Balance of payments: DECEMBER 2005
20/02/2006 - Press Releases
Current account balance
In December 2005, the current account showed a deficit
of €2,496 million, €676 million higher than in December 2004. This
development is attributable to increases in the trade and income account
deficits and a decline in the services surplus. By contrast, the current
transfers surplus showed a small rise. (It should be recalled that, according to
the new presentation, the transfers balance is now divided into two parts: the
current transfers balance, which is classified under the current account, and
the capital transfers balance, which is a separate section. Thus, the new
current account balance comprises the trade balance, the services balance, the
income account balance and the current transfers balance, while the capital
transfers balance is an independent part of the balance of payments. Therefore,
in this new presentation of the balance of payments, the algebraic sum of the
current account balance and the capital transfers balance corresponds to the
current account balance as presented until recently, i.e. regarding data up to
and including June 2005.)
The trade deficit excluding oil and ships shrank by €125
million in December and the deficit of the ships' balance (sales minus
purchases) dropped by €60 million (year-on-year). However, since the deficit
of the oil balance rose by €637 million, the overall trade deficit eventually
widened by €452 million year-on-year.
The overall surplus of the services balance dropped by €53
million year-on-year, mainly reflecting a €72 million decline in the surplus
of the transport services balance. Furthermore, the travel services balance
showed a small deficit (as in December 2004), which was €7 million larger
year-on-year. By contrast, the "other services" deficit narrowed by
€26 million.
The €216 million increase in the income account deficit is
mainly attributable to a rise in interest payments on Greek government bonds
held by non-residents. (It should be recalled that, as from April 2005, the
methodology of recording interest on bonds in the balance of payments statistics
changed, so that interest payments are recorded on an accruals basis, rather
than on a cash basis, as they had been up to and including March 2005. Thus,
data are recorded more accurately. For comparability purposes, the monthly data
going back to January 2003 have also been revised.)
Finally, the current transfers surplus grew by €46 million
year-on-year. Specifically, net current transfers from the EU rose by €10
million in comparison with December 2004. (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 to the Community Budget.)
In 2005 (January-December), the current account
deficit widened by €3,594 million in comparison with 2004 and reached
€14,047 million, reflecting mainly a rise in the trade deficit and the income
account deficit and, secondarily, a drop in the current transfers surplus. The
small increase in the services surplus only partly offset the above
developments.
The €2,111 million rise in the overall trade deficit
(including oil and ships) is mainly due to the growth of the net oil import bill
by €2,118 million and, secondarily, to the fact that the ships' balance showed
a deficit of €722 million, compared with a surplus of €136 million in 2004.
(This outturn of the ships' balance mainly reflects a considerable increase in
payments for purchases of new sea-going ships from abroad.) These developments
more than offset the favourable outturn of the trade deficit excluding oil
and ships, which narrowed by €865 million, because exports
(excluding oil and ships) grew by €524 million, while the corresponding
imports declined by €341 million in comparison with 2004.
The services surplus widened by €231 million, as a result
of an increase in net travel and transport receipts. Specifically, gross travel
receipts (i.e. travel spending in Greece by non-residents) grew by €689
million (or 6.7%), while gross payments (i.e. travel spending abroad by
residents) rose by €135 million or 5.9%, thereby pushing up net travel
receipts by €553 million year-on-year. Net transport receipts increased only
by €55 million, as a considerable rise (of €564 million) in gross transport
(mainly shipping) receipts, despite the continuing drop in freight rates in
international markets, was largely offset by the growth of gross transport
payments (by €509 million). Finally, net payments for "other"
services rose by €377 million.
In 2005, the income account deficit grew by €1,263 million,
as net interest, dividend and profit payments increased. The deficit increase is
mainly attributable to a continuing rise in non-residents' holdings of old and
new issues of Greek Government bonds.
Finally, the €452 million fall in the current transfers
surplus in comparison with 2004 is attributable mainly to a €282 million drop
in net current transfers to the "other" sectors (excluding general
government) and, secondarily, to a €169 million decrease in net current
transfers to general government (mainly from the EU). However, it should be
stressed that gross current transfers to general government (mainly from the EU)
rose by €535 million or 13.1%, but in the end net transfers dropped, as
general government gross current payments to the EU grew by €705 million or
31.8%.
Capital transfers balance
In December 2005, the capital transfers balance showed
a surplus of €362 million, €87 million larger than in December 2004.
(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 2005, the capital transfers balance showed a
surplus of €2,049 million, i.e. smaller by €337 million than in 2004. This
mainly reflects a €327 million decrease in capital transfers to general
government from the EU.
Combined current account and capital transfers balance
(according to the old method of presentation)
The combined current account and capital transfers balances
(on the basis of the old method of presentation) showed a deficit of €2,134
million in December 2005, compared with a deficit of €1,546 million in
December 2004. Overall, in 2005, the deficit amounted to €11,999
million, compared with €8,067 million in 2004.
Financial account balance
In December 2005, no significant flows were observed
under direct investment, except for an inflow of €69 million representing
Credit Agricole's participation in Emporiki Bank's share capital increase. Under
portfolio investment, a net outflow of €212 million was observed, as the
€964 million inflow of non-residents' funds, for purchases of, mainly, Greek
government bonds, and, secondarily, shares, was more than offset by a €1,177
million outflow of residents' funds for corresponding purchases abroad.
"Other" investment showed a net inflow of €2,124 million, which is
attributable to the fact that the decline in residents' repo and deposit
holdings abroad overshot the decrease in the corresponding holdings in Greece by
non-residents.
In 2005, direct investment showed a net outflow
of €979 million (compared with a net inflow of €600 million in the previous
year). This development is accounted for mainly by a net outflow of €767
million for residents' direct investment abroad and, secondarily, by a net
outflow of €212 million under non-residents' investment in Greece. Portfolio
investment recorded a net inflow of €7,323 million, since the outflow of
residents' funds for investment abroad (mainly in bonds) was more than offset by
a €20.7 billion inflow of non-residents' funds for investment primarily in
Greek government paper and - to a considerable extent - shares of Greek firms
(€5.1 billion). Finally, under "other" investment, a net inflow of
€5,914 million reflects the fact that the inflow of funds (€12,215 million),
mainly for non-residents' investment in deposits and repos in Greece, was
largely offset by the outflow of residents' funds (€6,301 million), primarily
for similar investment abroad.
At end-2005, Greece's reserve assets came to €1.9
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 January 2006 will
be released on 21 March 2006.