Bermuda's balance of payments surplus fell in the fourth quarter of 2004 to $34 million, down from $43 million in the corresponding quarter of 2003.

But the Bermuda Monetary Authority said that for 2004 as a whole the current account surplus is estimated at $172 million, representing a marked improvement over the previous year.

The balance of payments reflects the overall foreign exchange position from the myriad of international transactions that occur between Bermuda and its trading partners in any given period.

Finance Minister Paula Cox said: “I am delighted that the balance of payments surplus has returned to more comfortable levels following the low point in 2002.

"In the recent Budget Statement Government projected that the 2004 surplus was on track to match or exceed the four-quarter running total of $157 million posted at June 30, 2004. The current account surplus of $172 million for 2004 exceeded all expectations.

“I consider that the very positive outcome reflects the underlying strength of our economy generally and in particular, the continued strength of service exports given the very sharp increase of some 16 percent in merchandise imports in 2004.

"The increase in receipts from the international business sector was particularly strong and was recorded at $1.3 billion, an increase of some 12 percent year-over-year.”

The Minster said that, if existing trends continue throughout 2005, she anticipates an equally positive performance for Bermuda's balance of payments this year.

The BMA said that increased levels of imports helped to drive payments in the fourth quarter of 2004 up by $54 million compared to the corresponding quarter in 2003.

A greater contribution by the professional services sector pushed receipts up by $45 million compared to the fourth quarter of 2003.

The capital and financial account, which comprises long term capital investment and financial transfers, ran an estimated net outflow of $24 million in the fourth quarter resulting from net long term investment outflow of $68 million and net short term investment inflow of $44 million, attributable to decreases of $20 million and $24 million in the external holdings of authorised dealers and the BMA respectively.

Over the year as a whole, the BMA said that the account recorded an estimated net outflow of $99 million. Net long-term investment is estimated at $148 million, notwithstanding the exceptional inward investment resulting from that portion of residents' holdings of Bank of Bermuda shares acquired by HSBC Group, which was not reinvested abroad.

There was an estimated net short-term investment inflow of $49 million, comprising decreases in external holdings of authorised dealers and the BMA.