Stronger current account balance for third quarter

An updated balance of payments statement detailing the international economic and financial transactions of Malta in the third quarter this year shows an improvement in the current account balance of Lm16.9 million, from a net surplus of Lm12.6 million during the September 2001 quarter, to one of Lm29.5 million during the same period this year, the National Statistics Office said.

Leading towards this favourable shift were essentially an amelioration in the net balances of both the income account as well as the goods account of the statement.

The net surplus in the income account rose by a remarkable Lm13.4 million, from a net positive balance of Lm1.1 million during the third quarter of 2001 to one of Lm14.5 million during the same period this year; while the visible trade gap in the goods account contracted by a substantial Lm12.5 million, from a net negative balance of Lm61.0 million during the September 2001 quarter to one of Lm48.4 million during the corresponding quarter this year.

The NSO said that notwithstanding a significant rise in the dividend payments to non-resident entities overseas, the net balance in the income account was favourably affected by a notable increase in interest earnings received primarily by international financial institutions operating in Malta that outpaced entirely a rise in interest outlays recorded by the same institutions to non-residents abroad; whereas the net balance in the goods account was positively influenced by an increase in total exports that overshadowed completely the rise in merchandise imports recorded during the September quarter under review.

In contrast, however, the net surplus in the services account deteriorated by Lm5.1 million, from a net positive balance of Lm71.9 million during the September 2001 quarter to one of Lm66.8 million during the same quarter this year; while that in the current transfers account dropped by Lm3.9 million, from a net favourable balance of Lm0.6 million during the third quarter of 2001 to a net deficit of Lm3.3 million during the corresponding period this year.

The net balance in the services account was adversely affected by a deterioration in both the transport category as well as the travel category that compose the account.

The NSO said that the net positive balance in the transport account shrank by Lm6.1 million, from a net surplus of Lm11 million during the September 2001 quarter to one of Lm4.9 million during the same quarter this year; while that in the travel account contracted by Lm3.6 million, from a net favourable balance of Lm64.4 million during the third quarter of 2001 to one of Lm60.8 million during the period under review.

On the contrary, however, there was an improvement in the other services account of Lm4.6 million, from a net deficit of Lm3.6 million during the September 2001 quarter to a net surplus of Lm1 million during the same quarter this year.

Impinging on the net balance recorded in the transport account was essentially the combined impact of a decline in revenue derived from foreign passenger transportation as well as a drop in earnings raised from a variety of services related to the transport industry; whereas the net balance in the travel account was affected by a decline in travel receipts that outpaced completely the decline in expenditure recorded by residents travelling overseas.

The NSO explained that in the capital and financial part of the statement, the financial account was characterised by an increase in net outflows of Lm55.8 million, from a net outflow of Lm3.2 million during the September 2001 quarter to one of Lm59 million during the corresponding quarter in 2002.

Direct investment abroad declined by Lm0.3 million, from a net outflow of Lm1.2 million during the September 2001 quarter to one of Lm0.9 million during the same quarter this year; while direct investment in Malta rose by a notable Lm67.4 million, from a net outflow of Lm17.2 million during the third quarter of 2001 to a net inflow of Lm50.2 million during the same quarter this year.

On the other hand, the portfolio investment account was marked by a drop in net outflows of Lm38.2 million, from a net outflow of Lm143.6 million during the September 2001 quarter to one of Lm105.3 million during the same quarter in 2002; whereas the other investment account was characterised by a plunge in net inflows of Lm139.5 million, from a net inflow of Lm203.6 million during the third quarter of 2001 to one of Lm64.1 million during the period under consideration.

The NSO said that in a mirror reflection to the above movements in the current and financial part of the statement, the reserve assets of the country increased by Lm67.1 million as against an increase of Lm44.8 million during the comparable period a year ago.

The NSO also gave provisional statistics on the balance of payments statement of Malta during the first nine months of the year which reveal a slight improvement in the current account balance of Lm3.8 million, from a net deficit of Lm22.7 million during January to September 2001 to one of Lm18.8 million during the corresponding period in 2002.

As a result of the above shifts in the statement, the reserve assets of the country increased by Lm82.5 million, as against an increase of Lm47.3 million recorded during the January to September period a year ago.