Balance of payments APRIL 1999
05/10/1999 - Announcements
The current account balance improved for a third consecutive month in April 1999. The current account deficit, in particular, was reduced from EUR 868 million in April 1998 down to EUR 396 million in April 1999, which was almost half the March 1999 figure. This development stemmed mainly from a decline of EUR 262 million in the trade deficit and an increase of EUR 130 million in the surplus on current transfers while both the balance on the income account and the services balance improved relative to last year’s.
The narrowing of the trade deficit is mainly due to an improvement in the non-oil trade balance, which, in turn, reflects a considerable increase in export receipts and a reduction in the import bill. Turning to the balance of services, its surplus recorded a small rise, since both receipts and payments related to tourism and transport increased. Regarding the balance on the income account, this was in surplus, as all receipt items increased and the corresponding payments were reduced. The increase in the surplus on current transfers was due to a rise in emigrants' remittances but mainly to EU transfers, which almost doubled compared with April 1998.
Regarding the financial account of the balance of payments, both direct investment, which includes residents' investment abroad, and portfolio investment recorded net outflows (of EUR 46 million and EUR 417 million, respectively), while a net inflow was recorded in the "other investment" category. Finally, Greece's foreign exchange reserves dropped by EUR 420 million in April 1999.
The current account deficit, in the January-April 1999 period, dropped by 43.0 per cent, compared with the corresponding period of 1998, to EUR 1,425 million. This improvement came as a result of the lower deficits on the trade balance and the income account, while the surpluses on services and current transfers remained at the levels of the corresponding 1998 period. The reduction (of EUR 727 million) in the trade deficit was largely due to a decrease in both the non-oil trade deficit and net fuel imports. The improvement in the non-oil trade balance was due to a large increase (of EUR 719 million or 48 per cent) in export receipts, which more than offset the rise (of EUR 262 million or 4 per cent) in the import bill.
The decrease (of EUR 353 million) in the incomes deficit was a result of the EUR 433 million increase in receipts, due to increased inflows related to interest, dividends, profits and compensation of employees. Concerning the services balance, both receipts and payments regarding tourist and transport services grew, leaving the surplus on the services balance almost unchanged, which was the case for the surplus on current transfers as well, since the increase in EU transfers was largely offset by an equivalent rise in transfer payments.
Regarding the financial account in the January-April 1999 period, portfolio investment recorded a significant net inflow of EUR 5,085 million, which was mostly channeled to equities and Greek government bonds, while the "other investment" item, which includes general government debt repayment, recorded an outflow of EUR 812 million. As a result, the country's foreign exchange reserves increased by EUR 2.5 billion between end-December 1998 and end-April 1999 and reached EUR 20.8 billion, compared with EUR 16.6 billion in April 1998. Finally, on the basis of the latest available data, foreign exchange reserves stood at EUR 20.7 billion at the end of September 1999.