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Balance of payments: AUGUST 2007

22/10/2007 - Press Releases

Current account balance

In August 2007, the current account deficit grew by €75 million year-on-year, to reach €159 million. In this month there was a considerable widening mainly of the trade deficit and, secondarily, of the income account deficit, which was partly offset by a rise in the surpluses of the current transfers balance and the services balance.

The year-on-year increase of €229 million in the overall trade deficit is attributable to increases in the trade deficit excluding oil and ships and in net payments for purchases of ships (of €381 million and €135 million respectively), whereas the net oil import bill decreased by €287 million.

The overall surplus of the services balance did not change significantly (up €58 million), as the considerable rise in net transport receipts and the small increase in net travel receipts were largely offset by an increase in net payments for other services.

The €56 million rise in the income account deficit is exclusively attributable to higher net interest, dividend and profit payments.

Finally, the surplus of the current transfers balance showed a remarkable increase year-on-year, because net EU transfers to general government grew. (It should be recalled 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-August 2007, the current account deficit expanded by €4,349 million over the corresponding period of 2006 and reached €19,266 million, reflecting the growth mainly of the trade deficit and, secondarily, of the income account deficit, as well as – to a smaller extent – a decrease in the current transfers surplus. By contrast, the services surplus rose.

The widening of the overall trade deficit by €3,297 million was mainly a result of increases in the trade deficit excluding oil and ships and in net payments for purchases of ships (of €2,299 million and €1,197 million respectively), while the net oil import bill decreased by €199 million. With respect to the trade balance excluding oil and ships, export receipts grew by €452 million or 6.0%, while the corresponding import bill rose by €2,751 million or 12.2%.

The services surplus expanded by €614 million, reflecting a rise mainly in net transport receipts and, to a lesser extent, in net travel receipts, while net payments for other services grew. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 13.1% and gross travel receipts by 1.5%.

The income account deficit rose by €1,346 million, mainly as a result of higher net interest, dividend and profit payments. This development is associated with a rise in non-residents’ holdings of public debt, as well as with the increase in interest rates.

Finally, underlying the decline of €319 million in the current transfers surplus were on the one hand lower (by €348 million) net receipts of the other sectors (i.e. excluding general government), while general government net receipts from the EU grew by €29 million. It should be noted that EU current transfers to general government rose by €285 million, while payments to the EU grew by €255 million.

 

Capital transfers balance

In August 2007, the capital transfers balance showed a small surplus of €12.6 million, compared with €1.9 million in August 2006. (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-August 2007, the capital transfers balance showed a surplus of €2,503 million, €498 million up year-on-year. 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 €4,213 million, compared with €4,034 million in the corresponding period of 2006.

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 €146 million in August 2007, compared with a deficit of €82 million in the same month of 2006. In January-August 2007, this deficit came to €16,763 million, compared with €12,912 million in the corresponding period of 2006.

Financial account balance

In August 2007, residents' direct investment abroad came to €122 million, of which €35 million concerned the purchase of real estate in Romania by EUROBANK PROPERTIES S.A. During the same month, non-residents' direct investment in Greece recorded an outflow of €87 million. The most important outflows concerned the withdrawal of GENERAL BISCUIT S.A. from the share capital of PAPADOPOULOS BISCUITS S.A. and the withdrawal of VALTOP HOLDINGS LTD (Cyprus) from DODONI S.A. (amounting to €104 million and €20 million respectively).

Under portfolio investment, a net outflow of €2,108 million was recorded, which is due to the fact that the net inflow of non-residents' funds for purchases of Greek government bonds and Treasury bills (which came to €780 million) was more than offset by an outflow of residents' funds for purchases of foreign bonds and Treasury bills (worth €1,223 million and €232 million respectively), by the rise in residents' holdings of shares of foreign firms and financial derivatives (by €278 million and €148 million respectively), as well as by the decline in non-residents’ holdings of shares of Greek firms (by €1,006 million).

"Other" investment recorded a net inflow of €2,616 million, mainly because of a rise in non-resident credit institutions' deposit and repo holdings in Greece.

In January-August 2007, direct investment showed a net outflow of €2,211 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €806 million, while net outflows of residents' funds for direct investment abroad reached €3,017 million. During the same period, a net inflow of €13,325 million was recorded under portfolio investment, as the inflow of non-residents' funds for investment in Greece (mainly in Greek government bonds and Treasury bills, of €17.2 billion, as well as shares of Greek firms, of €7.5 billion) was considerably higher than the outflows of residents' funds for investment mainly in foreign bonds and Treasury bills (worth €9.9 billion), as well as in foreign shares (worth €1.0 billion). Finally, under "other" investment, a net inflow of €5.7 billion mainly reflects the fact that the inflow of non-residents' funds for investment in deposits and repos in Greece more than offset the outflow of residents' funds for investment in deposits and repos abroad.

At end-August 2007, Greece's reserve assets reached €2.1 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 September 2007 will be released on 20 November 2007.

 

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