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Balance of payments: JANUARY 2007

21/03/2007 - Press Releases

Current account balance

In January 2007, the current account balance showed a deficit of €2,804 million, i.e. €582 million higher than in January 2006. This development reflects the widening mainly of the trade deficit and secondarily of the income account deficit, which was not offset by a small increase in the surpluses of the services balance and the current transfers balance.

The €553 million rise in the trade deficit mainly reflects increases of €310 million and €209 million in net payments for purchases of ships and in the trade deficit excluding oil and ships, respectively, while the net oil import bill grew by only €34 million. It should be pointed out that exports of goods excluding oil and ships continued to rise markedly (by €122 million or 14.0%), but the corresponding imports also grew at the same time (by €331 million or 12.3%). The €40 million hike in the surplus of the services balance is attributable mainly to a decline in the deficit of the travel services balance (it should be pointed out that in January residents' travel spending abroad outstripped non-residents' spending in Greece) and, secondarily, to a rise in the surplus of the transportation services balance. The widening of the income account deficit mainly reflects higher net interest payments on deposits and loans and, secondarily, increased interest payments on Greek government bonds held by non-residents. Finally, the growth of the current transfers surplus is accounted for by higher net current transfers from the EU to general government. 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, 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 2007, the capital transfers balance showed a surplus of €74 million, i.e. it doubled year-on-year. Capital transfers 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 (according to the old method of presentation)

The combined current account and capital transfers balance showed a deficit of €2,730 million in January 2007, compared with €2,186 million in January 2006.

Financial account balance

In January 2007, there were no substantial flows recorded under direct investment. In particular, under non-residents' investment in Greece, the most important inflow (€22 million) concerned the acquisition of the diagnostic branch of BAYER HELLAS by SIEMENS (Germany). Residents' investment abroad came to €95 million: the most important outflow (€17 million) concerned the acquisition of the company TECHNO ACCION (Argentine) by INTRALOT. Under portfolio investment, a net inflow of €4,192 million was recorded, mainly reflecting non-residents' purchases of Greek government bonds and shares of Greek firms (of €2,912 million and €1,561 million respectively) and declines (of €322 million and €293 million) in residents' holdings of foreign shares and Treasury bills, respectively. These developments were partly offset by increases (of €631 million and €176 million) in residents' holdings of foreign bonds and financial derivatives, respectively. ''Other'' investment recorded a small net outflow of €1,912 million, mainly because the rise in Greek credit institutions’ and institutional investors’ deposit and repo holdings abroad was only partly offset by an increase in foreign credit institutions' corresponding investment in Greece.

At end - January 2007, Greece's reserve assets reached €2.0 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 2007 will be released on 20 April 2007.

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