Press Releases

Balance of payments: February 2011

20/04/2011 - Press Releases

Current account balance

In February 2011, the current account deficit decreased substantially to €1,959 million, from €3,159 million in February 2010. This narrowing in the deficit reflects primarily a considerable increase of €1,091 million in the current transfer receipts of general government (mainly from the EU) and, secondarily, a €237 million decline in non-oil imports, a €142 million rise in exports of goods excluding oil and ships, and a €82 million decrease in net payments for interest, dividends and profits. These developments more than offset a €322 million rise in the net oil import bill.

The improvement in the trade deficit excluding oil and ships reflects the continued recovery of export receipts in this category (up by 17.2%) and a decrease in the corresponding import bill by 5.5%.

The surplus of the services balance remained virtually unchanged (it dropped by €3 million only), as the small rise in net transport receipts and the decrease in net payments for “other” services were offset by the fact that net travel payments reached €15 million in February 2011, compared with net receipts of €16 million in February 2010. Transport receipts (mainly from merchant shipping) fell by 4.1%, while the corresponding payments declined by 8.0%.

The income account deficit dropped by €78 million or 11.2%, as net payments for interest, dividends and profits fell by 11.9%.

Finally, the current transfers balance showed a surplus of €669 million, compared with a deficit of €383 million in February 2010, chiefly as a result of increased general government receipts from the EU, concerning direct aid and subsidies under the Common Agricultural Policy. As already mentioned in the press release of 21 March, due to the quick implementation of the relevant procedures, the bulk of the funds allocated to general government under EU current transfers for the whole of 2011 has already been absorbed during the first two months of 2011. (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 January-February 2011 period, the current account deficit fell by €2 billion or 29.7% year-on-year, to €4.7 billion. This development reflects primarily a large increase of €2.1 billion in the current transfer receipts of general government (mainly from the EU) and, secondarily, a €504 million decline in the non-oil import bill, a €453 million rise in receipts from overall exports of goods and a €80 million decrease in net payments for interest, dividends and profits.

In particular, the overall trade deficit grew by €113 million, as a result of a €921 million increase in the net oil import bill, whereas net payments for purchases of ships dropped by €171 million and the trade deficit excluding oil and ships shrank by €637 million. Receipts from exports of goods excluding oil and ships rose by 15.7%, while the corresponding import bill declined by 8.4%.

The €42 million increase in the surplus of the services balance reflects lower net payments for “other” services, which offset a decrease in net transport receipts and a rise in net travel payments. It should be noted that gross transport receipts (chiefly from merchant shipping) and the corresponding payments both fell slightly by 3.2%; as a result, net receipts dropped by €32 million. Moreover, travel spending in Greece by non-residents grew by 6.1%, while travel spending by residents abroad rose by 11.6%. As a result, net travel payments increased by €21 million.

The income account deficit shrank by €70 million year-on-year, mainly reflecting lower net payments for interest, dividends and profits (down by 6.3%).

Finally, the current transfers balance showed a surplus of €1,358 million, compared with a deficit of €651 million in the same period of 2010, mainly as a result of the aforementioned increase in EU transfers to general government.

Capital transfers balance

In February 2011, the capital transfers balance showed a surplus of €338 million, up by €244 million year-on-year, due to the implementation of projects under the National Strategic Reference Framework. (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 January-February 2011 period, the capital transfers balance showed a surplus of €326 million, compared with €126 million in the corresponding period of 2010. This mostly reflects a rise in EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €1,684 million, compared with a deficit of €524 million in the corresponding period of 2010, reflecting the above-mentioned development in EU current transfers.

Combined current account and capital transfers balancem

In February 2011, the deficit of the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) reached €1.6 billion, compared with €3.1 billion in February 2010. In the January-February 2011 period, the deficit of the combined current account and capital transfers balance came to €4.4 billion, compared with €6.6 billion in the corresponding period of 2010 (down by 33.3%).

Financial account balance

In February 2011, non-residents’ direct investment in Greece showed a net inflow of €23 million. The most important transaction concerned (a) a €43 million inflow for the participation of Cosco Pacific Limited (Hong Kong) in the share capital increase of Piraeus Container Terminal SA; and (b) a €30 million inflow for the participation of Velti Plc (United Kingdom) in the capital increase of its subsidiary “Velti Software and Related Products and Services SA”. Residents’ direct investment abroad recorded a net outflow of €141 million. The most remarkable transaction under this category concerned an outflow of €101 million by EFG Eurobank Ergasias SA for the endowment of its branch EFG Eurobank Ergasias SA Spolka (Poland).

Under portfolio investment, a net inflow of €796 million was recorded, reflecting a 1.7 billion decrease in residents’ investment in foreign bonds and Treasury bills (inflow). This development was partly offset by a €1.0 billion decrease in non-residents’ investment in Greek bonds and Treasury bills (outflow).

Under “other” investment, a net inflow of €1.1 billion was recorded, which is mainly attributable to a €1.5 billion increase in non-residents’ deposit and repo holdings in Greece (inflow), a €264 million rise in the outstanding debt of the public and the private sector to non-residents (inflow), as well as a small €65 million decline in loans to non-residents (inflow). These developments were offset by a €778 million rise in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (outflow).

In the January-February 2011 period, direct investment showed a net outflow of €140 million (compared with a net outflow of €234 million in the corresponding period of 2010). Specifically, net outflows of residents’ funds for direct investment abroad reached €208 million, while net inflows of non-residents’ funds for direct investment in Greece came to 68 million.

During the same period, a net outflow of €131 million was observed under portfolio investment (against a net inflow of €1.26 billion in the corresponding period of 2010). In more detail, an outflow was recorded due to a decrease of €2.1 billion in non-residents’ purchases of Greek bonds and Treasury bills, which was largely offset by a €1.7 billion decline in resident credit institutions’ and institutional investors’ holdings of foreign bonds and Treasury bills (inflow), a €207 million drop in residents’ holdings of foreign shares (inflow) and a €144 million rise in non-residents’ purchases of shares of Greek firms (inflow).

Under “other” investment, a net inflow of €4.3 billion (compared with a net inflow of €5.5 billion in the corresponding period of 2010) is mainly attributable to a €6.2 billion increase in the outstanding debt of the public and the private sector to non-residents (of which €6,153 million concern net general government borrowing, which reflects gross borrowing of €6,468 million under the support mechanism for the Greek economy). This development was partly offset by a €2.0 billion rise in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (outflow).

At end-February 2011, Greece’s reserve assets stood at €4.75 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 March 2011 will be released on 23 May 2011.

Related link: Balance of payments:  February 2011

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