October-December 2006

Early indicators on the international economic and financial transactions of Malta during the last quarter of 2006 show an improvement in the current account balance of Lm37.8 million, from a net deficit of Lm81.6 million during the December 2005 quarter to one of Lm43.8 million during the corresponding quarter this year, the National Statistics Office said yesterday.

Contributing towards this amelioration in the balance of payments statement was essentially a contraction in the visible trade gap of Lm41.5 million as well as an improvement in the net balance of the income account of Lm21.6 million.

Indeed, net balance in the goods account was affected by the dual impact of a rise in export earnings of Lm28.1 million and a fall in import outlays of Lm13.4 million. The net balance in the income account was primarily influenced by a rise in interest earnings coming from investments in bonds, deposit assets and loans to non-resident entities by financial institutions operating in Malta that were higher than the interest payments incurred by the same institutions on loans and deposits due to entities residing abroad.

Conversely, the net balance in the current transfers account fell by Lm18.5 million, from a net surplus of Lm35.3 million during the December 2005 quarter to one of Lm16.8 million during the quarter under consideration, while that in the services account fell by Lm6.9 million, from a net surplus of Lm11.5 million during the last quarter of 2005 to one of Lm4.7 million during the relative period in 2006.

Indeed, the net balance in the services account was particularly affected by the twofold effect of a rise in outlays by Maltese residents travelling abroad of Lm8.6 million as well as a fall in revenue coming from tourists visiting the Maltese islands of Lm2.0 million.

As regards the capital and financial account of the statement, the capital account was marked by net inflows of Lm27.6 million as against net inflows of Lm23.7 million during the December quarter last year, while the financial account was shaped by net inflows of Lm67.7 million as opposed to net outflows of Lm2.7 million during the fourth quarter of 2005.

The direct investment account was marked by net inflows of Lm94.3 million as against net inflows of Lm42.8 million during the last quarter of 2005. In fact, the direct investment in Malta was shaped by net inflows of Lm94.3 million as opposed to net inflows of Lm42.2 million during the December 2005 quarter.

As a result of the above shifts in the statement, the reserve assets of the country fell by Lm18.9 million as against an increase of Lm36.3 million during the corresponding quarter in 2005.

January-December 2006

Provisional estimates on the balance of payments statement of Malta during 2006 reveal an improvement in the current account balance of Lm31.3 million, from a net deficit of Lm164.5 million during 2005 to one of Lm133.2 million during 2006.

Generating this outcome was essentially an improvement in the net balances of the current transfers account and the income account, of Lm61.3 million and Lm22.5 million respectively, that collectively outweighed the deterioration recorded in the net balances of the services and goods account of Lm27.2 million and Lm25.2 million respectively.

In the capital and financial account of the statement, the capital account was marked by net inflows of Lm64.8 million as against net inflows of Lm66.8 million during 2005, whereas the financial account was shaped by net inflows of Lm127.7 million as opposed to net inflows of Lm96.9 million during 2005.

As a result of the above shifts, the reserve assets of the country rose by Lm35.7 million as against an increase of Lm80.6 million during 2005.