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Balance of payments: APRIL 2003

20/06/2003 - Press Releases

Current account balance

In April 2003, the current account balance remained almost unchanged year-on-year, recording a €1,062 million deficit. This resulted from a narrowing of the non-oil trade deficit and the income account deficit, as well as from a widening of the services surplus. These developments were offset by an increase in net oil imports and, most notably, a decrease in the transfers surplus.

In particular, underlying the narrowing of the trade deficit were a rise in non-oil export receipts and especially a decline in the non-oil import bill. By contrast, the net oil import bill increased year-on-year. The growth of the services surplus stemmed from an increase in net receipts from transport and, to a lesser extent, travel services, while net payments for other services remained unchanged. The income account deficit narrowed, mainly due to reduced interest payments on Greek government bonds held by non-residents. Finally, the decline in the transfers surplus reflects a fall in the net receipts of general government (mainly net receipts from the EU).

In January-April 2003 the non-oil trade deficit decreased, whereas the services surplus grew. In the same period, however, there was a widening of the oil deficit and the income account deficit and a narrowing of the transfers surplus. As a result, the current account deficit rose by €609 million over the same period in 2002.

The non-oil trade deficit declined by €525 million in January-April 2003 as a result of a €159 million rise in export receipts and a fall (of €367 million) in the import bill. At the same time, the net oil import bill increased by €530 million. Over the same period, the services surplus grew, as the drop in net receipts from travel services was more than offset by the rise in net receipts from transport services. The income account deficit widened by €146 million, mainly owing to an increase in net payments for interest, dividends and profits, as well as to a decline in net receipts from fees and wages. Finally, underlying the narrowing (by €712 million) of the transfers surplus was mainly a reduction in transfers from the EU. By contrast, net transfers to the other sectors grew.

Financial account balance

In April 2003, direct investment showed a net outflow of €65 million. Under portfolio investment, a net inflow of €1,973 million was recorded, mainly reflecting non-residents' investment in Greek bonds, which was only partly offset by an outflow for purchases of foreign bonds by residents. Finally, as regards "other investment", a net outflow of €1,179 million was observed, connected mainly to a decrease in deposits and repo holdings abroad by residents, as well as to reduced deposits and repo holdings of non-residents.

In January-April 2003, a net outflow of €436 million was observed under direct investment, mainly associated with residents’ investment abroad. During the same period, a substantial net inflow of €6,680 million was recorded under portfolio investment. This development is connected to a sizeable inflow of foreign investors’ funds, mainly for the purchase of Greek bonds. It should be pointed out that there was also a notable outflow of funds mainly for the purchase of bonds by Greek investors. Finally, under ‘‘other investment’’, a net outflow of €6,015 million was recorded. This is associated with a considerable increase in deposits and repo holdings abroad by residents, substantial general government loan repayments and a decrease in deposits and repo holdings by non-residents.

At end-April 2003, Greece’s reserve assets stood at €5.0 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" at the IMF, "Special Drawing Rights", and Bank of Greece's 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 payment data for May 2003 will be released on 19 July 2003.

 

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