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Balance of payments: APRIL 2010

23/06/2010 - Press Releases

Current account balance

In April 2010, the current account deficit stood at €2,952 million, unchanged year-on-year. This is attributable to the fact that the declines in the trade deficit and the income account deficit were offset by a fall in the services balance and by the fact that the current transfers account recorded a deficit. The decrease in the trade deficit was accounted for by declines of €75 million and €65 million in the trade deficit excluding oil and ships and in net payments for purchases of ships, respectively, while the net oil import bill did not change considerably.

The surplus of the services balance narrowed by €50 million, mainly as a result of a €32 million fall in net transport receipts, while net travel receipts also fell (by €12 million) year-on-year.

The income account deficit shrank by €84 million due to lower net interest, dividend and profit payments.

Finally, the current transfers balance recorded a deficit of €175 million (compared with a small deficit of €1.4 million in April 2009), as EU transfers to general government were lower than general government transfers (payments) to the EU. (It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF), 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-April 2010, the current account deficit grew by €2.6 billion or 25.5% year-on-year and reached €12.9 billion, reflecting primarily a large decrease in current transfers to general government (mainly from the EU) and a rise in the net oil import bill, as well as, to a lesser extent, a decline in the surplus of the services balance. If current transfers to general government (mainly from the EU) are not taken into account for the first four months of 2010 (since their large decline is temporary, as explained hereinbelow), the rise in the current account deficit is limited to €0.6 billion or 4.5%.

The €373 million hike in the overall trade deficit stemmed from an increase of €765 million in the net oil import bill. By contrast, the trade deficit excluding oil and ships narrowed by €375 million, as the import bill fell by €610 million (5.9%), while export receipts declined by €235 million (6.4%). Net payments for purchases of ships also fell by €18 million.

The €138 million contraction in the surplus of the services balance reflects lower net transport receipts. Gross transport receipts (chiefly from merchant shipping) showed an increase (of 8.7%), while the corresponding payments grew by 25.8%; as a result, net transport receipts fell by €185 million. Moreover, travel spending in Greece by non-residents dropped by 7.8%, while travel spending by residents abroad declined by 11.1%; as a result, net travel receipts rose by €22 million. Finally, net payments for “other” services decreased by €26 million.

The income account deficit narrowed by €163 million in comparison with the first four months of 2009, because net interest, dividend and profit payments fell by €176 million.

Finally, the current transfers balance showed a deficit of €883 million, compared with a surplus of €1,379 million in the same period of 2009, mainly owing to a decline in EU transfers to general government. As already mentioned in previous press releases, this decrease is attributable to a delay in inflows (in the order of €2 billion) from the European Agricultural Guidance and Guarantee Fund (EAGGF) for the payment of direct aid under the CAP, which, however, are expected to be recorded in the balance of payments statistics for May.

Capital transfers balance

In April 2010, the capital transfers balance showed a surplus of only €11 million, substantially down in comparison with April 2009 (€335 million). (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-April 2010, the capital transfers balance showed a surplus of €159 million, compared with €814 million in the same period of 2009. This chiefly reflects a decline in EU capital transfers to general government. The overall transfers balance (current transfers plus capital transfers) recorded a deficit of €724 million, compared with a surplus of €2,194 million in the same period of 2009, largely reflecting the aforementioned developments in EU current transfers.

Combined current account and capital transfers balance

The deficit of the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) reached €2.9 billion in April 2010, compared with €2.6 billion in April 2009. In January-April 2010, this deficit came to €12.7 billion, compared with €9.4 billion in the corresponding period of 2009.

Financial account balance

In April 2010, non-residents’ direct investment in Greece recorded a net inflow of €39 million. The most important transaction concerns an inflow of €30 million, representing an advance by the Cypriot company Competrol Est. Cyprus Ltd. for the acquisition of 100% of Chipita S.A., which belonged to the Vivartia group. Residents’ direct investment abroad showed a net outflow of €73 million. The most important transactions in this category concerned on the one hand a €27 million outflow for the participation of MIG in the share capital increase of MIG Real Estate Serbia B.V. and, on the other hand, a €15 million outflow for the participation of MIG in the share capital increase of MIG Leisure and Real Estate Croatia B.V.

Under portfolio investment, a net outflow of €7.0 billion was recorded, reflecting mainly a €8.4 billion decrease (outflow) in non-residents’ investment in Greek government bonds and Treasury bills and a €383 million decline (outflow) in non-residents’ holdings of shares of Greek firms. These developments were partly offset by a €1.9 billion drop (inflow) in residents’ holdings of foreign bonds and Treasury bills.

Under “other” investment, a net inflow of €9.5 billion was recorded, which is mainly attributable to a €13.3 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece and a €130 million rise (inflow) in loan liabilities of the public and the private sector to non-residents. These developments were partly offset by a €3.8 billion increase (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, and a €51 million rise (outflow) in loans granted to non-residents.

In January-April 2010, direct investment showed a net inflow of €907 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece reached €1,100 million, while an outflow of €193 million was recorded under residents’ direct investment abroad.

During the same period, a net outflow of €2.1 billion was recorded under portfolio investment. Specifically, an outflow was recorded due to a €6.8 billion decrease in non-residents’ purchases of Greek government bonds and Treasury bills, as well as a €630 million outflow as a result of a decline in non-residents’ investment in shares of Greek firms. Outflows of €968 million and €742 million were also recorded owing to increases in residents’ investment in foreign shares and financial derivatives, respectively. These developments were only partly offset by a €7.1 billion inflow due to a decline in resident credit institutions’ and institutional investors’ holdings of foreign bonds and Treasury bills.

Finally, under “other” investment, a net inflow of €13.2 billion mainly reflects a €25.3 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece, which was partly offset by a €11.9 billion rise (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad and – to a smaller extent – a €86 million decrease (outflow) in loan liabilities of the public and the private sector to non-residents.

At end-April 2010, Greece’s reserve assets stood at €4.0 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" 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 May 2010 will be released on 20 July 2010.

 

BALANCE OF PAYMENTS (EUR millions - provisional)

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