The Bermuda Monetary Authority (BMA) forecasts this year income from overseas investments will about equal the amount of money residents invested outside of the Island in the last 12 months.

The balance of payments equalisation is seen as an indication the relaxation of exchange controls is earning foreign currency for Bermuda as investments build up outside the Island.

General Manager Malcolm Williams said he expects investment money going out of Bermuda to add up to about $140 million by the end of 1997, about the same as residents eventually bring back in to the Island from a growing pool.

BMA figures show in the first half of 1997 $81 million left the country as portfolio investments while $60 million in income returned. In 1996 $141 million went out while $131 million was earned for a net balance of payments loss of $10 million.

In 1995 $100 million went out while $117 million came in for a net balance of payments gain of $17 million. In 1994 $62 million went out while $77 million came in for a net balance of payments gain of $15 million.

Over the past two years when the foreign exchange controls were relaxed Mr.

Williams said the BMA had not rejected any request to take any amount outside of the Island for investment purposes. Requests have been made to take up to $4 million out of the country, and the BMA has always approved them.

Sometimes the BMA will request applicants to spread their withdrawals over a few months so their foreign exchange withdrawals will not adversely affect deposit companies or draw heavily on Bermuda's foreign exchange reserves all at once.

The policy to relax the controls was made because of Bermuda's strong balance of payments, and strong economy Mr. Williams said. Over time there will be less money going out to be invested while the money outside will continue to earn income, some of which will be brought back into Bermuda, he said.

In another move the BMA is allowing banks and deposit companies to approve up to $500,000 per person in foreign exchange withdrawals without the applicant having to get approval from the BMA. Previously applicants had to apply to the BMA through the banks and deposit companies to withdraw more than $25,000 per person per year.

Mr. Williams stressed the change, which will take effect January 1, 1998, was an "administrative liberalisation''. For the past two years the BMA's policy has been to allow residents to take out as much as they wanted for investment overseas, usually for retirement or education planning.

"This is not an underlying change. It will streamline foreign exchange control.'' For statistics purposes the banks and deposit companies will still have to report the aggregate foreign exchange amounts approved at the end of every day. Mr. Williams said the BMA was also monitoring the effect the open policy was having on investment in companies on the Bermuda Stock Exchange.

Some have thought increasing investments abroad would take money out of the local stock market.

Malcolm Williams