Balance of payments: AUGUST 2004
18/10/2004 - Press Releases
Current account balance
In August 2004, the current account showed a surplus
considerably bigger than the one in August 2003. This improvement is mainly due
to a large increase in the services surplus and - to a much lesser extent - to a
rise in the transfers surplus. By contrast, both the trade and the income
account deficits grew.
Specifically, underlying the widening of the trade deficit
were on the one hand an increase in the non-oil trade deficit and, on the other,
a rise in the net oil import bill, which almost tripled, reflecting
substantially higher oil prices in the world market. The services surplus
improved considerably, mainly as a result of two factors: First, the substantial
growth of net travel receipts, which were affected favourably by the holding of
the Olympic Games, and second, the rise in net transport receipts (mainly from
shipping). It should be noted that gross travel receipts rose by 25.4%
year-on-year in August 2004. Finally, net receipts from ''other'' services also
increased, mainly as a result of a rise in receipts from services associated
with the holding of the Olympic Games (notably television broadcasting fees).
The income account deficit grew owing to a rise in net interest, dividend and
profit payments. Finally, the growth of the transfers surplus reflects an
increase in net EU transfers to general government.
In January-August 2004, the current account deficit
narrowed considerably (by €1,583 million) over the same period of 2003,
falling to €3,146 million. This development mainly reflects a substantial rise
in the services surplus and, secondarily, an increase in the transfers surplus,
which, taken together, more than offset the strong rise in the trade deficit.
The trade deficit grew by €1,820 million relative to the same period of 2003.
Specifically, a €2,354 million (or 12.9%) increase in the non-oil import bill
more than offset a €879 million (or 13.9%) rise in non-oil export receipts,
whereas the net oil import bill increased by €345 million. Besides, the
services surplus grew by €2,797 million, mainly owing to a big rise (of
€1,974 million) in net transport receipts (mainly from shipping) and, to a
lesser extent, a €588 million increase in net travel receipts and a €235
drop in net payments for ''other services''. Finally, the €631 million
year-on-year growth of the transfers surplus is almost exclusively accounted for
by a €823 million increase in general government receipts (mainly
transfers from the EU), which far exceeded the €185 million rise in general
government payments (mainly to the EU).
Financial account balance
In August 2004, a net inflow of €165 million was
recorded under direct investment. The most important direct investment in Greece
by non-residents was the increase in Paneuropean Oil and Industrial Holdings
S.A.'s participation in the capital of Hellenic Petroleum S.A. Under portfolio
investment, a net inflow of €3,915 million mainly reflects non-residents'
purchases of Greek government securities (€3,470 million). Finally, as regards
"other investment", a net outflow of €5,341 million resulted from an
increase in residents' claims on non-residents (mainly an increase in domestic
credit institutions' and institutional investors' deposits and repos abroad), as
well as a decrease in residents' liabilities vis-a-vis non-residents (mainly a
decline in non-residents' deposits and repo holdings in Greece).
In January-August 2004, non-residents' direct
investment in Greece reached €925 million, while residents' direct investment
abroad came to €324 million, resulting in a net inflow of €600 million under
direct investment. Over the same period, a substantial net inflow of €10,761
million was recorded under portfolio investment, mainly reflecting
non-residents' inflows for the purchase of Greek government bonds (€15,593
million), which more than offset residents' outflows for the purchase of foreign
bonds (€6,212 million). Finally, a net outflow of €8,408 million under
''other investment'' is largely associated with domestic credit institutions'
sizeable outflows (of €10,575 million) to deposits and repos abroad and - to a
lesser extent - outflows (of €1,193 million) for the repayment of loans
granted to residents by non-residents, which more than offset non-residents'
inflows to deposits and repos (€3,404 million).
At end-August 2004, Greece's reserve assets came to
€3.3 billion. (It should be recalled that since the first months of 2003 the
Bank of Greece has started to diversify its portfolio, by reducing its non-euro
area currency holdings, which are included in reserve assets, and by increasing
its higher-yield or euro-denominated assets - mainly bonds issued by euro area
Member States, which are not included in reserve assets. Given that there
is less need to maintain high foreign currency reserves, by the above
diversification the Bank of Greece has improved the return on its investments.
It has been noted repeatedly 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 September 2004 will
be released on 19 November 2004.