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Balance of payments: SEPTEMBER 2003

17/11/2003 - Press Releases

Current account balance

 In September 2003, the non-oil trade deficit remained virtually unchanged year-on-year. However, the current account deficit widened, mainly owing to aν increase in the oil deficit and, secondarily, to a small decrease in the services surplus. Besides, a slight increase was recorded in the transfers surplus, which offset the small growth of the income account deficit.

 As regards the trade balance, the rise in non-oil export receipts was fully offset by the increase in the non-oil import bill. The small decrease in the services surplus mainly stemmed from reduced net travel receipts. (It should be recalled that both the September 2003 and September 2002 travel balance data are derived from a border survey and therefore are comparable). Net transport (notably sea transport) receipts grew, as gross receipts increased considerably, while gross payments rose moderately. The small increase in the income account deficit came mainly as a result of a decline in fees and wages receipts, while the small rise in the transfers surplus mostly reflects the fact that net EU transfers to general government grew.

 The January-September 2003 period saw an improvement in both the non-oil trade deficit, which fell, and the services surplus, which grew in comparison with the same period in 2002. However, as a result of a widening of the oil trade deficit and the income account deficit and a narrowing of the transfers surplus, the current account deficit eventually grew by €475 million over the same period in 2002, reaching €5,019 million.

 The non-oil trade deficit decreased by €435 million in January-September 2003 over the same period in 2002, as export receipts grew by €289 million and the import bill declined by €145 million. However, the net oil import bill rose by €522 million. Over the same period, the services surplus grew, as the increase in net transport receipts more than offset the decrease in net travel receipts. (It should be recalled that the travel balance statistics for the entire January-September 2003 period are not comparable with those in the corresponding period of 2002, as their compilation on the basis of the relevant border survey started in mid-May 2002). The income account deficit widened by €518 million, mainly owing to increased net interest payments on Greek government bonds, which are associated with a commensurate rise in non-residents’ holdings of such securities since the beginning of 2003. Finally, underlying the narrowing (by €348 million) of the transfers surplus was a reduction in net transfers from the EU to general government, which more than offset the growth of net transfers to the other sectors. It should be stressed that the decrease in net transfers from the EU to general government was observed in the first months of 2003, while a continuous increase has been recorded since June.


Financial account balance

 Financial flows under direct investment were low in September 2003. Under portfolio investment, a considerable inflow of non-residents’ funds, mainly for the purchase of Greek government bonds and secondarily of equities, was almost fully offset by an outflow of residents’ funds, mainly for the purchase of bonds issued by non-residents; as a result, the net inflow was small (€7.6 million).  As regards "other investment", the net inflow of €530 million was mainly connected with an increase in non-residents’ deposits and repo holdings in Greece . These inflows were partly offset by a rise in domestic credit institutions’ and institutional investors’ deposits and repo holdings abroad.

 In January-September 2003, a net outflow of €671 million was observed under direct investment, which is mainly accounted for by residents’ direct investment abroad. Over the same period, a substantial net inflow of €11,320 million was recorded under portfolio investment. This development is mainly associated with an inflow of foreign investors’ funds for the purchase of Greek government bonds, which increased considerably year-on-year. At the same time, residents’ portfolio investment abroad grew appreciably, mainly owing to the purchase by the Bank of Greece of bonds issued by euro area Member States (in particular in February and March 2003). In the context of the restructuring of its portfolio, the Bank of Greece also reduced its holdings of non-euro area currencies, which led to a reduction in its reserve assets. Finally, a net outflow of €8,681 million was recorded under ‘‘other investment’’. This is connected with a considerable outflow to residents’ (mainly credit institutions’) deposits and repo holdings abroad, substantial repayments of general government loans and a decrease in deposits and repo holdings by non-residents.

 At end-August 2003, Greece ’s reserve assets stood at €5.0 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. 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 October 2003 will be released on 17 December 2003 .

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