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Balance of Payments: AUGUST 2002

13/11/2002 - Press Releases

Current account balance

In August 2002 the current account balance recorded a 146 million euro surplus, compared with a small deficit (26 million euro) in August 2001. This favourable development resulted mainly from the rise in the services surplus and, to a lesser extent, the reduction in the trade deficit. By contrast, the transfers surplus decreased considerably in August, while the income account deficit stood roughly at August 2001 levels.

In particular, the lower non-oil deficit reflects the fact that in August the decrease in imports was larger than the decrease in exports. Net payments for fuel imports fell only slightly. The rise in the services surplus came from the apparent increase in net receipts, mainly from travel services. It should however be noted that, as explained below, data on travel receipts and payments in 2002 are not fully comparable with those for previous years. The transfers surplus narrowed, mainly due to the decline in net receipts of the sectors other than general government and, to a lesser degree, because of lower net transfers from the EU in August. Finally, there was no significant change in the income account deficit.

In the January-August 2002 period, the current account deficit rose by 422 million euro, compared with that of the corresponding 2001 period, and came to 4,806 million euro. This development reflects mainly the lower transfers surplus, but also the widening of the trade deficit, which is related to the increase in both the non-oil deficit and net imports of fuel. The widening of the current account deficit is also attributable to the increase in the income account deficit. These developments were only partly offset by the rise in the services surplus.

The non-oil trade deficit grew by 235 million euro in the January-August 2002 period, as a result of a considerable decrease (by 495 million euro) in export receipts. At the same time, however, the import bill also decreased (by 259 million euro). Net imports of fuel rose by 155 million euro. In the same period, the services surplus widened, as the increase in net travel receipts more than offset the decrease in net transport receipts. It should be recalled that, as from May 2002, travel receipts and payments are calculated on the basis of a sample survey ("border survey"); thus data are not fully comparable with those of previous periods. The income account deficit increased mainly because of the rise in net payments for interest, dividends and profits. This development reflects lower interest rates and dividend yields in 2002, which resulted in a drop in receipts and – less so -- in payments. Lastly, the narrowing of the transfers surplus is attributable to the fall in net EU transfers, the increase in general government payments and the decrease in other sectors' net receipts.


Financial account balance

In August 2002, no substantial net inflows were recorded under direct investment. Under portfolio investment there was a net inflow of 2,284 million euro, mainly reflecting inflows of non-residents' funds for the purchase of Greek bonds. "Other investment" showed a considerable net outflow of 2,194 million euro, primarily because non-residents reduced their deposits and repo holdings in Greece.

In the January - August 2002 period, net outflows of 365 million euro were recorded under direct investment, which are exclusively attributable to residents' investment abroad. In the same period, a substantial net inflow (of 8,340 million euro) was recorded under portfolio investment; this is connected with the considerable inflow of foreign investors' funds, mainly for the purchase of Greek government bonds and secondarily for the purchase of shares, which more than offset the outflow of Greek investors' funds for the purchase of foreign bonds and shares. The shift of both foreign and Greek investors to the bond market reflects the uncertainly prevailing in international capital markets.

At end-August 2002, the country's reserve assets came to 8.9 billion euro. (It should be recalled that, since Greece joined the euro area in January 2001, reserve assets, as defined by the European Central Bank, only include monetary gold, the reserve position at the IMF, Special Drawing Rights, and the Bank of Greece's claims in foreign currency on residents of countries outside the euro area. Conversely, reserve assets do not include claims in euro on residents of countries outside the euro area, claims in foreign currency and in euro on residents of euro area countries, and the Bank of Greece's participation in the capital and the reserve assets of the ECB.)

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