Press Releases

Balance of payments: FEBRUARY 2008

21/04/2008 - Press Releases

Current account balance

In February 2008, the current account deficit narrowed by €1,317 million year-on-year, to reach €1,843 million, reflecting a considerable surplus in the current transfers balance, as well as an increase in the surplus of the services balance. These developments more than offset a widening mainly of the trade deficit and, secondarily, of the income account deficit.

The year-on-year increase of €707 million in the overall trade deficit is attributable to increases of €346 million, €186 million and €175 million in the trade deficit excluding oil and ships, the net oil import bill and net payments for purchases of ships, respectively.

The surplus of the services balance widened by €150 million, as a result of an increase in net transport receipts (up €258 million), which more than offset the rises in both net travel payments and net payments for other services (up €27 million and €81 million respectively).

The €81 million rise in the income account deficit is mainly attributable to higher net interest, dividend and profit payments.

The current transfers balance showed a considerable surplus of €1,667 million (compared with a deficit of €289 million in February 2007), as EU transfers to general government increased, while general government payments to the EU declined. (It should be noted 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, 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 January-February 2008, the current account deficit dropped by €1,090 million over the same period in 2007 and reached €4,839 million, mainly reflecting the significant increase in the surplus of the current transfers balance and in the surplus of the services balance, which more than offset a rise in the trade deficit and a small increase in the income account deficit.

The €902 million hike in the overall trade deficit was mainly a result of increases (of €748 million and €283 million) in the trade deficit excluding oil and ships and in the net oil import bill, respectively. By contrast, net payments for purchases of ships dropped by €129 million. With respect to the trade balance excluding oil and ships, export receipts grew by €354 million or 19.5%, while the corresponding import bill rose by €1,103 million or 19.0%.

The services surplus expanded by €703 million, reflecting higher net transport receipts. The travel services balance remained almost unchanged, while net payments for other services grew. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 45% and gross travel receipts by 14.6%.

The income account deficit rose by €92 million, as a result of higher net interest, dividend and profit payments. This development is mainly associated with a rise in non-residents ' holdings of public debt.

Finally, the €1,381 increase in the surplus of the current transfers balance is attributable to both a rise in EU transfers to general government and a decline in general government payments to the EU.

Capital transfers balance

In February 2008, the capital transfers balance showed a surplus of €887 million, compared with €767 million in February 2007. (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-February 2008, the capital transfers balance showed a surplus of €1,341 million, i.e. considerably higher (by €500 million) than in the same period of 2007. This reflects a rise in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €2,867 million, compared with €986 million in 2007.

Combined current account and capital transfers balance (according to the old method of presentation)

The combined current account and capital transfers balance (according to the old method of presentation) showed a deficit of €956 million in February 2008, compared with a deficit of €2,394 million in the same month of 2007. In January-February 2008, this deficit came to €3,498 million, compared with €5,088 million in the same period of 2007.

Financial account balance

In February 2008, residents' direct investment abroad came to €181 million. This investment mainly concerned an outflow of €26 million by PIRAEUS BANK for increasing its participation in the share capital of its subsidiary ATLAS BANK (Serbia), as well as a €17 million outflow for the increase in EUROBANK's participation in the share capital of its subsidiary EUROBANK SERBIA (Serbia). Non-residents' investment in Greece came to €63 million. The most important investment concerned an inflow of €50 million for the participation of the ALAPIS FARMA (Cyprus) in the capital of its parent company ALAPIS SA. Under portfolio investment, a net inflow of €4,234 million was recorded, almost exclusively attributable to the fact that non-residents ' purchases of Greek government bonds (of €7 billion) more than offset residents' purchases of foreign bonds (of €2.7 billion). "Other" investment recorded a net outflow of €3,361 million, resulting from a decline in non-residents' deposit and repo holdings in Greece and an increase in residents' corresponding holdings abroad, as well as from the repayment of loans granted to residents by non-residents.

In January-February 2008, direct investment showed a net outflow of €195 million, as net inflows of non-residents' ' funds for direct investment in Greece came to €91 million, while net outflows of residents' funds for direct investment abroad reached €285 million, concerning mainly the aforementioned investments that were recorded in February, as well as a €80 million outflow (recorded in January) which concerned a capital injection to EFG SPOLKA AK (Poland) by EUROBANK. During the same period, a net inflow of €11,317 million was recorded under portfolio investment, as the inflow of non-residents' funds for investment in Greece (mainly in Greek government bonds, of €16 billion) was considerably higher than residents' fund outflows for investment in foreign bonds (worth €4.8 billion). Finally, under ''other'' investment, a net outflow of €8,196 million reflects considerable outflows of residents ' funds for investment in deposits and repos abroad, a decline in non-residents' corresponding investment in Greece, as well as the repayment of loans granted by non-residents to residents.

At end-February 2008, Greece ' s reserve assets reached €2.3 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 March 2008 will be released on 22 May 2008.

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