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Balance of payments: APRIL 2007

22/06/2007 - Press Releases

Current account balance

In April 2007, the current account deficit grew by €953 million year-on-year, to reach €3,174 million. This development reflects a widening of the trade deficit and the income account deficit, as well as a decline in the current transfers surplus. By contrast, the surplus of the services balance rose.

The year-on-year increase of €398 million in the overall trade deficit is due to higher (by €819 million or 33%) imports of goods excluding oil and ships. This development more than offset the dampening effect on the overall trade deficit of a €164 million (or 20.2%) rise in exports of goods excluding oil and ships, a €231 million decline in net payments for purchases of ships and a small decrease (of €26 million) in the net oil import bill. 

The overall surplus of the services balance showed an increase of €83 million, as a result of a rise in net transport receipts, while net travel and other services receipts dropped. 

The €304 million increase in the income account deficit is attributable to higher net interest, dividend and profit payments. 

Finally, the surplus of the current transfers balance fell by €333 million year-on-year, mainly because net EU transfers to general government dropped by €354 million. (It should be recalled that gross current transfers from the EU mainly include receipts from the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) in the context of the Common Agricultural Policy, 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 2007, the current account deficit grew by €1,877 million over the same period of 2006 and reached €12,185 million, reflecting: first, a decrease in the current transfers surplus; second, the growth of the trade deficit; and third, a widening of the income account deficit. By contrast, a rise was observed in the services surplus. 

The growth of the overall trade deficit by €729 million was mainly a result of increases in the trade deficit excluding oil and ships and in net payments for purchases of ships (of €717 million and €415 million respectively). By contrast, the net oil import bill dropped by €403 million. With respect to the trade balance excluding oil and ships, export receipts grew by €277 million or 7.8%, while the corresponding import bill rose by €994 million or 8.8%. 

The services surplus expanded by €127 million, reflecting an improvement in the transport balance, which was partly offset by lower net travel receipts and higher net payments for other services. Specifically, gross travel receipts grew by 5.2% and gross transport receipts by 6.4%. 

The income account deficit rose by €443 million, as a result of higher net interest, dividend and profit payments. 

Finally, underlying the decline of €833 million in the current transfers surplus were on the one hand higher general government payments to the EU (mainly in February) and, on the other hand, lower receipts (in February, March and April).



Capital transfers balance 

In April 2007, the capital transfers balance showed a surplus of €355 million, €79 million down year-on-year. (Capital transfers 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 2007, the capital transfers balance showed a surplus of €2,273 million, €1,101 million up year-on-year. This reflects exclusively a rise in EU capital transfers to general government. Thus, the overall transfers balance recorded a surplus of €2,766 million, which was €268 million higher than in the same period of 2006.

Combined current account and capital transfers balance (according to the old method of presentation)

The combined current account and capital transfers balance (according to the old method of presentation) showed a deficit of €2,818 million in April 2007, €1,032 million up year-on-year. In January-April 2007, this deficit came to €9,912 million, compared with €9,136 million during the same period of 2006.

Financial account balance

In April 2007, non-residents’ direct investment in Greece came to €285 million. The most important investments mainly concerned an inflow of €322 million for the acquisition by LAFARGE S.A. of the participation of the NATIONAL BANK OF GREECE S.A. in the share capital of HERACLES GENERAL CEMENT COMPANY S.A. and, secondarily, a €26 million inflow for the acquisition of SIEMENS ENTERPRISES COMMUNICATION S.A. by NOKIA. During the same period, residents’ direct investment abroad came to €207 million and chiefly concerned an outflow of €64 million for the increase in the participation of PIRAEUS BANK in the share capital of PIRAEUS BANK in Serbia (€38 million) and of TIRANA BANK in Albania (€26 million), as well as an outflow of €25 million for the acquisition by BELVEN ASSOCIATES S.A. of hotels in Switzerland. Under portfolio investment, a net inflow of €425 million was recorded, mainly reflecting non-residents’ purchases of Greek government bonds and, to a much lesser extent, shares of Greek firms (of €1,438 million and €157 million respectively). These developments were largely offset by residents’ purchases of mainly foreign bonds and secondarily foreign Treasury bills and derivatives, worth €859 million, €117 million and €168 million respectively. "Other" investment recorded a net inflow of €2,766 million, mainly reflecting a rise in non-resident credit institutions’ deposit and repo holdings in Greece and, to a lesser extent, a decline in the outstanding balance of resident credit institutions’ deposit and repo holdings abroad. These developments were offset only to a small extent by the outflow of funds for the repayment of loans granted by non-residents to general government and other residents.

In January-April 2007, direct investment showed a net outflow of €1,973 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece came to €424 million, while net outflows of residents’ funds for direct investment abroad reached €2,397 million. During the same period, a net inflow of €11,476 million was recorded under portfolio investment (compared with only €755 million during the same period of 2006), as the inflow of non-residents’ funds for investment in Greece (mainly in Greek government bonds and shares of Greek firms, of €12.2 billion and €4.2 billion respectively) was considerably higher than the outflows of residents’ funds for investment mainly in foreign bonds (worth €4.5 billion). Finally, under “other” investment, a relatively small net inflow of €717 million mainly reflects the fact that the inflow of non-residents’ funds for investment in deposits and repos in Greece was very largely offset by residents’ investment in deposits and repos abroad and, to a smaller extent, by repayments of loans granted by non-residents to residents.

At end-April 2007, Greece’s reserve assets reached €2.2 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 2007 will be released on 20 July 2007.

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