Balance of payments: March 2010
25/05/2010 - Press Releases
Current account balance
In March 2010, the current account deficit grew by €327 million year-on-year to €3,015 million. This is exclusively attributable to a widening of the trade deficit, which mainly reflects a €347 million increase in the net oil import bill and, to a much smaller extent, a €85 million rise in the trade deficit excluding oil and ships, as exports grew by only 1.1%, while imports increased by 3.8%. By contrast, net payment for purchases of ships fell (by €28 million).
The overall services deficit showed a small increase of €42 million, mainly as a result of a €47 million rise in net transport receipts. Neither net travel receipts nor net payments for “other” services changed considerably year-on-year.
The income account deficit narrowed by €28 million as a result of a drop in net interest, dividend and profit payments.
Finally, the current transfers balance recorded a deficit of €81 million (compared with €88 million in March 2009), as EU transfers to general government were lower than general government transfers (payments) to the EU. (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 first quarter of 2010, the current account deficit grew by €2.7 billion or 36.6% year-on-year and reached €10.0 billion, reflecting primarily a large decrease in current transfers to general government (mainly from the EU) and, to a lesser extent, a rise in the net oil import bill and net payments for purchases of ships. If current transfers to general government (mainly from the EU) are not taken into account for the first quarter of 2010 (since their large decline is temporary, as explained below), the rise in the current account deficit is limited to €0.7 billion or 7.9%.
The €571 million rise in the overall trade deficit is attributable to increases of €764 million and €48 million in the net oil import bill and net payments for purchases of ships, respectively. By contrast, the trade deficit excluding oil and ships narrowed by €241 million, as the import bill fell by €501 million or 6.5%, while export receipts declined by €261 million or 9.3%.
The €88 million contraction in the surplus of the services balance reflects lower net transport receipts. Gross transport receipts (chiefly from merchant shipping) showed an increase (of 7.9%), while the corresponding payments grew by 25.5%; as a result, net transport receipts dropped by €153 million. Travel spending by non-residents in Greece remained virtually unchanged (-1.5%), while travel spending by residents abroad declined by 7.0%; as a result, net travel payments fell by €34 million. Finally, net payments for “other” services decreased by €31 million.
The income account deficit decreased by €78 million in comparison with the first quarter of 2009, because net interest, dividend and profit payments fell slightly.
Finally, the current transfers balance showed a deficit of €708 million, compared with a surplus of €1,381 million in the corresponding period of 2009, mainly owing to a decline in EU transfers to general government. As already mentioned in the press release for the month of February, this decrease is attributable to a delay in inflows (in the order of €2 billion) from the European Agricultural Guidance and Guarantee Fund (EAGGF) for the payment of direct aid under the Common Agricultural Policy, which, however, are expected to be recorded in the balance of payments statistics for May.
Capital transfers balance
In March 2010, the capital transfers balance showed a surplus of only €22 million, substantially down in comparison with March 2009 (€249 million). (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 first quarter of 2010, the capital transfers balance showed a surplus of €148 million, compared with €480 million in the corresponding quarter of 2009. This chiefly reflects a decline in EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a deficit of €560 million, compared with a surplus of €1,860 million in the corresponding period of 2009, reflecting the aforementioned developments in current transfers from the EU.
Combined current account and capital transfers balance
The deficit of the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) reached €3.0 billion in March 2010, compared with €2.4 billion in March 2009. In the first quarter of 2010, this deficit came to €9.8 billion, compared with €6.8 billion in the corresponding period of 2009.
Financial account balance
In March 2010, non-residents’ direct investment in Greece recorded a net inflow of €1,104 million. The most important transaction concerns an inflow of €939 million due to the participation of Crédit Agricole S.A. in the capital increase of Emporiki Bank S.A., as a result of which the stake of Crédit Agricole S.A. in the capital of Emporiki Bank S.A. rose from 87.9% to 91%. Residents’ direct investment abroad showed a net outflow of €65 million, without any remarkable transactions.
Under portfolio investment, a net inflow of €3.7 billion was recorded, reflecting both a decrease (inflow) in residents’ holdings of foreign bonds and Treasury bills (of €2.1 billion) and a €1.9 billion rise in non-residents’ investment in Greek government bonds and Treasury bills. A rise (outflow) was recorded in residents’ investment in foreign shares and financial derivatives (of €223 million and €246 million, respectively).
Under “other” investment, a net outflow of €1.9 billion was recorded (compared with a net outflow of €3.3 billion in March 2009), which is mainly attributable to a €5.1 billion rise (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad. This outflow was partly offset by a €2.7 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece and a €474 million rise (inflow) in loan liabilities of the public and the private sector to non-residents.
In the first quarter of 2010, direct investment showed a net inflow of €941 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece reached €1,061 million, while an outflow of €120 million was recorded under residents’ direct investment abroad.
During the same period, a net inflow of €4.9 billion was recorded under portfolio investment. This reflected an inflow of €5.2 billion because of a decline in resident institutional investors’ holdings of foreign bonds and Treasury bills, as well as n inflow of 1.6 billion because of non-residents’ purchases of Greek government bonds and Treasury bills. An outflow was observed due to increases of €0.9 billion and €0.6 billion in residents’ investment in foreign shares and financial derivatives, respectively. Finally, a €0.2 billion outflow was recorded due to a decline in non-residents’ investment in shares of Greek firms.
Finally, under “other” investment, a net inflow of €3.6 billion mainly reflects a €12.0 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece, which was partly offset by a €8.1 billion rise (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad and – to a smaller extent – a €0.2 billion decrease (outflow) in loan liabilities of the public and the private sector to non-residents.
At end-March 2010, Greece’s reserve assets stood at €4.1 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 April 2010 will be released on 23 June 2010.
BALANCE OF PAYMENTS (EUR millions - provisional)