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19/02/2013 - Balance of payments: December 2012

Current account balance

In December 2012, the current account balance showed a deficit of €534 million, down by 1.6 billion year-on-year.

The trade deficit narrowed by €984 million, as a result of a €627 million decrease in the trade deficit excluding oil and ships, as well as declines of €214 million and €143 million in the net oil import bill and net payments for purchases of ships, respectively. The trade deficit excluding oil and ships shrank due to the reduced import bill by €418 million or 18.9% and the rise in export receipts by €209 million or 19.3%.

The surplus of the services balance narrowed by €163 million primarily due to lower net transport receipts and, secondarily, to a deficit of the “other” services balance, compared to a small surplus in December 2011. By contrast, the deficit of the travel services balance was lower year-on-year. In more detail, compared with December 2011, travel spending in Greece by non-residents declined by 5.0%, while travel spending abroad by residents fell by 10.1%; as a result, net payments for travel services came to €25 million, compared to €36 million in December 2011. In the same month, non-residents’ arrivals decreased by 4.2%, according to data from the Bank of Greece’s border survey. Gross transport receipts (chiefly from merchant shipping) fell by 16.3% and the corresponding payments dropped by 10.7%, resulting in a €137 million decline in net receipts.

The income account showed a deficit of €33 million, compared with a deficit of €1,017 million in December 2011, reflecting the €968 million year-on-year drop in net payments for interest, dividends and profits. This development mainly reflects a €466 million decrease in net interest payments on Greek government bonds held by non-residents following the PSI, and also lower net interest payments on deposits and loans by €466 million. At the same time, there were net receipts from dividends and profits amounting to €2 million, compared to net payments of €15 million in December 2011.

Finally, the current transfers surplus came to €28 million, compared to €223 million in December 2011, reflecting decreases of €187 million and €8.5 million in general government net transfer receipts (chiefly from the EU) and receipts of “other sectors” (mainly emigrants’ remittances), respectively. (It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF), as well as receipts from the European Social Fund, while current transfers to the EU include Greece’s contributions (payments) to the Community Budget.)

In 2012, the current account deficit contracted by €15.05 billion or 72.9% compared to 2011, and came to €5.6 billion or 2.9% of GDP (compared to 9.9% of GDP in 2011). This development mainly reflects a substantial decline of €7.6 billion in the trade deficit and a €6.4 billion decline in the income account deficit, as well as an increase in the surpluses of the current transfers balance and the services balance by €884 million and €90 million, respectively.

In more detail, the trade deficit contracted on account of a €4.4 billion (or 34.6%) decrease in the trade deficit excluding oil and ships, lower net payments for purchases of ships by €2.3 billion (or 69.1%) and a lower net oil import bill by €907 million (or 8.2%). Receipts from exports of goods excluding oil and ships rose by 3.8%, while the corresponding import bill fell at a much faster pace (15.0%).

The small increase in the surplus of the services balance is chiefly due to higher net transport receipts and, secondarily, lower net payments for “other” services, while net travel receipts declined marginally. In more detail, travel spending by non-residents in Greece fell by 4.6% year-on-year, while non-residents’ arrivals declined at an average annual rate of 5.5% (according to data from the Bank of Greece’s border survey). At the same time, travel spending abroad by residents fell by 18.4%, resulting in a decline in net receipts by €63 million or 0.8%. Gross transport receipts (chiefly from merchant shipping) fell by 5.7%, but the corresponding payments recorded a stronger decline (by 12.6%); as a result, net receipts increased by €102 million.

The income account deficit fell by €6.4 billion compared to 2011, mainly owing to a sharp decline in net interest payments on Greek government bonds held by non-residents. This decline is a result of the PSI and deferred interest payments on loans under the support mechanism through the ECB owing to interest rate changes, as already mentioned in the press release on June 2012 data. Finally, the current transfers balance showed a surplus of €1.4 billion, up by €884 million with respect to 2011. This development is mainly due to a €643 million rise in net current transfer receipts of general government (mainly from the EU) and to the fact that the “other sectors” balance recorded net transfer receipts of €32 million, against net transfer payments of €209 million in 2011.

Capital transfers balance

In December 2012 the capital transfers surplus fell to €498 million, compared to €795 million in December 2011, reflecting a decline in net transfers to general government. (Capital transfers from the EU mainly include receipts from the Structural Funds – except for the European Social Fund – and the Cohesion Fund under the Community Support Framework.)

In 2012, the capital transfers balance showed a surplus of €2.3 billion, compared to €2.7 billion in 2011. This mainly reflects a decline in net EU capital transfers to general government.

