The National Statistics Office said that leading towards this was essentially an improvement in the net balances of both the income account as well as the goods account of the statement. Indeed, the net balance in the income account improved by Lm10.3 million, from a net surplus of Lm0.6 million during the second quarter of 2003 to one of Lm10.9 million during the same period in 2004; whereas the net balance in the goods account improved by Lm9 million, from a net deficit of Lm75.6 million during the June 2003 quarter to one of Lm66.7 million during the same period this year.

The net balance in the income account was particularly affected by a fall in both dividend payments as well as retained earnings of foreign-owned resident enterprises that more than offset the fall in interest receipts earned from abroad by financial institutions operating in Malta; while the net balance in the goods account was influenced by a decrease in imports of Lm21.8 million that overshadowed completely the decline in export earnings of Lm12.8 million recorded during the period under consideration.

Additionally, the net balance in the services account improved by Lm0.6 million, from a net surplus of Lm50.1 million during the April to June 2003 quarter to one of Lm50.7 million during the relative quarter in 2004.

Indeed, the net balance in the transport account improved by Lm2.4 million, from a net deficit of Lm3.3 million during the second quarter of 2003 to one of Lm1 million during the corresponding quarter in 2004; whereas that in the other services account improved by Lm0.6 million, from a net surplus of Lm1.8 million during the June 2003 quarter to one of Lm2.3 million during the same period this year.

Notwithstanding this, however, the net balance in the travel account worsened by Lm2.4 million, from a net surplus of Lm51.7 million during the second quarter of 2003 to one of Lm49.3 million during the relative period in 2004. Also, the net balance in the current transfers account shifted by Lm8.7 million, from a net surplus of Lm0.3 million during the April to June 2003 quarter to a net deficit of Lm8.4 million during the June quarter this year.

In the capital and financial account of the statement, the capital account was characterised by net inflows of Lm6.5 million as opposed to net inflows of Lm1 million during the second quarter of 2003; while the financial account was marked by net outflows of Lm36.3 million as against net

outflows of Lm7.2 million during the June quarter last year.

Direct investment in Malta increased by Lm24.1 million as against an increase of Lm1.6 million during the second quarter of 2003; whereas direct investment abroad rose by Lm2.1 million as opposed to an increase of Lm1 million during the June quarter last year.

Additionally, the portfolio investment account was marked by net outflows of Lm3.5 million as opposed to net outflows of Lm131 million during the June 2003 quarter; whereas the other investment account was characterised by net outflows of Lm163.1 million as against net inflows of Lm166.5 million during the relative quarter last year.

As a result of the above shifts in the

current and financial accounts of the statement, the reserves assets of the country decreased by Lm27.1 million as opposed to an increase of Lm43.4 million during the June quarter of 2003.