Balance of Payments: JANUARY - OCTOBER 2000
08/01/2001 - Press Releases
Current account balance
In the September-October 2000 period, the current account deficit
increased by 683 million euro against that of the corresponding period of the previous
year and stood at 1,508 million euro. This resulted from the increase mainly in the trade
deficit and, to a much lesser degree, in the income account deficit, while the current
transfers surplus decreased considerably. By contrast, there was a large increase in the
services surplus.
The increase in the trade deficit in this period (compared with the
corresponding period of 1999) stemmed from the growth in the non-oil deficit (by 482
million euro) and in the net imports of oil (by 263 million euro). It should be noted
that, although non-oil export receipts grew much faster than the import bill (40 per cent
against 24 per cent), the deficit widened, as the import bill was more than three times as
high as the export bill. The increase in the import bill stemmed mainly from payments for
the import of electronic appliances, vehicles, machinery, sea-vessels and iron and steel
products. As regards the services balance, the improvement was derived from increases in
net receipts from travel and, mainly, transportation services. Besides, the growth in the
income account deficit is attributable to the increase in net payments for interest,
dividends and profits. Finally, the decrease in the current transfers surplus mostly
reflects the considerable decline in net EU transfers in the September-October 2000
period, compared with the corresponding 1999 period. This development was due to the
delayed absorption of the remaining funds from the Second Community Support Framework
(CSF) and of advance payments from the Third CSF.
In the January-October 2000 period, the current account deficit came to
6,127 million euro, against a 3,082 million drachma deficit in the corresponding 1999
period. About 40 per cent of the increase in the deficit is attributable to the growth in
the net oil import bill, mainly caused by the evolution of the world price of crude oil,
but also by the increased volume of oil imports in the first months of 2000. At the same
time, the non-oil trade deficit also increased considerably, despite the fast growth of
export receipts. The large rise in the import bill mainly regards imports of passenger
cars, but also of machinery and other capital goods and reflects increased investment
activity and the faster growth of disposable income.
The improvement of the services balance stemmed mostly from the
increase in net receipts from transportation services, a fact linked, on the one hand, to
favourable developments in the international sea-trade market and, on the other hand, to
the more accurate recording of shipping companies’ income. At the same time, about 3/4
of the increase in travel receipts were offset by an increase in travel payments, which,
however, in recent years include a larger share of expenditure for studies abroad, medical
care etc. The increase in the income account deficit was related to the rise in net
payments for interest, dividends and profits. Finally, current transfers showed an
increased surplus, reflecting the rise mainly in net EU transfers in the January-October
2000 period ( these transfers, however, decreased considerably in the last two months of
that period) and, to a lesser degree, in emigrants’ remittances.
Financial account balance
As regards the financial account balance, all three major categories of
investment recorded net inflows in the September – October 2000 period. By contrast, in
the January-October period, a net outflow was observed in direct investment and “other
investment”, while only portfolio investment registered a net inflow. In particular, net
outflows for direct investment resulted from the fact that residents' investment abroad
exceeded investment of non-residents in Greece by 1.4 billion euro. The net inflow for
portfolio investment in the period under review was 2.7 billion euro higher than that in
the corresponding 1999 period and concerned non-residents’ investment mainly in bonds
and, to a lesser degree, in equity. Net outflows for “other investment” were mainly
due to the considerable decrease in non-residents’ deposits in Greece and to the
increase in residents’ deposits abroad. These movements regarded deposits of credit
institutions and were connected to the gradual convergence of drachma interest rates
towards the interest rates of euro area currencies. It should be noted that, while in the
January-October 1999 period the net liabilities of the general government grew by 1.1
billion euro (owing to borrowing), in the corresponding 2000 period they fell by 0.3
billion euro, because repayments overshot new borrowing.
As a result of the above current account and financial account
developments, the country’s foreign exchange reserves came to 14.9 billion US dollars
(17.7 billion euro) at the end of October 2000. Moreover, on the basis of the latest
available data, Greece's foreign exchange reserves amounted to 15.3 billion US dollars at
the end of November 2000.