Balance of payments: MAY 2003
18/07/2003 - Press Releases
Current account balance
In May 2003, the current account deficit remained almost unchanged
year-on-year, standing at €738 million. Specifically, a rise in the services surplus
offset a widening of the trade deficit, as well as a limited decrease in the transfers
surplus and a small increase in the income balance.
Underlying the widening of the non-oil trade deficit was a fall in
export receipts and a rise in the import bill. The net oil import bill also increased
year-on-year. Besides, the growth of the services surplus stemmed mainly from a rise in
net transport receipts, whereas net travel receipts fell. The income account deficit grew,
mainly due to increased payments for interest, dividends and profits. Finally, the decline
in the transfers surplus reflects a fall in net receipts of general government (mainly net
transfers from the EU).
In January-May 2003 the current account deficit rose by €605 million
over the same period in 2002 and reached €5,069 million. Specifically, there was an
increase in the net oil import bill, a widening of the income account deficit and a
narrowing of the transfers surplus; these developments more than offset a decrease in the
non-oil trade deficit and a rise in the services surplus.
The non-oil trade deficit declined by €488 million in January-May
2003 as a result of a €143 million increase in export receipts and a €345 million fall
in the import bill. By contrast, the net oil import bill rose by €543 million. Over the
same period, the services surplus grew, as the increase in net transport receipts more
than offset the fall in net travel receipts. (It should be recalled at this point that, as
from mid-May 2002, statistics for travel receipts and payments are compiled on the basis
of a sample ‘‘border survey’’; hence the data for the January-May 2003 period are
not fully comparable with those for the corresponding period of 2002). The income account
deficit widened by €154 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 €724 million) of the transfers surplus was
mainly a reduction in transfers from the EU to general government. By contrast, net
transfers to the other sectors grew.
Financial account balance
In May 2003, direct investment showed a net outflow of €333 million,
which is associated with a €272 decrease in TELENOR’s participation in COSMOTE’s
share capital. It should be noted, however, that this outflow was offset by a
corresponding increase in liabilities (i.e. an inflow) under portfolio investment, as the
shares previously held by TELENOR were purchased by non-residents, whose holdings in
COSMOTE’s capital are small on an individual basis (hence this purchase is not recorded
under direct investment). Under portfolio investment, a net inflow of €3,458 million was
recorded, mainly reflecting non-residents' investment in Greek government bonds. Finally,
as regards "other investment", a net outflow of €2,133 million was observed,
connected mainly to an increase in deposits and repo holdings abroad by residents
(domestic credit institutions and institutional investors), as well as to reduced deposits
and repo holdings of non-residents and repayment of general government loans.
In January-May 2003, a net outflow of €769 million was observed under
direct investment. During the same period, a considerable net inflow of €10,138 million
was recorded under portfolio investment. This development is connected to a sizeable
inflow of foreign investors’ funds, mainly for the purchase of Greek government bonds.
It should be recalled that the substantial year-on-year increase in outflows under
portfolio investment is accounted for by the purchase (particularly in February and March
2003) by the Bank of Greece of bonds issued by euro area member countries and reflects the
restructuring of the Bank’s portfolio (with a corresponding decrease in reserve assets).
Finally, under ‘‘other investment’’, a nest outflow of €8,148 million was
recorded. This is associated with a considerable increase in deposits and repo holdings
abroad by residents (mainly credit institutions), general government loan repayments and a
decrease in deposits and repo holdings by non-residents.
At end-May 2003, Greece’s reserve assets stood at €4.8 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 June 2003 will be released on 18