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Balance of Payments 1996 - 1998
Balance of Payments
External Sector performance improved during 1998 as indicated by the relative improvement in the country's overall balance of payments position for the year when compared with the 1997 position. This improvement was due to improved trends in both the unrequited transfer receipts (net) as well as official capital (net) inflows. However, the performance reflected an overall deficit during the year under review, which resulted mainly from lower capital inflows in respect of balance of payments support, the huge drawdown on gross official reserves for debt services and general imports payments.
Current Account
Revised BOP statistics for 1996 and 1997 as well as the 1998 position, indicate consistent improvements in the overall current account balance position though recording deficits of Le138,574mn ($151mn), Le59,049mn ($60mn) and Le51,769mn ($33mn) in 1996, 1997 and 1998 respectively. The improvement in the 1997 position was due mainly to a reduction of over 66 per cent in the trade deficit, while for 1998, it was largely on account of an increase of over 300 per cent in unrequited transfer payments. This offset the widening trade deficit that stemmed from an upsurge in the import bill. During 1998, an increase of more than 200 per cent was recorded in export receipts (at Le49,476mn from Le15,428mn in 1997) which however pitched against a much increased import value of Le138,852mn (US$89mn) and this resulted in a worsened trade deficit position of Le89,376mn (US$57mn) as compared to the preceding year's position of Le55,177mn (US$56mn). The improved performance in the export sector was due to increase in export receipts from the Marine Department. Similarly, the increase in the import bill resulted from the improvement in economic activity and the security situation during the review period.
The Services Sector recorded a net deficit position which widened by Le34,863mn to Le63,383mn (41mn) in 1998. This was due to a higher level of investment income outflows and payments for freight and insurance services.
The over 300 per cent improvement in the net unrequited transfer receipts was due to increases in both the private and official transfers, following the restoration of the democratically elected Government in March 1998.
Capital and Financial Account
The Capital and Financial Account position during 1998 recorded a net outflow of Le71,559mn ($46mn). This level was Le18,420mn lower than that in 1997. This relative improvement was as a result of the more than three and half fold increase in net official capital inflows culminating from the significant increase in long term official loans and grants. This position more than offset the marginal increase in net private capital outflows to Le138,042mn in 1998.
Outflows in the form of debt repayments on government direct and guaranteed loans increased by more than 200 per cent to Le28,946mn during 1998.
Net Assets and Liabilities of the Banking System
Both the assets and liability position of the Central Monetary Institution increased to minus Le30,102mn and Le78,551mn respectively leading to a net position of Le48,449mn but the net assets and liabilities position for the banking system (central bank and commercial banks) amounted to Le37,991mn during the period under review. The increases in both the assets and liabilities positions of the central bank during the review period were largely due to increases in the foreign exchange holdings and other claims and liabilities to IMF respectively.
Financing
The overall deficit of Le123,328mn in 1998 was largely financed by use of Fund credit for balance of payments support as well as drawdown on external reserves.
Balance of Payments
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