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Balance of payments: JULY 2003

18/09/2003 - Press Releases


Current account balance


The current account balance showed a small surplus in July 2003, as had also been the case in July 2002. This mainly reflects a considerable increase in the transfers surplus, which more than offset the widening of the income account deficit. The trade and services balances remained virtually unchanged.


With regard to the trade balance, both exports and imports did not change significantly over July 2002. The small rise in the services surplus mainly stemmed from an increase in net transport (notably sea transport) receipts. Net travel receipts fell slightly, as the decline in gross receipts was almost offset by the decrease in gross payments. The July data for travel receipts and payments are comparable year-on-year and are derived from a border survey. The income account deficit more than doubled compared with July 2002; this mainly reflects the rise in interest payments on Greek government bonds, following increased investment by non-residents in such securities during the January-July 2003 period. Finally, the growth of the transfers surplus mainly reflects a rise in net EU transfers to the general government sector.


In January-July 2003, the non-oil trade deficit fell; at the same time, the services surplus increased. These positive developments were offset by a widening of the oil trade deficit and the income account deficit and a narrowing of the transfers surplus. As a result, the current account deficit rose by €866 million compared with the same period in 2002.


The non-oil trade deficit decreased by €384 million in January-July 2003, as export receipts grew by €278 million and the import bill declined by €106 million. At the same time, however, the net oil import bill rose by €572 million. Over the same period, the services surplus grew, as the increase in net transport receipts more than offset the decrease in net travel receipts. (It should be recalled that figures for travel receipts and payments for the entire January-July 2003 period are not comparable with those for the corresponding period of 2002, as their compilation on the basis of a border survey started in mid-May 2002). The income account deficit widened by €560 million, mainly owing to an increase in net payments for interest, dividends and profits (for the reasons discussed above). Finally, underlying the narrowing (by €500 million) of the transfers surplus was a reduction in transfers from the EU to the general government sector, which more than offset the increase of net transfers to the other sectors.


 Financial account balance


In July 2003, financial flows under direct investment were low. Under portfolio investment, a net outflow of €908 million was observed, mainly reflecting non-residents' disinvestment in Greek government bonds and, to a lesser extent, residents’ net acquisition of foreign bonds and shares. Finally, as regards "other investment", a net inflow of €1,132 million was recorded, mainly connected with a decrease in domestic credit institutions’ and institutional investors’ deposits and repo holdings abroad, as well as with an increase in non-residents’ deposits and repo holdings in Greece.


In January-July 2003, a considerable net inflow of €10,520 million was recorded under portfolio investment. This development is mainly connected with an inflow of foreign investors’ funds for the purchase of Greek government bonds, which more than doubled year-on-year. At the same time, residents’ portfolio investment abroad grew considerably, mainly owing to the purchase by the Bank of Greece of bonds issued by euro area Member States, in the context of the restructuring of the Bank’s portfolio. During the same period, a net outflow of €580 million was observed under direct investment. Finally, under ‘‘other investment’’, a net outflow of €8,022 million was recorded. This is associated with a considerable increase in residents’ (mainly credit institutions’) deposits and repo holdings abroad, substantial general government loan repayments and a decrease in deposits and repo holdings by non-residents.


At end-July 2003, Greece ’s reserve assets stood at €5.1 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 August 2003 will be released on 17 October 2003 .



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