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Balance of payments rises as imports fall in fourth quarter

The collapse in tourism arrivals as a result of the Covid-19 pandemic affected Bermuda’s balance of payments in the fourth quarter. (File photograph by Akil Simons)

Bermuda’s trade surplus rose by $20 million to $248 million in the fourth quarter of 2020, but imports of goods and services dropped compared to the same October to December period in 2019.

The current account surplus was the highest it has been since 2016 when it was $273 million.

The effect of economic turmoil from the Covid-19 pandemic saw goods and services imports fall by $81 million to $447 million year-over-year as goods imported dropped by $14 million and services plunged by $67 million, mainly due to declines in travel and transport.

Exports of goods and services also fell, with tourism income receipts plummeting $90 million from $117 million to $27 million, a report from the Department of Statistics today showed.

Wayne Furbert, the cabinet office minister, said the balance on the travel account during the fourth quarter recorded a deficit of $19 million compared to a surplus of $47 million a year ago mostly due to fewer visitors and lower expenditure.

Mr Furbert added: “Transactions related to trade in goods resulted in a smaller deficit on the goods account, decreasing by $12 million to $250 million.

“The decrease in the value of imported goods was reflected primarily in the imports of fuels which fell by $11 million. Imports of finished equipment dropped $5 million while transport equipment and machinery fell by $2 million each.

“Revenue from the exports of goods also decreased by $2 million during the fourth quarter with less fuel re-exported to foreign airlines visiting Bermuda.”

The primary income account surplus increased by $45 million year-over-year to $467 million. The primary income account reflects balances on compensation paid to non-residents, and income from investments and payroll tax paid by non-resident companies to the government.

The increase primarily reflected increases in employee compensation and net investment income of $21 million and $22 million respectively.

Bermuda’s net international investment position increased to $4.66 billion, reflecting the amount that the stock of foreign assets held by Bermuda residents registered above its stock of foreign liabilities. The net IIP increased by $1.85 billion over the third quarter of 2020.

Mr Furbert said: “Two of the four institutional sectors recorded positive balances on their net international investment positions at the end of the fourth quarter. Specifically, financial corporations recorded a balance of $6.83 billion and non-profit institutions recorded a balance of $28 million. In contrast, non-financial corporations recorded a deficit balance of $1.6 billion while the government recorded a deficit balance of $596 million, which narrowed slightly due to a rise in portfolio investment assets.”

The report said foreign assets increased to $16.87 billion. Between the third and fourth quarters of 2020, Bermuda residents’ net acquisition position of financial assets rose $1.26 billion due mostly to increased holdings of currency and deposits.

Foreign liabilities decreased to $12.2 billion. Bermuda residents’ stock of foreign liabilities decreased by $591 million from the third quarter of 2020. The decrease in the liability position reflected mostly a drop in currency and deposits by resident institutions owed to non-residents.

For the year to date, Bermuda’s current account balance was $917 million compared to $824 million in 2019. These balances are subject to revision.

The travel balance swung from a surplus of $338 million to a deficit of $88 million, but the business services balance jumped from $280 million to $410 million.

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Published May 31, 2021 at 7:53 am (Updated May 31, 2021 at 8:41 am)

Balance of payments rises as imports fall in fourth quarter

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