Press Releases

Balance of payments: NOVEMBER 2006

23/01/2007 - Press Releases

Current account balance

In November 2006, the current account balance showed a deficit of €2,640 million, i.e. €478 million higher than in the same month of 2005. This expansion reflects mainly a surge in the trade deficit and - to a much lesser extent - the growth of the income account deficit. By contrast, the surpluses of the services and current transfers balances showed an appreciable increase.

Underlying the €618 million rise in the trade deficit were increases of €155 million in the net oil import bill, €232 million in the other goods (excluding oil and ships) deficit and €231 million in net payments for purchases of ships. The €133 million rise in the surplus of the services balance is almost exclusively attributable to a hike in net transport receipts, while there was no considerable change in the travel balance. The widening of the income account deficit by €51 million mainly reflects an increase in net interest payments to non-residents. Finally, the €57 million growth of the current transfers surplus reflects mainly a €106 million increase in net current transfers from the EU to general government, while net transfers to the other sectors declined. It should be recalled that current transfers from the EU mainly include receipts from the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) in the context of the Common Agricultural Policy and receipts from the European Social Fund, while current transfers to the EU include Greece’s contributions (payments) to the Community Budget.

In January - November 2006, the current account deficit widened by €8,721 million over the same period of 2005 and reached €20,825 million, reflecting mainly a rise in the trade deficit and, to a lesser extent, an increase in the income account deficit. During the same period, the services and the current transfers surpluses did not show any considerable change.

The widening of the overall trade deficit (including oil and ships) by €7,355 million was a result of increases in net payments for purchases of ships by €2,687 million (the ships' balance is characterised by great volatility), the trade deficit excluding oil and ships by €2,338 million and the net oil import bill by €2,330 million. It should be pointed out that receipts from exports of goods (excluding oil and ships) showed a considerable rise (by €1,108 million or 11.7%), but the increase in the corresponding import bill (by €3,447 million or 12.2%) was larger. The services surplus showed a very small rise, as the €649 million increase in net travel receipts (travel receipts rose by €580 million or 5.5%, while payments declined by €69 million or 3.1%) was almost offset by a €175 million drop in net transport receipts (transport receipts grew by €602 million or 4.8%, while transport payments increased by €777 million or 13.9%) and a €447 million rise in net payments for ''other'' services. The income account deficit grew by €1,384 million, mainly as a result of higher net interest, dividend and profit payments. Finally, there was a negligible decrease in the current transfers surplus, as the €78 million decline in net (mainly EU) current transfers to general government more than offset (by a narrow margin) a €69 million rise in net current transfers to the other sectors (excluding general government).

Capital transfers balance

In November 2006, the capital transfers balance showed a surplus of €452 million, €153 million up year - on - year, mainly as a result of a considerable increase in capital transfers from the EU 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 January - November 2006, the surplus of the capital transfers balance grew by €900 million year - on - year and reached €2,587 million. This reflects a €883 million rise in net EU capital transfers to general government.

Combined current account and capital transfers balance (according to the old method of presentation)

The combined current account and capital transfers balance (according to the old method of presentation) showed a deficit of €2,188 million in November 2006, €325 million up year - on - year. In January - November 2006, the overall deficit reached €18,238 million, compared with €10,418 million in the same period of 2005.

Financial account balance

In November 2006, a considerable net inflow of €458 million was recorded under direct investment. Specifically, under non-residents ' investment in Greece, the most important development was a €203 million inflow for the coverage of the capital increase of UNILEVER HELLAS S.A. by its parent company UNILEVER (Netherlands). Under residents ' investment abroad, the most important flows were, on the one hand, a €36 million outflow for the partial acquisition of MINDBANK (Romania) by the Agricultural Bank of Greece and, on the other hand, a €342 million inflow as a result of the sale by the Hellenic Telecommunications Organisation (OTE) S.A. of its stake in the share capital of ARMENTEL (Armenia) to a non - resident company (VIMPEL - COMMUNICATIONS). Under portfolio investment, a net inflow of €2,322 million was recorded, reflecting non-residents ' purchases of Greek government bonds (of €2,633 million) and, to a lesser extent, shares of Greek firms (of €906 million), which, however, were partly offset by residents ' purchases of foreign bonds and shares (of €849 million and €309 million, respectively). ''Other'' investment recorded a small net outflow of €64 million, reflecting the fact that the rise in Greek credit institutions' deposit and repo holdings abroad and, secondarily, the repayment of residents' loans were almost fully offset by an increase in foreign credit institutions' deposit and repo holdings in Greece.

In January-November 2006, direct investment showed a net inflow of €1,226 million (compared with a net outflow of €727 million in the same period of 2005). Specifically, net inflows of non-residents' funds for direct investment in Greece reached €4,011 million, while net outflows of residents' funds for direct investment abroad came to €2,785 million. Over the same period, a net inflow of €5,464 million was recorded under portfolio investment, as the inflow of non-residents' funds for investment in Greece (mainly in Greek government bonds and shares of Greek firms, of €11.5 billion and €5.1 billion respectively) largely exceeded the repayment of short-term Greek government securities and the outflow of residents' funds for investment in foreign bonds, shares and Treasury bills. Finally, under ''other'' investment, a net inflow of €11,900 million mainly reflects the fact that the inflow of non-residents' funds to deposits and repos in Greece was more than double the outflow of residents' funds for corresponding investment abroad.

At end-November 2006, Greece's reserve assets reached €2.3 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 December 2006 will be released on 21 February 2007.