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When compared with the third quarter last year, the current account balance of Malta improved by Lm8.6 million (€20.1 million) to a net surplus of Lm20.9 million (€48.7 million). Provisional statistical indicators on the balance of payments statement of Malta for the third quarter of 2007 disclose an improvement in the current account balance of Lm8.6 million, from a net surplus of Lm12.3 million during the September 2006 quarter to one of Lm20.9 million during the same quarter this year.

Contributing towards this amelioration was the combined effect of a contraction in the net deficit of the income account as well as an improvement in the net surplus balance of the current transfers account of the statement. Indeed, as a result of an increase in dividend and interest receipts from abroad, the net negative balance in the income account shrunk by Lm7.0 million, from a net deficit of Lm21.7 million during the third quarter of 2006 to one of Lm14.7 million during the corresponding quarter this year. Also, the net positive balance in the current transfers account increased by Lm3.3 million, from a net surplus of Lm10.0 million during the September 2006 quarter to one of Lm13.3 million in this period of 2007.

On the other hand, however, the current account balance was adversely affected by an expansion of the visible trade gap of Lm2.1 million, from a net deficit of Lm108.1 million during the July to September 2006 period to one of Lm110.2 million during the same quarter this year. In fact, the goods account was characterised by an increase in the imports bill of Lm5.2 million that was stronger than the increase in revenue from merchandise exports of Lm3.1 million.

As regards the capital and financial account of the statement, the capital account recorded net inflows of Lm11.5 million as against net inflows of Lm13.3 million during the third quarter of 2006, whereas the financial account registered net outflows of Lm48.6 million as opposed to net outflows of Lm51.2 million during the same period in 2006.

The direct investment abroad was characterised by net outflows of Lm1.6 million as against net inflows of Lm1.0 million during the September quarter of 2006, while the direct investment in Malta was distinguished by net inflows of Lm131.5 million as opposed to net inflows of Lm83.5 million during the third quarter last year.

Likewise, the portfolio investment account was characterised by net inflows of Lm342.6 million as against net inflows of Lm147.0 million during the July to September period in 2006, whereas the other investment account was shaped by net outflows of Lm509.1 million as opposed to net outflows of Lm238.3 million during the September quarter last year.

As a result of the above shifts in all the accounts making up the statement, the reserve assets of the country rose by Lm31.6 million as against an increase of Lm39.2 million during the third quarter last year.

July - September 2007: Balance of Payments Transactions with the EU and Extra-EU countries In another statement detailing the international transactions that Malta conducted with the European Union during the third quarter of 2007, the current account balance worsened by Lm13.1 million, from a net deficit of Lm47.0 million during the September 2006 period to one of Lm60.2 million during the period under review. Indeed, as can be seen in Table 3, this was generated by an expansion of the visible trade gap as well as a deterioration in the net balances of both the income account and the current transfers account of the statement. Notwithstanding this, however, these adverse shifts were partially mitigated by an improvement in the net positive balance of the services account of the statement.

On the contrary, the current account balance of Malta with the rest of the world trading partners (i.e. excluding the European Union) improved by Lm21.8 million, from a net surplus of Lm59.3 million during the July to September 2006 period to one of Lm81.1 million during the September quarter this year