the three months to December 31, the Bermuda Mometary Authority reported yesterday.

The deficit was the largest of the 1990s and compared to a deficit of just $1 million in 1993.

But BMA general manager Mr. Malcolm Williams said an explanation can be seen through the analysis of the total value of imported merchandise through the docks, as companies replenished stocks after years of declining sales.

He predicted that an improving economy will make that deficit disappear. The deficit resulted primarily from increased payments abroad by residents for imports, travel, professional, managerial and technical services and other goods, services and income.

The largest increase ($18 million), reported the BMA, was recorded in the imports account. Apart from replenishment, it reflected an increase in consumer expenditure. The increase of $7 million in the travel account was made up primarily of increases in resident trips abroad.

There were also reduced receipts, including a $2 million decrease in visitor earnings, after a two percent drop in visitor arrivals. The Authority also recorded decreased earnings on resident-owned assets abroad, which resulted in investment income decreasing by $6 million.

There was another $6 million decrease recorded in the other goods, services and income account as a result of a reduction in earnings of resident entities that provide services to non-residents.

On capital account, there was a net long term capital outflow of $29 million (after an outflow of $44 million and an inflow of $15 million for the quarter).

Inflows included the $11 million for the sale of local property to non-Bermudians, $3 million in borrowings from non-residents and other capital movements that total about a million dollars.

Outflows consisted of debt repayment to non-residents of $19 million, Government investing its pension funds of $19 million abroad, residents purchasing $2 million worth of foreign real estate and other outflows aggregating $4 million.

Notes and coins of Bermuda money in circulation surged to $56.3 million to the end of the fourth quarter (December), new figures have revealed -- a $3.3 million increase since December, 1993 and a $5.5 million increase on the year before.

Bermuda's money supply grew by 6.98 percent during the 1994 calendar year to $1.83 billion.

That compares with a growth of 8.55 percent, 9.33 percent and 9.54 percent in each of the three previous years.