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18/09/2013 - Balance of payments: July 2013

Current account balance

In July 2013, the current account balance showed a surplus of €2.7 billion, up by 2.2 billion year-on-year. This development is mainly due to an inflow of €1.5 billion representing the first instalment of the income on the Securities Markets Programme (SMP) portfolio accruing to the ECB payable to Greece. At the same time, the trade deficit contracted, while the services surplus rose. By contrast, the income account deficit recorded an increase.

The trade deficit fell by €207 million, on account of a €164 million decrease in the net oil import bill. The trade deficit excluding oil and ships recorded a slight decline of €16.5 million, as a result of higher export receipts (up by €135 million or 11.7%) and a higher import bill (up by €118 million or 6.4%). Finally, net payments for purchases of ships also dropped by €27 million.

The surplus of the services balance increased by €257 million, exclusively owing to a significant rise in net travel receipts (up by €265 million) and a slight increase in net receipts from “other” services (up by €7 million). By contrast, net transport receipts dropped slightly (by €14 million), exclusively on account of the negative development in the balance of “other” transport (excluding sea transport) services. The rise in the surplus of the travel services balance is mainly attributable to a €258 million (or 12.3%) increase in travel spending by non-residents in Greece (also reflecting a 14.0% rise in non-resident travellers’ arrivals, according to the Bank of Greece’s border survey), while travel spending by residents abroad declined by €6.2 million (or 3.1%).

The income account deficit rose by €209 million, mainly as a result of higher net interest, dividend and profit payments.

 Finally, the current transfers balance showed a €1.9 billion surplus in July 2013, against a €100 million deficit in July 2012, mainly owing to an inflow of €1.5 billion representing the first instalment of the income on the SMP portfolio mentioned above. (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 the January-July 2013 period, the current account deficit fell by €6.2 billion (or 97.6%) year-on-year, to €156 million. This development is attributable, primarily, to a significant decline in the trade deficit (down by €3.0 billion) and, secondarily, to increases in the current transfers and services surpluses (up by €2.4 billion and €774 million, respectively); the income account deficit also narrowed. The considerable improvement in the current transfers balance is chiefly attributable to these developments in July.

In more detail, the trade deficit shrank owing to respective declines in the net oil import bill by €2.2 billion (or 33.4%), in the trade deficit excluding oil and ships by €677 million (or 12.4%), and in net payments for purchases of ships by €134 million (or 18.0%). Receipts from exports of goods excluding oil and ships rose by 4.2%, while the corresponding import bill fell by 2.6%.

An increase in the services surplus is due to higher net travel receipts and lower net payments for “other” services, which offset a contraction in net transport receipts. In more detail, travel spending in Greece by non-residents grew by 15.5% year-on-year (also reflecting a 12.9% rise in non-residents’ arrivals over the same period, according to the Bank of Greece’s border survey); at the same time, travel spending by residents abroad fell by 7.4%. As a result, the travel balance showed a €4.6 billion surplus, compared with €3.8 billion in the same period of 2012.

The income account deficit fell by €106 million year-on-year, mainly owing to a decline in net interest payments on Greek government bonds held by non-residents (following the PSI).

Finally, the current transfers balance showed a surplus of €3.8 billion, up by €2.4 billion year-on-year. This development is mainly due to higher general government net transfer receipts (mainly from the EU).

Capital transfers balance

In July 2013, the capital transfers balance showed a surplus of €1.7 billion, compared with €151 million in July 2012, reflecting a rise 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 the January-July 2013 period, the capital transfers balance showed a surplus of €2.8 billion, up by €1.6 billion year-on-year. This development is mainly attributable to an increase in net EU capital transfers to general government, which more than offset a rise in the net capital transfer payments of the other sectors.

The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €6.6 billion in the January-July 2012 period, up by €3.9 billion year-on-year, reflecting the above-mentioned developments in EU current and capital transfers, as well as in net transfer receipts of the other sectors (mainly emigrants’ remittances).

Combined current account and capital transfers balance

In July 2013, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a surplus of €4.4 billion, compared with €659 million in July 2012. In the January-July 2013 period, this balance showed a surplus of €2.6 billion, against a deficit of €5.2 billion in the same period of 2012.


Financial account balance

In July 2013, non-residents’ direct investment in Greece showed a small net inflow of €6.9 million (compared with a net inflow of €2.2 billion in July 2012), without any remarkable transactions. Residents’ direct investment abroad showed a net inflow of €685.7 million (disinvestment). The most important transactions concerned an inflow of €640 million from the sale of two Bulgarian subsidiaries of COSMOTE, Cosmo Bulgaria Mobile EAD (Globul) and Germanos Telecom Bulgaria S.A.

Under portfolio investment, a net outflow of €1.5 billion was recorded (compared with a net outflow of €517 million in July 2012), which is chiefly attributable to a €690 million rise in residents’ holdings of foreign bonds and Treasury bills (outflow) and also to a €832 million decline in non-residents’ holdings of Greek government bonds and Treasury bills (outflow). As regards “other” investment, a net outflow of €3.4 billion was recorded (compared with a net outflow of €2.6 billion in the same month of 2012), which is mainly attributable to a decline in non-residents’ deposit and repo holdings in Greece (including the TARGET account) (outflow) and a €1.6 billion increase in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (outflow). These developments were partly offset by a €3.4 billion increase in the outstanding debt of the public and the private sector to non-residents (inflow) (of which €2.5 billion and €1.7 billion concern public sector borrowing from the EFSF and the IMF, respectively).

In the January-July 2013 period, direct investment showed a net inflow of €1.7 billion (compared with a net inflow of €2.3 billion in the same period of 2012). Specifically, non-residents’ direct investment in Greece showed an increase of €910 million (net inflow), while residents’ direct investment abroad showed a decline (net inflow) of €833 million, i.e. disinvestment.

A net outflow of €11.3 billion was observed under portfolio investment (compared with a net outflow of €72.1 billion in the same period of 2012). In more detail, a capital outflow was recorded due to respective declines in non-residents' purchases of Greek bonds and Treasury bills by €8.7 billion and in non-residents’ investment in Greek financial derivatives by €55 million. A capital outflow was recorded also as a result of increases in resident institutional investors’ holdings of foreign bonds and Treasury bills and residents’ investment in foreign financial derivatives, of €3.34 billion and €362 million, respectively.

Under “other” investment, a net inflow of €6.2 billion was recorded (compared with a net inflow of €75.7 billion in the same period of 2012). This is chiefly attributable to a €28.8 billion increase in the net outstanding debt of the public and the private sector to non-residents, but also to a €15.9 billion decline in resident institutional investors’ deposit and repo holdings abroad (inflows). These developments were partly offset by a €37.8 billion decrease in non-residents’ deposit and repo holdings in Greece (outflow).

At end-July 2013, Greece’s reserve assets stood at €4.6 billion, compared with €5.5 billion in July 2012. (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. Conversely, reserve assets do not include claims in euro on residents of non-euro area countries, claims in foreign currency and in euro on residents of euro area countries, and the Bank of Greece participation in the capital and the reserve assets of the ECB.)

Note: Balance of payments data for August 2013 will be released on 18 October 2013.

Related link: Balance of payments: July 2013 - Table