is proposed to extend the investment horizon for several years and do not give the results of bank's annual financial performance such prominence. Although implementing such investment strategy in some years may result in negative returns, but in the long term it would be much higher.
"Lithuanian average annual income from foreign reserve management could increase from 0.2% to 0.4% of Gross Domestic Product," Deputy Chairman of the Chairman of the Bank of Lithuania Board Darius Petrauskas.
Bank of Lithuania will develop new guidelines for the management of foreign reserves following the World Bank's recommendations.