Balance of payments: February 2015

20/04/2015 - Press Releases

Balance of Payments: February 2015 (1)

Current account balance

In February 2015, the current account balance showed a deficit of €929 million, up by €200 million year-on-year. This development is mainly attributable to the deterioration in the primary and the secondary income accounts, as well as to a decline in the surplus of the services balance. The above developments were offset to some extent by an improvement in the balance of goods.

The deficit of the balance of goods decreased considerably by €357 million, year-on-year, mainly on account of the lower net oil import bill, which reflects the fall in oil prices. In addition, net payments for purchases of ships also declined. By contrast, the deficit of the balance of goods, excluding oil and ships registered a small increase, despite a 5% rise in export receipts, given that the corresponding imports grew more.

The surplus of the services balance shrank, owing to lower net receipts primarily from construction services and intellectual property rights (royalties), and secondarily from transport (mainly sea transport) services. However, the surplus of the travel services balance rose slightly, as a result of a significant increase (of 56%) in non-residents’ arrivals in February and a 16.2% rise in the corresponding receipts, which was largely offset by an increase in travel spending abroad by residents.

The primary income account showed a deficit of €175 million, against a surplus in the same month of 2014, mainly on account of higher net interest, dividend and profit payments and lower net other primary income, which includes taxes and subsidies on products and production.

The secondary income account showed a deficit of €108 million, up by €87 million year-on-year, mainly on account of higher net general government payments to the EU.

In the January-February 2015 period, the current account balance showed a deficit of €1.8 billion, up by €711 million year-on-year. This increase is primarily attributable to the deterioration in the primary and the secondary income accounts, and secondarily in the services balance. By contrast, the balance of goods improved slightly.

The deficit of the balance of goods decreased due to a drop in the net oil import bill, as a result of the fall in oil prices, and in net payments for purchases of ships, which was offset by an increase in the deficit of the balance of goods excluding oil and ships. It should be noted that exports of goods excluding oil and ships are lower in the January-February 2015 period, as they fell in January, while in February they registered an increase compared with the corresponding aggregates in 2014.

The surplus of the services balance shrank, as the decline in net transport and other services receipts was only partly offset by a rise in net travel receipts. In the January-February 2015 period, total non-residents’ arrivals increased by 52.7% year-on-year, but the corresponding receipts grew by a mere 12.4%.

As a result of the above developments, the overall balance of goods and services recorded a deficit, which was higher by €32 million year-on-year.

In the January-February 2015 period, the surplus of the primary income account shrank, mainly on account of higher net payments related to investment income (interest, dividends, and profits). Finally, the secondary income account recorded a deficit, against a surplus in the same period of 2014.

Capital account balance

In February 2015, the capital account surplus fell by €1.4 billion year-on-year, reflecting lower net capital transfers from the EU to general government. In the January-February 2015 period, the capital account showed a small surplus of €159 million, down by €1.3 billion year-on-year.

Combined current and capital account balance

In February 2015, the combined current and capital account balance (corresponding to the economy’s external financing requirements) showed a deficit of €820 million, against a surplus of €739 million in February 2014. In the January-February 2015 period, a deficit of €1.6 billion was recorded, against a surplus of €390 million in the same period of 2014.

Financial account balance

In February 2015, residents’ net assets from direct investment abroad rose by €35 million, while the corresponding liabilities that represent non-residents’ direct investment in Greece increased by a mere €4 million (without any remarkable transactions).

Under portfolio investment, the net decrease (of €9.6 billion) in residents’ external assets reflects mainly a fall (of €11.3 billion) in residents’ holdings of foreign bonds and Treasury bills (including the transfer of EFSF notes of €10.9 billion from the Hellenic Financial Stability Fund to the EFSF). Conversely, residents’ net external liabilities declined (by €730 million).

Under other investment, a net increase (of €2.8 billion) in assets was recorded, which reflects mainly the statistical adjustment that relates to the issue of banknotes. The net decrease (of €5.3 billion) in liabilities reflects mainly a net decline of €12.3 billion in the outstanding debt of the public and the private sector to non-residents (of which €10.9 billion concern a reduction in public sector borrowing as a result of the transfer of EFSF notes from the Hellenic Financial Stability Fund to the EFSF and €749 million concern principal payments to the IMF under the support mechanism). By contrast, a net increase of €4.3 billion was recorded in non-residents’ deposit and repo holdings in Greece (the TARGET account included).

In the January-February 2015 period, residents’ net assets from direct investment abroad rose by €76 million, while the corresponding liabilities that represent non-residents’ direct investment in Greece did not show any notable change.

Under portfolio investment, the net decrease of €8.3 billion in residents’ external assets is mainly due to a drop of €12.1 billion in residents’ holdings of foreign bonds and Treasury bills. Moreover, residents’ net external liabilities fell by €2.2 billion, mainly on account of a decline in non-residents’ investment in Greek government bonds and Treasury bills, as well as in shares of Greek firms.

Finally, under other investment, the net increase of €12.5 billion in assets reflects mainly the statistical adjustment that relates to the issue of banknotes (2) and the rise in residents’ deposit and repo holdings abroad. The issue of banknotes above Greece’s key for subscription to the Eurosystem resulted in a net increase in residents’ liabilities, as the rise in their outstanding debt was, for most of its part, offset by a rise in non-residents’ deposit and repo holdings in Greece.

At end-February 2015, Greece’s reserve assets stood at €5.7 billion, compared with €5.1 billion at end-February 2014.

Note: Balance of payments data for March 2015 will be released on 22 May 2015.

(1) It should be noted that, as from reference month January 2015, the presentation of the balance of payments is based on the Balance of Payments Manual 6th edition (BPM6). For more information on the transition to the new BPM6 methodology, see the relevant press release published by the Bank of Greece on 23 March 2015.

(2) It should be noted that, as from January 2015, under other investment, the statistical adjustment that relates to the issue of (euro) banknotes above the key for subscription to the European Central Bank’s capital is also recorded under liabilities, representing liabilities of the Bank of Greece vis-à-vis the Eurosystem. This entry is offset by an entry of the same amount under assets, representing residents’ assets vis-à-vis the Eurosystem.