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Balance of payments: MARCH 2008

22/05/2008 - Press Releases

Current account balance

 In March 2008, the current account deficit grew by €423 million year-on-year, to reach €3,515 million, reflecting mainly a deficit in the current transfers balance, compared with a surplus in 2007, as well as an increase in the income account deficit. The surplus of the service balance showed a small increase, while the trade deficit did not change considerably.

The small year-on-year increase of €9 million in the overall trade deficit is attributable to an increase of €245 million in the net oil import bill, which was mostly offset by decreases of €203 million and €32 million in net payments for purchases of ships and in the trade deficit excluding oil and ships, respectively.

The surplus of the services balance rose by €46 million, as a result of a €61 million decline in net payments for other services and an increase in net transport receipts (up €23 million), which more than offset a drop in net travel receipts (down €37 million).

 The €165 million rise in the income account deficit is mainly attributable to higher net payments fir interest, dividends and profits.

The current transfers balance showed a deficit of €61 million (compared with a surplus of €234 million in March 2007), as EU transfers to general government decreased, while general government payments to the EU rose. (It should be noted that gross 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, 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 2008, the current account deficit dropped by €667 million over the same period in 2007 and reached €8,355 million, mainly reflecting substantial increases in the surpluses of both the current transfers balance (recorded in February 2008) and the services balance, which more than offset the rises in the trade deficit and the income account deficit.

The €911 million hike in the overall trade deficit was mainly a result of increases (of €716 million and €527 million) in the trade deficit excluding oil and ships and in the net oil import bill, respectively. By contrast, net payments for purchases of ships dropped by €332 million. With respect to the trade balance excluding oil and ships, export receipts grew by €265 million or 9.3%, while the corresponding import bill rose by €981 million or 11%.

The surplus of the services balance expanded by €750 million, mainly reflecting higher net transport receipts. The travel services balance showed a small deficit (of €17 million), compared with a surplus of €23 million in the first quarter of 2007, while net payments for other services rose. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 32% and gross travel receipts by 5.7%.

The income account deficit rose by €258 million, as a result of higher net interest, dividend and profit payments. This development is mainly associated with a rise in non-residents’ public debt holdings.

Finally, the €1,086 increase in the surplus of the current transfers balance is attributable mainly to a rise in EU transfers to general government, as well as to a decline in general government payments to the EU.

Capital transfers balance

In March 2008, the capital transfers balance showed a surplus of €220 million, compared with €1,076 million in March 2007. (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 2008, the capital transfers balance showed a surplus of €1,562 million (down €356 million year-on-year). This reflects a decline in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3,027 million, compared with €2,296 million in 2007.

 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 €3,295 million in March 2008, compared with a deficit of €2,016 million in the corresponding month of 2007. In the the first quarter of 2008, this deficit came to €6,793 million, compared with €7,104 million in the corresponding period of 2007.

Financial account balance

 In March 2008, residents’ direct investment abroad came to €110 million. The most important investment concerned an outflow of €47 million by the NATIONAL BANK for covering its participation in the share capital increase of the bank ROMANEASKA (Romania). Non-residents’ investment in Greece registered an outflow of €35 million, reflecting a decline in this investment. The most important outflow, of €70 million, came from the sale of the supermarket chain PLUS HELLAS by the German company TENGELMANN KKG to AB VASILOPOULOS SA. Under portfolio investment, a net outflow of €4,362 million was recorded, almost exclusively attributable to the fact that non-residents’ sales of Greek government bonds and Treasury bills and, secondarily, shares of Greek firms (of €4.4 and €0.4 billion, respectively) were offset only to a small extent by residents’ sales of foreign shares (of €0.3 million). "Other" investment recorded a considerable net inflow of €7,652 million, resulting from a large increase in non-residents’ deposit and repo holdings in Greece, which was substantially higher than the small rise in residents’ corresponding holdings abroad.

In the first quarter of 2008, direct investment showed a net outflow of €340 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece came to only €56 million, while net outflows of residents’ funds for direct investment abroad reached €395 million. During the same period, a net inflow of €6,955 million was recorded under portfolio investment, as the inflow of non-residents’ funds for investment in Greece (exclusively in Greek government bonds, of €11.6 billion) was considerably higher than outflows of residents’ funds for investment in foreign bonds and Treasury bills (worth €4.8 billion). Finally, under “other” investment, a relatively small net outflow of €544 million is attributable to the fact that a large part of the outflows of residents’ funds for investment in deposits and repos abroad and, secondarily, for repayment of loans granted by non-residents to residents was offset by inflows of non-residents’ funds for investment in deposits and repos in Greece.

At end-March 2008, Greece’s reserve assets stood at €2.4 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 2008 will be released on 24 June 2008.

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