In 2011, Malta’s attractiveness as a target for foreign direct investment (FDI) did not improve much. According to a review of the country’s International Investment Position by the National Statistics Office, FDI in 2011 was just €3m or 2.5 percent higher than in the previous year, reaching €12.5bn.
FDI represents just 28 percent of the money flowing into Malta, which in 2011 grew by 1.2 percent to reach €31.5bn. The bulk of the money flows - €31.5bn or 70 percent - shows up in the statistics as ‘Other Investment’. This increased by only 1.6 percent over the year. Most of the Other Investment consisted of currency and deposits made by banks (almost 92%), but there were also some trade credits (3.0%), and bank loans (2%).
Malta’s assets in 2011 totalled €45.2bn, for a mere 0.7 percent annual increase. Most of our assets (57.4%) consisted of Other Investment, of which bank loans accounted for 91 percent. Another 38 percent of the assets consisted of portfolio investment, mostly bonds and notes held by banks.
The country’s reserve assets totalled just short of €396m, which were down 2 percent on 2010. There were some interesting movements in these over the year. Monetary gold held by the Central Bank almost tripled to €9.6m, whilst Malta’s reserve position with the International Monetary Fund grew by 52 percent to €54.4m. On the other hand Special Drawing Rights issued by the IMF fell by 3 percent to €107.7m whilst foreign currency and deposits also decreased by 12 percent to €224.3m.
It appears that, as the Eurozone crisis evolved and the world economy started slowing down, Malta’s Central Bank sought some shelter in holding more gold, which reched a three-year high. The MCB also reduced its SDR take-up and increased its reserve position with the IMF as the international organization increased its lending to members.
The upshot of the trends in the country’s assets and liabilities was that the net International Investment Position deteriorated by €91m or 20 percent to €368.5m. This IIP is the lowest in three years and is a whopping 54 percent below that of 2009.