The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3.8 billion, up by €539 million with respect to 2011, reflecting the above-mentioned positive development in current transfers from the EU.

Combined current account and capital transfers balance

The combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a small deficit of €37 million in December 2012, compared with €1.35 billion in the same month of 2011. In 2012, this balance showed a deficit of just €3.26 billion, compared with €18 billion in 2011 (down by 81.9%), i.e. it fell at a faster pace than the current account deficit.

Financial account balance

In December 2012, non-residents’ direct investment in Greece showed a net inflow (increase) of €633.4 million, compared to €1.8 billion in December 2011. The most significant transactions concern inflows of: (i) €286 million for the participation of Société Générale (France) in the capital increase of Geniki Bank, (ii) €175 million for the participation of JC General Services CVBA (Belgium) in the capital increase of Johnson & Johnson Hellas SA, (iii) €139 million for the participation of Banco Comercial Portuguès (Portugal) in the capital increase of Millennium Bank, (iv) €105 million for the participation of Metlife Alico (US) in the capital increase of American Life Insurance Co, (v) €70 million for the participation of Crédit Agricole, (France) in the capital increase of Crédit Agricole Life, (vi) €60 million for the participation of Crédit Agricole Leasing & Factoring (France) in the capital increase of Emporiki Leasing SA, and (vii) €41 million for the participation of JC General Services CVBA (Belgium) in the capital increase of Janssen-Cilag Pharmaceuticals. Residents’ direct investment abroad recorded a net outflow (increase) of €22 million, without any remarkable transaction.

Under portfolio investment, a net outflow of €25.7 million was recorded, compared with €323 million in December 2011. This outflow is mainly due to a €19.0 billion increase in residents’ investment in foreign bonds and Treasury bills and a €6.7 billion decline in non-residents’ holdings of Greek bonds and Treasury bills.

Under “other” investment, a net inflow of €24.5 billion was recorded (against a net outflow of €701 million in December 2011), mainly on account of an increase (inflow) of €35.5 billion in the outstanding debt of the public and the private sector to non-residents (of which €34.3 billion concern gross public sector borrowing under the support mechanism for the Greek economy, which corresponds to net borrowing of €34.0 billion), and of a €232 million decline in resident credit institutions and institutional investors’ deposit and repo holdings abroad (inflow). These developments were mainly offset by an €11.2 billion decrease in non-residents’ deposit and repo holdings in Greece (outflow).

In 2012 direct investment showed a net inflow of €2.3 billion, compared with a net outflow of €453 million in 2011). Specifically, non-residents’ direct investment in Greece posted a net inflow of €2.3 billion, which mainly concerned Crédit Agricole’s increased participation in the share capital of Emporiki Bank, while residents’ direct investment abroad showed a net inflow of €30.4 million (disinvestment).

Also, a net outflow of €100.5 billion was observed in 2012 under portfolio investment (compared to a net outflow of €19.8 billion in 2011). This development reflects an outflow of funds due, on the one hand, to a €57.7 billion increase in resident institutional investors’ holdings of foreign bonds and Treasury bills (including EFSF bonds) and, on the other hand, a €41.8 billion decrease in non-residents’ holdings of Greek bonds and Treasury bills. Furthermore, an outflow of funds was recorded also on account of increases of €831 million and €129 million in residents’ holdings of foreign financial derivatives and foreign shares, respectively. A €52 million outflow was also recorded due to a decline in non-residents’ investment in shares of Greek firms.

Finally, a net inflow of €101.7 billion was recorded under “other” investment (compared with a net inflow of €38.05 billion in 2011). This is chiefly attributable to a €111.2 billion increase in the net outstanding debt of the public and the private sector to non-residents (inflow) and to a €15.3 billion decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow). In more detail, net general government borrowing came to €109.1 billion and reflects gross public sector borrowing of €109.9 billion from the EFSF and the IMF. These developments were partly offset by a €23.4 billion decline in non-residents’ holdings of deposits and repos in Greece (outflow).

At end-December 2012, Greece’s reserve assets stood at €5.5 billion. (It should be recalled that, since Greece joined the euro area in January 2001, reserve assets, as defined by the European Central Bank, include only monetary gold, the "reserve position" with the IMF, "Special Drawing Rights", and Bank of Greece claims in foreign currency on residents of non-euro area countries. Excluded are euro-denominated claims on non-euro area residents, claims (in foreign currency and in euro) on euro area residents, and the Bank of Greece share in the capital and reserves of the ECB.)

 
Note: Balance of payments data for January 2013 will be released on 21 March 2013.

Related link: Balance of payments: December 2012 - Table