Balance of payments FEBRUARY 2004
20/04/2004 - Press Releases
Current account balance
In February 2004, the current account balance improved
considerably and showed a small surplus, in comparison with a deficit in
February 2003. Specifically, the transfers surplus and the services surplus
approximately doubled. At the same time, the income account deficit narrowed. By
contrast, the trade deficit rose over the same period.
The growth of the trade deficit is mainly accounted for by an
increase in the non-oil import bill, which more than offset the rise in non-oil
export receipts. Moreover, the net oil import bill grew slightly. The increase
in the services surplus stemmed from higher net transport receipts, while net
travel receipts remained virtually unchanged. Finally, the rise in the transfers
surplus reflects an increase in net EU transfers to general government to EUR
1,436 million, from EUR 614 million in February 2003.
In January-February 2004, the current account deficit
narrowed considerably (by EUR 1,082 million) over the same period in 2003 and
reached EUR 1,196 million. Specifically, the trade deficit fell slightly
relative to the same period in 2003. This reflects a EUR 189 million decrease in
the net oil import bill, which was partly offset by a EUR 136 million increase
in the non-oil trade deficit. Besides, the services surplus grew considerably (by
EUR 415 million) due to a marked rise in net transport receipts, while net
travel receipts dropped. The income account deficit fell by EUR 159 million as a
result of a decrease in net interest, dividend and profit payments. Finally, the
transfers surplus grew by EUR 455 million, because of an increase in net EU
transfers to general government.
Financial account balance
In February 2004, there were no significant direct
investment flows. Under portfolio investment, a net inflow of EUR 3,112 million
mainly reflects purchases of Greek government bonds by non-residents. Finally,
as regards "other investment", a net outflow of EUR 3,443 million was
mainly associated with a rise in resident credit institutions' and institutional
investors' deposits and repo holdings abroad, as well as a drop in non-residents'
deposits and repo holdings in Greece.
In January-February 2004, a net inflow of EUR 356
million was observed under direct investment. Over the same period, a
substantial net inflow of EUR 2,552 million was recorded under portfolio
investment. This mainly reflects the fact that the inflow of funds as a result
of increased non-residents' holdings of Greek government paper far outweighed
the outflow of funds accounted for by the rise in residents' investments in
securities issued by non-residents. Finally, under ''other investment'' a net
outflow of EUR 2,827 million was recorded, which is mainly connected with
residents' (mainly credit institutions') continued sizeable outflows to deposits
and repos abroad.
At end-February 2004, Greece's reserve assets came to EUR
3.7 billion. It should be noted that since the first months of 2003 the Bank of
Greece has been diversifying its portfolio, by reducing its non-euro area
currency (mainly US dollar) holdings, which are included in reserve assets, and
increasing its higher-yield or euro-denominated assets (mainly bonds issued by
euro area Member States, which are not included in reserve assets). Given that
there is now less need to maintain high foreign currency reserves, by the above
diversification the Bank of Greece has been improving the return on its
investments. (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 2004 will be
released on 21 May 2004.