Balance of payments: January 2011

21/03/2011 - Press Releases

Current account balance

In January 2011, the current account deficit fell considerably by €807 million or 22.5% year-on-year, reaching €2,786 million. This development is attributable to the fact that the current transfers balance recorded a sizeable surplus, compared with a deficit in January 2010. Moreover, the surplus of the services balance rose slightly. By contrast, the trade and the income account deficits grew.

The widening of the trade deficit by €185 million is exclusively accounted for by a €598 million or 56% increase in the net oil import bill. By contrast, net payments for purchases of ships dropped by €36 million. Moreover, the trade deficit excluding oil and ships shrank by €377 million, as the import bill declined by €264 million or 10.9%, while the corresponding export receipts rose by €112.9 million or 14.1%.

The €44.4 million rise in the surplus of the services balance was a result of lower net payments for, mainly, other services and, secondarily, travel services, while net transport receipts fell by €37 million. This decline is a result of a fall in net air transport receipts, while net transport receipts from merchant shipping rose marginally.

A small €8 million increase in the income account deficit chiefly reflects higher net fee and wage payments. Finally, the current transfers balance shifted from a deficit in January 2010 to a sizeable surplus of €689 million, mainly as a result of higher general government receipts which concern direct aid and subsidies under the Common Agricultural Policy. However, it should be taken into account that, due to the quick implementation of the relevant procedures, the bulk of EU current transfers to general government expected for the whole of 2011 has already been absorbed during the first two months of the year.

(It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF) under 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.)

Capital transfers balance

In January 2011, the capital transfers balance showed a deficit of €12.5 million, compared with a surplus of €32 million in January 2010. (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.)

Combined current account and capital transfers balance

In January 2011, the combined current and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €2,799 million, down by €763 million year-on-year.

Financial account balance

In January 2011, residents’ direct investment abroad recorded a net outflow of €67 million (compared with a net outflow of €59 million in January 2010), without any remarkable transactions. Non-residents’ direct investment in Greece showed a net inflow of €45 million (compared with a net outflow of €37 million in January 2010), without any remarkable transactions.

Under portfolio investment, a net outflow of €926 million was recorded (compared with a net inflow of €3.8 billion in January 2010), mainly reflecting outflows of €1.1 billion as a result of a decrease in non-residents’ investment in Greek bonds and Treasury bills. This was partly offset by a €184 million inflow due to a drop in residents’ investment in foreign shares, as well as by a €114 million inflow owing to an increase in non-residents’ investment in shares of Greek firms.

Under “other” investment, a net inflow of €3.2 billion was recorded (compared with a net inflow of €0.4 billion in January 2010), which mainly reflects a €6.0 billion increase in the outstanding debt of the public and the private sector to non-residents (of which €6,162 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 offset by a €1.2 billion rise in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (outflow) and a €1.5 billion decrease in non-residents’ deposit and repo holdings in Greece (outflow).

At end-January 2011, Greece’s reserve assets stood at €4.7 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 February 2011 will be released on 20 April 2011.