Press Releases

Balance of payments: May 2012

20/07/2012 - Press Releases

Current account balance

In May 2012, the current account balance showed a deficit of €1.2 billion, down by €728 million or 37.9% year-on-year.

The trade deficit fell by €232 million, as a result of a €358 million decrease in the trade deficit excluding oil and ships, as well as a €280 million decline in net payments for purchases of ships. By contrast, the net oil import bill rose by €406 million or 60.3%, offsetting the aforementioned improvement to a large degree. The trade deficit excluding oil and ships narrowed due to a considerable rise of €152 million (or 14.1%) in export receipts and an also considerable decline of €206 million (or 9.0%) in the import bill.

The surplus of the services balance shrank by €182 million as a result of higher net payments for “other” services and lower net travel receipts. Over the same period, net transport receipts rose. In more detail, travel spending in Greece by non-residents declined by 13.9% year-on-year, while travel spending abroad by residents of Greece fell by only 3.9%; as a result, net receipts decreased by €115 million. In the same month, non-residents’ arrivals decreased by 12.2%, according to the Bank of Greece’s border survey. Gross transport receipts (chiefly from merchant shipping) increased by 4.4% and the corresponding payments fell by 7.8%, resulting in higher net receipts by €103 million.

The income account deficit narrowed by €584 million, owing to a €587 million decline in net payments for interest, dividends and profits, which mainly reflects a €513 million decrease in net interest payments on Greek government bonds held by non-residents, following the PSI.

Finally, the current transfers balance showed a much smaller deficit year-on-year, mainly on account of lower general government net transfer payments (chiefly to the EU). (It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF), as well as receipts from the European Social Fund, while current transfers to the EU include Greece’s contributions (payments) to the Community Budget.)

In the January-May 2012 period, the current account deficit fell by €4.5 billion or 39.9% year-on-year, to €6.8 billion. This development reflects, primarily, the substantial decline of €2.6 billion in the non-oil trade deficit, as well as a €1.1 billion decrease in the income account deficit and rises of €502 million and €161 million in the surpluses of the services balance and the current transfers balance, respectively. At the same time, the net oil import bill fell slightly by €148 million. It should be recalled that this decline is the combined result of the January figure – which was considerably lower compared to the January 2011 figure (which included a deferred payment concerning imports of the year 2010) – and probably the decline in the volume of imports in February and April 2012. In any event, in March and May 2012 the net oil import bill increased considerably.

In more detail, the trade deficit decreased by €2.8 billion, as a result of a €1.6 billion (or 29.0%) decline in the trade deficit excluding oil and ships and a €1 billion fall in net payments for purchases of ships, whereas the net oil import bill also fell, as already mentioned. Receipts from exports of goods excluding oil and ships rose by 7.5%, while the corresponding import bill decreased at a relatively faster pace (11.5%).

An increase in the surplus of the services balance is mainly due to higher net transport receipts and, secondarily, lower net payments for “other” services, whereas net travel receipts fell slightly in the first five months of 2012. In more detail, travel spending in Greece by non-residents fell markedly (by 12.5%) year-on-year, reflecting also a decrease in non-residents’ arrivals at an average year-on-year rate of 10.8% (according to data from the Bank of Greece’s border survey). At the same time, however, travel spending abroad by residents of Greece fell by 21.3%, resulting in a slight decline of €19 million in net receipts. Over the same period, gross transport receipts (chiefly from merchant shipping) remained unchanged (+0.9%), but the corresponding payments fell by 12.5%; as a result, net receipts rose by €441 million.

The income account deficit fell by €1.1 billion year-on-year, mainly owing to a sharp decline in net interest payments on Greek government bonds held by non-residents, which is due to the PSI.

Finally, the current transfers balance showed a surplus of €1.2 billion, up by €161 million year-on-year. This development is due to, primarily, a €127 million decline in the net transfer payments of the sectors other than general government (mainly emigrants’ remittances) and, secondarily, a €34 million rise in general government net transfer receipts (mainly from the EU).

