Bermuda's balance of payments surplus surged to $1.26 billion last year, boosted by a nine-percent rise in compensation paid out to international company staff, as well as a 30 percent increase in the travel sector's net contribution.

Finance Minister Paula Cox yesterday said the figures "underscored the strong fundamentals of our national economy in 2007".

The balance of payments reflects the Island's transactions with the rest of the world and the seven-percent rise in the surplus, from the 2006 revised total of $1.18 billion, came about despite a $69 million, or 32 percent, increase on the payments side of the account.

However, the surplus recorded for the fourth quarter of 2007 suffered a 33.6 percent fall to $176 million, compared to $265 million, as current account payments soared by $200 million.

It was the lowest quarterly surplus recorded over the last two years.

Minister Cox, who predicted in February's Budget statement that the surplus would exceed $1 billion, said: "I am delighted that the external demand for Bermuda's goods and services resulted in a surplus of $1.26 billion on the current account.

"The size of the surplus underscored the strong fundamentals of our national economy in 2007. I note also that employee compensation for Bermudians and other residents working for international companies rose by some nine percent in 2007.

"I am also very pleased that the net contribution from the tourism sector rose by some 30 percent to $282 million in 2007. I consider that a strong fillip for the hospitality sector and other tourism-related businesses."

The figures released yesterday by the Department of Statistics show that receipts from the travel sector totalled $569 million, while payments were $287 million.

However, no breakdown was provided on how much of that travel was on business and how much was for leisure.

Compensation paid out to local residents by international business climbed 8.6 percent to $1.28 billion last year, while income from investments jumped 20 percent to $887 million.

Business services were another big earner, with a net contribution of $600 million, while the surplus gained from Government services was $72 million.

On the financial account, a net inflow of some $436 million in direct investment in 2007 pointed to sustained confidence in Bermuda's future by foreign investors, Minister Cox said. That inflow compared with an outflow of $318 million last year.

The figures show that the direct investment inflow came in the first six months of the year, which saw a net inflow of $578 million. The year's last two quarters have seen an outflow of $143 million.

"The demonstrated strength of the financial services sector and the tourism sector reflected in the balance of payments points to a similarly robust outcome for Bermuda's Gross Domestic Product in 2007," Minister Cox added.

"In light of these positive indicators, there is a very strong likelihood that the Ministry of Finance's revised GDP growth estimate for 2007 in the range of 3.5 to 3.75 per cent on an inflation-adjusted basis will be met."

The figures announced yesterday were provisional and may be revised in future.