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17/04/2014 - Balance of payments: February 2014

Current account balance

February 2014

In February 2014, the current account balance showed a deficit of €709 million, up by €25 million year-on-year. This development was mainly due to an increase (by €153 million) in the income account deficit and, more specifically, higher net interest payments on the EFSF and IMF loans, and also to a slight increase (by €26 million) in the trade deficit, year-on-year. These developments were partly offset by higher surpluses on the services and current transfers accounts.

The trade balance was negatively impacted by higher net payments for purchases of ships, while the oil and non-oil trade balances improved. As regards receipts from exports of goods excluding oil and ships, and the corresponding import bill, there were no remarkable changes in February.

The €87.4 million increase in the services surplus is due to higher net sea transport receipts and an improvement in the ‘‘other” services balance (chiefly higher net payments for construction services). By contrast, the travel balance showed a deficit, despite a 10.2% rise in tourist arrivals, given the smaller growth in travel spending in Greece by non-residents than in travel spending by residents abroad.

January-February 2014

In the first two months of 2014, the current account balance showed a deficit of €1 billion, up by €6 million year-on-year. This development was mainly due to an increase in the trade deficit, which was for the most part offset by increases in the surpluses of the services and current transfers accounts. The income account deficit over the same period did not change considerably.

In more detail, a €131 million rise in the trade deficit is mainly attributable to higher net payments for purchases of ships and, to a lesser extent, a higher net oil import bill. The balance for goods excluding oil and ships showed a slight improvement, despite a decline in export receipts, given that the import bill showed a stronger decrease.

The transport surplus increased by €79 million, mainly on account of higher net transport receipts, which offset a decline in net travel receipts and a rise in net payments for “other” services. In more detail, travel spending by non-residents in Greece grew by 17.3% year-on-year, while travel spending by residents abroad rose by 27.3%.

The income account deficit rose by a mere €4.3 million.

Finally, the current transfers balance showed a surplus of €1.7 billion, up by €50 million year-on-year. This development is attributable to a rise in net transfers to general government (mainly from the EU).

Capital transfers balance

In February 2014, as a result of an increase in net transfers to general government, the capital transfers balance recorded a surplus of €1.5 billion, which was more than double the surplus recorded in February 2013. Over the January-February 2014 period, the capital transfers balance showed a surplus of €1.45 billion, compared with €631 million in the same period of 2013.

Finally, the overall transfers balance (current transfers plus capital transfers) in the January-February 2014 period showed a surplus of €3.1 billion, compared with €2.3 billion over the same period in 2013.

Combined current account and capital transfers balance

As a result of the above-mentioned developments, the combined current and capital transfers balance (corresponding to the economy's external financing requirements) showed a €758 million surplus in February 2014, against a deficit of €44 million in the same month of 2013. In the January-February 2014 period, the above-mentioned balance showed a surplus of €450 million, against a deficit of €367 million in 2013.

Financial account balance

In February 2014, non-residents’ direct investment in Greece showed a net inflow of €100 million. The most important transaction concerned a €146 million inflow for the participation of Fairfax Financial Holdings Ltd. (Canada) in the capital increase of Eurobank Properties S.A. Residents’ direct investment abroad recorded an increase (outflow) of €54 million, without any remarkable transaction.

Under portfolio investment, a net outflow of €515 million was recorded, mainly attributable to an increase in residents’ holdings of foreign bonds and Treasury bills (outflow).

Under “other” investment, a net inflow of €417 million was recorded, chiefly on account of a decline (inflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.

In the January-February 2014 period, non-residents’ direct investment in Greece showed a net inflow of €55.4 million. Residents’ direct investment abroad showed a net outflow (increase) of €159 million.

Under portfolio investment, a net outflow of €2.7 billion was recorded, mainly as a result of a rise in residents’ investment in foreign Treasury bills and a decline in non-residents’ holdings of Greek government bonds and Treasury bills. This development was partly offset by an inflow for the purchase of Greek shares by non-residents, as well as by a decrease in residents’ holdings of foreign bonds.

Under “other” investment, a net inflow of €2.7 billion was recorded, mainly due to non-residents’ increased holdings of Greek deposits and repos.

At end-February 2014, Greece’s reserve assets stood at €5 billion, compared with €5.3 billion at end-February 2013.

Note: Balance of payments data for March 2014 will be released on 22 May 2014.

Related link: Balance of payments: February 2014 - Table