Narrow money (M1) expanded by Lm6.8 million, or 0.4 per cent, in April, mainly as a result of a rise in currency in circulation. Deposits withdrawable on demand also moved higher, reflecting an increase in household deposits, which reversed most of the previous month’s drop. Despite these developments, the annual growth rate of M1 extended its downward trend, falling to 0.9 per cent from 2.7 per cent in March.

Intermediate money (M2) rose by Lm2.9 million, or 0.1 per cent, in April, as the increase in M1 was partly offset by a contraction in deposits with an agreed maturity of up to two years. These fell by Lm4 million, or 0.3 per cent, during the month and by 1.3 per cent a year earlier.

Turning to the counterparts of M3, domestic credit fell by Lm9.6 million, or 0.3 per cent, in April, while its annual rate of growth eased to 4.2 per cent from 4.4 per cent in March. Whereas net claims on central government rose slightly, claims on other residents fell by Lm10.4 million, mainly as a result of a drop in loans and advances, which had been growing steadily in previous months. In particular, credit to private non-financial companies fell by Lm6 million or 0.3 per cent. A reduction in loans to a number of sectors, particularly real estate, renting and business activities, outweighed further borrowing by the construction sector and households.

The net foreign assets of the banking system expanded by Lm16.3 million, or 1.2 per cent, in April, recovering part of the previous month’s drop. In the 12 months to end-April they fell by four per cent, compared with a decrease of 1.6 per cent in the year to March. This drop in the annual growth rate reflected a base effect that took place in the same month of the previous year, namely, the injection of capital into a foreign-owned bank by its parent.

Over the month, the net foreign assets of the Central Bank of Malta declined by Lm11.6 million, or 1.4 per cent, largely as a result of foreign currency sales to the rest of the banking system. In contrast, the net foreign assets of the latter expanded by Lm27.9 million, or 4.9 per cent, owing mostly to foreign exchange purchases by deposit money banks from the Central Bank.

Other counterparts of M3 rose by Lm3.9 million, or 0.3 per cent, in April, mainly as a result of an increase in the banks’ retained earnings.

Further economic and monetary information can be obtained from the website of the Central Bank of Malta www.centralbankmalta.com