Balance of payments: JUNE 2006
18/08/2006 - Press Releases
Current account balance
In June 2006, the current account deficit came to
€2,081 million, compared with €777 million in the same month of 2005. This
development is attributable mainly to a €1,098 million increase in the trade
deficit, which almost equally stemmed from the deficits of the oil, ships and
other goods balances. The widening of the current account deficit is also
accounted for, to a much smaller extent, by the growth of the income account
deficit (by €172 million) and the narrowing of the current transfers surplus (by
€30 million). Finally, the surplus of the services balance remained virtually
unchanged year-on-year.
The outturn of the surplus of the services balance firstly
reflects a €205 million rise in net travel receipts, which is
attributable to a €176 million (or 13.3%) hike in receipts (i.e. travel spending
in Greece by non-residents) and a €28 million (or 12.4%) decline in payments (i.e.
travel spending abroad by residents. However, the growth of net travel
receipts was offset on the one hand by a €116 million drop in net receipts from
transport (mainly shipping) services and, on the other hand, the fact that "other"
services recorded net payments of €76 million, compared with net receipts of €17
million in June 2005. Besides, the rise in the income account deficit mainly
reflects higher (by €112 million) net dividend and profit payments and, to a
lesser extent, higher net interest payments. Finally, the drop in the current
transfers surplus reflects the fact that current transfers from the EU to
general government recorded net payments of €42 million (compared with
net receipts of €3 million in June 2005), while net receipts from
transfers to the other sectors of the economy grew by €15 million. It should be
recalled 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 and receipts from
the European Social Fund, while current transfers to the EU include
Greece's contributions (payments) to the Community Budget.
In January-June 2006, the current account deficit
widened by €6,344 million over the same period of 2005 and reached €14,277
million, reflecting mainly a rise in the trade deficit and, to a much lesser
extent, an increase in the income account deficit and a narrowing of the
services surplus. The current transfers surplus also recorded a decrease, albeit
small.
The overall trade deficit (including oil and ships)
showed an increase of €4,623 million, which almost equally stemmed from rises in
the deficit excluding oil and ships, in the net oil import bill and in net
payments for purchases of ships (of €1,628, €1,614 and €1,381 million
respectively). It should be pointed out that receipts from goods exports (excluding
oil and ships) showed a remarkable rise (of €666 million or 13.5%), which,
however, was more than offset by a hike (of €2,321 million or 15.5%) in the
corresponding import bill.
The services surplus narrowed by €683 million, as a result
of, mainly, a €546 million drop in net transport receipts (because
transport receipts declined by €82 million, while transport payments increased
by €464 million) and, secondarily, a €284 million rise in net payments
for "other" services. By contrast, net travel receipts grew by €146
million (as receipts rose by €99 million and payments declined by €47 million).
The income account deficit grew by €1,004 million, almost
exclusively owing to higher net interest, dividend and profit payments. The
widening of the deficit is mainly accounted for by an increase in net interest
payments as a result of a continuing rise in non-residents' holdings of old and
new issues of Greek Government bonds.
Finally, the current transfers surplus narrowed slightly (by
€34 million), as the decrease in net (mainly EU) current transfers to general
government more than offset a rise in net current transfers to the other sectors
(excluding general government).
Capital transfers balance
In June 2006, the capital transfers balance showed a
surplus of €57 million, €35 million up year-on-year. (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 January-June 2006, the capital transfers balance
showed a surplus of €1,508 million, €461 million higher than in the same period
of 2005. This reflects almost exclusively a rise in EU capital transfers to
general government.
Combined current account and capital transfers balance
(according to the old method of presentation)
The combined current account and capital transfers balances (according
to the old method of presentation) showed a deficit of €2,024 million in June
2006, €1,270 million up year-on-year. Overall, in January-June 2006,
this deficit reached €12,769 million, compared with €6,885 million in the same
period of 2005.
Financial account balance
In June 2006, a net inflow of €117 million was
observed under direct investment. Specifically, residents' investment abroad
showed a net outflow of €61 million, while there was a net inflow of €178
million under non-residents' investment in Greece, chiefly featuring an inflow
of €31 million for the participation of SOGEN HOLDING in the share capital
increase of HSG CONSUMER FINANCE. Under portfolio investment, there was a net
outflow of €3,971 million, as a result of non-residents' disinvestment in Greek
government securities, which was only partly offset by non-residents' higher
purchases of Greek firms' shares (including €356 million in connection with the
sale of 20% of the share capital of the Postal Savings Bank to institutional
investors) and residents' lower investment in securities issued by non-residents.
"Other" investment showed a net inflow of €6,169 million, mainly reflecting a
decline in resident credit institutions' and institutional investors' deposit
and repo holdings abroad, which far outweighed a decrease in non-residents'
deposit and repo holdings in Greece.
In January-June 2006, direct investment showed a net
inflow of €1,010 million (compared with a net inflow of €145 million in
the same period of 2005). This development is mainly accounted for by a net
inflow of €1,351 million for non-residents' direct investment in Greece, which
was partly offset by a net outflow of €342 million for residents' direct
investment abroad. Under portfolio investment, a net inflow of €2,114 million
was recorded, as the inflow of non-residents' funds for investment in Greece (mainly
in Greek government securities and shares of Greek firms, of €4,825 and €2,420
million respectively) more than offset residents' outflows for investment abroad
(mainly in bonds and shares of foreign firms). Finally, under "other" investment,
a net inflow of €10,386 million is mainly attributable to non-residents' inflows
(of €10,190 million) to deposits and repos in Greece, while resident credit
institutions' and institutional investors' deposit and repo holdings abroad
dropped.
At end-June 2006, Greece's reserve assets reached €2.2
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 July 2006 will be
released on 19 September 2006.