Capital transfers balance

In May 2012, the capital transfers balance showed a small surplus of €2.7 million, compared with €15.6 million in May 2011, as a result of a decrease in net EU capital transfers to general government. (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 the January-May 2012 period, the capital transfers balance showed a surplus of €1.1 billion, compared with €321 million in the corresponding period of 2011. This exclusively reflects a rise in net EU capital transfers to general government.

The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €2.3 billion in the January-May 2012 period, up by €922 million year-on-year, reflecting the above-mentioned positive development in EU capital transfers.

Combined current account and capital transfers balance

In May 2012, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €1.2 billion, compared with €1.9 billion in March 2011. In the January-May 2012 period, this balance showed a deficit of €5.7 billion, compared with €11.0 billion in the corresponding period of 2011 (down by 48.0%), i.e. it fell at a faster pace than the current account deficit.

Financial account balance

In May 2012, non-residents’ direct investment in Greece showed a net outflow (decline) of €79 million. The most important transaction under this category concerns an inflow of €47 million for the participation of the Cypriot company TBG Cyprus Holdings Limited in the share capital increase of PepsiCo-Ivi S.A. Residents’ direct investment abroad recorded a net outflow (increase) of €56 million, without any remarkable transaction.

Under portfolio investment, a net outflow of €7.4 billion was recorded, reflecting both a €3.7 billion increase (outflow) in residents’ holdings of foreign bonds and Treasury bills and a €3.3 billion decrease (outflow) in non-residents’ holdings of Greek bonds and Treasury bills. There was also a €355 million increase in residents’ holdings of shares of foreign firms and a €57 million decline in non-residents’ holdings of shares of Greek firms (outflows).

Under “other” investment, a net inflow of €8.9 billion was recorded, which is mainly attributable to a net €4.7 billion increase (inflow) in the outstanding debt of the public and the private sector to non-residents (of which €4.2 billion concern general government borrowing from the EFSF). There was also an inflow as a result of a €4.4 billion increase in non-residents’ deposit and repo holdings in Greece. Resident credit institutions’ and institutional investors’ deposit and repo holdings abroad recorded an increase (outflow) of €126 million.

In the January-May 2012 period, direct investment showed a net outflow of €59 million (compared with a net outflow of €567 million in the corresponding period of 2011). Specifically, non-residents’ direct investment in Greece showed a net outflow of €342 million, while residents’ direct investment abroad showed a net inflow of €283 million (decline).

A net outflow of €72.3 billion was observed under portfolio investment (against a net outflow of €9.7 billion in the corresponding period of 2011). In more detail, a capital outflow was recorded mainly due to a €40.9 billion increase in resident institutional investors’ holdings of foreign bonds and Treasury bills, as well as a €30.8 billion decrease in non-residents’ holdings of Greek bonds and Treasury bills (outflow). Secondarily, a capital outflow was also recorded on account of a €608 million increase in residents’ holdings of foreign financial derivatives.

Under “other” investment, a net inflow of €79.0 billion was recorded (compared with a net inflow of €21.5 billion in the corresponding period of 2011). This is chiefly attributable to a €73.9 billion increase in the net outstanding debt of the public and the private sector to non-residents (inflow) and to an €11.7 billion decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow). In more detail, net general government borrowing came to €74.5 billion and concerns public sector borrowing from the EFSF and the IMF. This development was partly offset by a €6.3 billion decline (outflow) in non-residents’ holdings of deposits and repos in Greece.

At end-May 2012, Greece’s reserve assets stood at €5.5 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. Excluded are euro-denominated claims on non-euro area residents, claims (in foreign currency and in euro) on euro area residents, and the Bank of Greece share in the capital and reserves of the ECB.)

Note: Balance of payments data for June 2012 will be released on 20 August 2012.

Related link: Balance of payments: May 2012 - Table

 

 

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