Early indicators on the Balance of Payments statement of Malta for the first quarter of 2009 show a deterioration in the current account balance of €156.0 million, from a net deficit of €33.8 million during the March 2008 quarter to one of €189.8 million during the relative quarter of 2009.
Responsible for this worsening was essentially the combined deterioration in the net balances of both the income account as well as the current transfers account of the statement. Indeed, the net negative balance in the income account increased by €158.1 million, from a net deficit of €3.3 million during the March 2008 quarter to one of €161.4 million during the corresponding quarter this year; whereas the net positive balance in the current transfers account shifted adversely by €50.6 million, from a net surplus of €40.6 million during the first quarter of 2008 to a net deficit of €10.0 million during the March quarter this year. Also, the net positive balance in the services account declined by €3.2 million, from a net surplus of €177.6 million during the March 2008 quarter to one of €174.3 million during the relative quarter this year.
The net balance in the income account was affected by the twofold effect of a rise in dividend payments and retained profits that are (ultimately) due to foreign entities having direct ownership in locally operating enterprises; as well as by a fall in earnings from portfolio investment in bonds and notes that resident financial institutions have invested abroad.
On the other hand, the net balance in the current transfers account was influenced by an increase in government transfer payments to foreign entities residing overseas; while the net balance in the services account was characterised by a fall in net earnings in both the travel account and the transport account of the statement.
Notwithstanding the above, the deterioration in the current account balance was favourably mitigated by a contraction in the visible trade gap of €55.9 million, from a net deficit of €248.7 million during the March 2008 quarter to one of €192.8 million during the quarter under review.
As regards the capital and financial account of the statement, the capital account was marked by net inflows of €1.2 million as against net inflows of €3.4 million during the March 2008 quarter; whereas the financial account was characterised by net inflows of €354.1 million as compared to net inflows of €35.9 million during the March quarter in 2008.
The direct investment abroad recorded net outflows of €15.7 million as against net outflows of €50.1 million during the first quarter of 2008; whereas the direct investment in Malta registered net inflows of €256.2 million as opposed to net inflows of €102.9 million during the first quarter of 2008.
The portfolio investment account was shaped by net inflows of €290.2 million as against net outflows of €0.7 million during the March 2008 quarter; whereas the financial derivatives account was characterised by net outflows of €128.6 million as compared to net outflows of €127.2 million during the first three months of 2008. Also, the other investment account recorded net outflows of €38.6 million as against net inflows of €180.5 million during the March quarter in 2008.
During the quarter under review, the reserve assets of the country increased by €9.4 million as opposed to an increase of €69.4 million during the March 2008 quarter.