The overall balance of payments picture shows a healthy current account surplus of $51 million to the end of the third quarter, in just released figures by the Bermuda Monetary Authority (BMA).

The surplus is comprised of a $20-million deficit in the first quarter, a $30-million surplus in the second quarter and a $41-million surplus in the third quarter.

The BMA said that compared with the 1994 third quarter, tourism arrivals were down 14 percent and earnings down by an estimated $27 million. The further reduction of US base personnel resulted in the other goods, services and income account decreasing by $8 million and transfers by $2 million.

The Bermuda dollar money supply reached its highest level ever to stand at $1.986 billion, representing a 4.6 percent increase during the first nine months of the year.

The foreign currency reserves (the net total of foreign currency held by the country in the banks) at the end of the third quarter was $589 million, some $602 million at the half year mark and $563 million after the first quarter.

The net foreign currency reserves include the deposits of exempt companies (liabilities,) for example, which the banks may put out to a New York bank (assets), hopefully at a profit.

BMA general manager, Mr. Malcolm Williams said the reserves are at a satisfactory level.

He said, "One always has to have a reserve of foreign currency in case exempt companies stopped putting money into a bank, or there was a big international collapse or something like that. You can fall back on that net foreign currency position.

"If there was a problem, you need to figure out what would be needed to be purchased, things like food. A lot of people say the reserves should be at least equal to what it would cost to buy three months of your imported needs.

"In our case, the figure ($589 million) is exceedingly good, because it could buy more than a year's imports.'' Imports over 1994 were valued at $551 million.

The surplus Bermuda dollar profile of combined banks and deposit companies show that total deposits at the end of the quarter were up to $1.88 billion, while total money out on loans, mortgages and advances was $1.52 billion, leaving a deposit surplus of $360 million.

Said Mr. Williams, "That's the picture of the banks and deposit companies' ability to lend, if necessary. It is a good picture. It is growing, one indicator of a growing economy.'' It is an indicator that may back up Mr. Williams' long held assertion that by relaxing exchange controls there need not be a flood of capital leaving the Island.

The Authority's general manager was one of the few who were unconvinced that there would be a flight of local capital, with a controlled relaxation of the rules.

Bermuda dollar deposits at Bermuda banks for the third quarter were up negligibly by 1.3 percent, or $14 million, to $1.087 billion when compared to the same period a year ago.

The BMA pointed out that this increase occurred despite the continuing relaxation of foreign currency capital control.

The supervisor of financial institutions also said that foreign currency deposits at the end of the third quarter, although $83 million higher than the third quarter 1994, are $417 million below the all time high figure of $6.815 billion at the 1994 calendar year end. The combined footings of the banks were unchanged from the half year totals of $8.116 billion.

Foreign currency deposits are generally a product of international business by the banks and exempted companies.

The Bermuda dollar deposit base reflects actual deposits and interest accruing to those deposits. Mr. Williams said there is another element increasingly reflected in that deposit base.

Mr. Williams said, "It also may be increasingly reflecting the movement of foreign currency held by residents outside Bermuda, who are bringing it into Bermuda and converting it into Bermuda dollars, because they can bring it in and take it out as they like.

"You may bring it in to buy a house, a car or to help with your business.

"The 10 percent (foreign currency purchase) tax has been removed, so it is more incentive to bring the money in, when they need no permission to send that money out again.'' The BMA's quarterly notice indicates that total consolidated assets held by Bermuda banks and deposit companies (their all-inclusive global assets) declined 3.9 percent in the first six months of the year and then climbed 1.6 percent or $188 million in the third quarter.

The end of September total consolidated assets figure of $12.148 billion is 2.4 percent or $299 million Continued on page 22 Balance of payments shows surplus -- BMA Continued from page 17 below the end of 1994 record of $12.447 billion.

The fluctuation is not thought to be significant, and could result from volatility created by mutual fund balances. There were a total of 633 collective investment schemes at the end of the review period with a total net asset value of $13.79 billion.

For deposit companies, customer deposits have increased by $25 million or 2.5 percent when compared with the second quarter of 1995, bringing it to $1.006 billion, the highest since the second quarter of 1993.

Deposit companies lent out $27 million more in mortgages and loans. Mortgages and loans remain at 88 percent of customer deposits.

The net long term capital outflows of $24 million, comprised $35 million in gross outflows and about $11 million in inflows, made up of $7 million from the sale of local property and direct investment of $4 million.

The outflows include Government investments of $11 million, the purchase of foreign securities of $9 million, some $6 million in parent debt repayment, $3 million in the purchase of foreign property, together with $2 million each for direct investments, debt repayment to non-residents and other outflows.