Balance of payments: November 2012

25/01/2013 - Press Releases

Current account balance

In November 2012, the current account balance showed a deficit of €850 million, down by 62.8% year-on-year.

The trade deficit narrowed by €828 million, as a result of a €352 million decrease in the trade deficit excluding oil and ships, as well as declines of €372 million and €103 million in the net oil import bill and the net import bill for ships, respectively. The trade deficit excluding oil and ships shrank almost exclusively due to the reduced import bill (down by €349 million or 16.2%), given that export receipts remained almost unchanged (having recorded only a small increase of 0.2%).

The surplus of the services balance narrowed by €61 million mainly as a result of lower net transport receipts and – only marginally -- lower net travel receipts, while the “other” services balance showed a small surplus (compared with a deficit in November 2011). In more detail, compared with November 2011, travel spending in Greece by non-residents declined by 7.5%, while travel spending by residents abroad fell by 5.3%; as a result, net receipts fell by €6.4 million. In the same month, non-residents’ arrivals decreased by 7.2%, according to data from the Bank of Greece’s border survey. Gross transport receipts (chiefly from merchant shipping) fell by 14.2% and the corresponding payments dropped by 10.1%, resulting in lower net receipts by €109 million.

The income account showed a deficit of only €4 million, compared with a deficit of €588 million a year earlier, reflecting net interest, dividend, and profit receipts of €22 million in November 2012, against net payments of €565 million in November 2011. This development mainly reflects a €487 million decline in net interest payments on Greek government bonds held by non-residents following the PSI, and secondarily, (a) lower net interest payments on deposits and loans, and (b) net receipts from dividends and profits, against net payments in November 2011.

Finally, the current transfers balance showed a deficit of €57 million, compared with a deficit of €140 million in November 2011, due to, on the one hand, a year-on-year decline in net general government transfer payments (chiefly to the EU), and, on the other hand, an increase in the net transfer receipts of the “other sectors” (mainly emigrants’ remittances). (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-November 2012 period, the current account deficit contracted by €13.4 billion or 72.7% year-on-year, to €5.1 billion. This development mainly reflects a significant decline of €6.7 billion in the trade deficit and a €5.4 billion drop in the income account deficit, as well as increases of €1.1 billion and €253 million in the surpluses of the current transfers balance and the services balance, respectively.

In more detail, the trade deficit shrank as a result of a €3.8 billion (or 32.6%) decline in the trade deficit excluding oil and ships and a drop of €2.2 billion (or 68.2%) and €693 million (or 6.6%) in net payments for purchases of ships and in the net oil import bill, respectively. Receipts from exports of goods excluding oil and ships rose by 2.4%, while the corresponding import bill fell at a much faster pace (14.6%).

The increase in the surplus of the services balance in the January-November 2012 period is chiefly due to higher net transport receipts and, secondarily, lower net payments for “other” services, while net travel receipts declined marginally. In more detail, travel spending in Greece by non-residents fell by 4.6% year-on-year, while non-residents’ arrivals declined at an average annual rate of 5.6% (according to data from the Bank of Greece’s border survey). At the same time, travel spending abroad by residents of Greece fell by 19.2%, resulting in a decline of €74 million or 0.9% in net receipts. During the same period, gross transport receipts (chiefly from merchant shipping) fell by 4.8%, but the corresponding payments recorded a stronger decline (of 12.8%); as a result, net receipts increased by €239 million.

The income account deficit fell by €5.4 billion year-on-year, mainly owing to a sharp decline in net interest payments on Greek government bonds held by non-residents. This decline is a result of the PSI and deferred interest payments on loans under the support mechanism through the ECB owing to interest rate changes, as already mentioned in the press release for June 2012 data.

Finally, the current transfers balance showed a surplus of €1.4 billion, up by €1.1 billion year-on-year. This development is mainly due to an €830 million rise in the net current transfer receipts of general government (mainly from the EU) and to the fact that the “other sectors” balance (mainly emigrants’ remittances) recorded net transfer receipts of €19.5 million, against net transfer payments of €230 million in the corresponding period of 2011.

Capital transfers balance

In November 2012 the capital transfers surplus fell to €253 million, compared with €734 million in November 2011, reflecting a decline in the surplus of 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-November 2012 period, the capital transfers balance showed a surplus of €1.8 billion, down from €1.9 billion in the corresponding period of 2011. This stems exclusively from a decline in net EU capital transfers to general government.

The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3.2 billion in the period under review, up by €1.0 billion year-on-year, reflecting the above-mentioned positive development in EU current transfers.

Combined current account and capital transfers balance

The combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a deficit of €597 million in November 2012, compared with €1.55 billion in November 2011. In the January-November 2012 period, this balance showed a deficit of just €3.2 billion, compared with €16.6 billion in the corresponding period of 2011 (down by 80.6%), i.e. it fell at a faster pace than the current account deficit.

Financial account balance

In November 2012 non-residents’ direct investment showed a net outflow of €144 million, mainly on account of negative reinvested earnings (i.e. losses instead of profits on the balance sheets of corporate direct investors in Greece). Residents’ direct investment abroad also recorded a net outflow (increase) of €212 million. The most important transactions concerned (a) an €80 million outflow for the participation of Emporiki Bank in the share capital increase of its subsidiary Emporiki Bank Cyprus Ltd. (Cyprus) and (b) a €72 million outflow for the participation of Εurobank in the share capital increase of its subsidiary EFG New Property Holdings (Cyprus).

Under portfolio investment, a net inflow of €2.8 billion was recorded mainly as a result of a €1.4 billion decline in residents’ investment in foreign bonds and Treasury bills and a €1.4 billion increase in non-residents’ purchases of Greek bonds and Treasury bills.

As regards “other” investment, a net outflow of €1.6 billion was recorded, which is mainly attributable to a €1.2 billion net decline in non-residents’ deposit and repo holdings in Greece (outflow), a €296 million increase (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, as well as a €136 million net decline in the outstanding debt of the public and the private sector to non-residents (outflow).

In the January-November 2012 period, direct investment showed a net inflow of €1.7 billion (against a net outflow of €2.3 billion in the corresponding period of 2011). More specifically, non-residents’ direct investment in Greece showed a net inflow of €1.7 billion, while residents’ direct investment abroad showed a net inflow of €52.4 million (disinvestment).

A net outflow of €74.8 billion was observed under portfolio investment (compared with a net outflow of €19.5 billion in the corresponding period of 2011). In more detail, the capital outflow was due, on the one hand, to a €38.7 billion increase in resident institutional investors’ holdings of foreign bonds and Treasury bills (including EFSF bonds) and, on the other hand, a €35.0 billion decrease in non-residents’ holdings of Greek bonds and Treasury bills. Furthermore, a capital outflow was recorded also on account of increases of €803.2 million and €115 million in residents’ holdings of foreign financial derivatives and foreign shares, respectively. A €126 million outflow was also recorded due to a decline in non-residents’ holdings of shares of Greek firms.

Under “other” investment, a net inflow of €77.3 billion was recorded (compared with a net inflow of €38.8 billion in the corresponding period of 2011). This is chiefly attributable to a €75.7 billion increase in the net outstanding debt of the public and the private sector to non-residents (inflow) and to a €15.1 billion decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow). In more detail, net general government borrowing came to €75.1 billion and reflects gross public sector borrowing of €75.6 billion from the EFSF and the IMF. These developments were partly offset by a €12.1 billion decline in non-residents’ holdings of deposits and repos in Greece (outflow).

At end-November 2012, Greece’s reserve assets stood at €6.0 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. 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 December 2012 will be released on 19 February 2013.