Balance of payments: JANUARY - AUGUST 2000
17/11/2000 - Press Releases
Current Account Balance
The current account recorded a deficit of EUR 344 million in the
July-August 2000 period, compared with a surplus of EUR 163 million in the corresponding
period of 1999. This development is largely due to increases in both the trade deficit
and, to a much lesser extent, the incomes deficit, while the surplus of current transfers
declined. By contrast, the services surplus increased significantly.
The increase in the trade deficit results from the growth of non-oil
imports, which more than offset the growth of non-oil export receipts, as well as from
increased net oil imports. On the other hand, the improvement in the balance of services
reflects higher net travel and transportation inflows. The small rise in the incomes
deficit is due to larger net outflows of investment income (interest, dividends and
profits payments). Finally, the smaller transfers surplus mainly reflects lower net EU
transfers in the July-August 2000 period compared with the corresponding period of 1999.
In the January-August 2000 period, the current account deficit rose to
EUR 4,618 million, from EUR 2,256 million in the corresponding period of 1999. It should
be noted that almost 41% of this rise is due to increased expenditure for net oil imports,
mainly as a result of developments in world crude oil prices and higher oil import volumes
in the first few months of 2000. The non-oil trade deficit also rose significantly, given
that the growth rate of export proceeds, which finance less than one third of import
payments, is lower compared to that of imports. Increased import expenditure is chiefly
associated with imports of passenger cars, as well as of machinery and capital equipment,
and reflects increased investment activity and an increase in disposable income.
The improved balance on services is mainly attributed to an increase in
net receipts from transportation services, reflecting favourable developments in the
international sea freight market and improved recording of the relevant data by the
commercial banks under the new balance-of-payments compilation system. Moreover, the rise
in travel receipts has been largely offset by a rise in travel payments. It should be
recalled, however, that the latter have always included expenditure on education and
medical care. The increase in the incomes deficit is for the most part due to larger
outflows related to interest, dividends and profits, which more than offset a rise in the
respective inflows. Finally, the higher surplus on transfers during the first eight months
of the year is chiefly due to a rise in net EU transfers and, to a lesser extent, in
emigrants’ remittances.
Financial account balance
Regarding developments in the financial account balance, both over the
July-August period and over the first eight months of the year, net outflows were recorded
in each of the "direct investment" and “other investment” components, while
portfolio investment showed a net inflow. Net direct investment inflows reflect the fact
that between January and August 2000 foreign investment by residents outgrew
non-residents' investment by about four times, the latter remaining broadly unchanged at
last year's levels. Portfolio investment increased over the first eight months of the year
compared to the corresponding period of 1999, owing to higher portfolio investment by
non-residents, while portfolio investment outflows by residents remained broadly
unchanged. Increased net outflows for “other investment” resulted mainly from a
significant decrease in deposits held by non-residents (notably credit institutions) with
domestic credit institutions, which relates to the gradual convergence of drachma interest
rates towards the corresponding euro rates.
As a result of the above developments in the current and the financial
account balances, Greece's foreign exchange reserves amounted to USD 15.4 billion (EUR
17.2 billion) at end-August 2000. According to the latest available data, foreign exchange
reserves reached USD 14.9 billion by the end of October.