Balance of payments: SEPTEMBER 2006
21/11/2006 - Press Releases
Current account balance
In September 2006, the current account balance showed a deficit of
€1,168 million, compared with €617
million in the same month of 2005. This expansion mainly reflects an increase in
the trade deficit and, secondarily, in the income account deficit, as well as a
very small decline in the surplus of the current transfers balance. These
developments were offset to a small extent by the growth of the surplus of the
services balance.
Underlying the widening of the trade deficit by €521
million were increases of €246 million,
€186 million and €89
million in net payments for purchases of ships, the other goods deficit and the
net oil import bill respectively. The €90 million
rise in the surplus of the services balance reflects a €97
million hike in net travel receipts (receipts grew by €102
million or 6.3% and payments by only €5 million) and
a €26 million increase in net receipts from
transport services (transport - mainly shipping - receipts rose by
€103 million or 9.5% and payments by €77 million), while net payments for "other" services rose by
€33 million. The widening of the income account
deficit by €104 million is mainly accounted for by a
rise in interest payments on non-residents' deposits in Greece, on loans granted
to residents and on non-residents' Greek government bond holdings. Finally, the
small drop in the current transfers surplus reflects a commensurate slight
decline in net current transfers from the EU to general government. It should be
recalled that 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 and receipts from the European
Social Fund, while current transfers to the EU include Greece's contributions
(payments) to the Community Budget.
In January-September 2006, the current account deficit widened by
€7,435 million over the same period of 2005 and
reached €16,036 million, reflecting mainly a rise in
the trade deficit and, to a lesser extent, an increase in the income account
deficit and a narrowing of the services and the current transfers surpluses.
The widening of the overall trade deficit (including oil and ships) by
€6,027 million was a result of hikes in net payments
for purchases of ships, the net oil import bill and the deficit excluding oil
and ships (of €2,323 million, €2,074
million and €1,630 million respectively). It should
be pointed out that receipts from exports of goods (excluding oil and ships)
showed a remarkable rise (of €916 million or 12.1%),
but the increase in the corresponding import bill (of €2,546
million or 11.1%) was larger in absolute terms. The services surplus narrowed by
€107 million, mainly as a result of, mainly, a
€483 million drop in net transport receipts
(transport - chiefly shipping - receipts grew by only €140
million or 1.3%, while transport payments increased by €624
million or 13.7%) and, secondarily, a €351 million
rise in net payments for "other" services. By contrast, net travel receipts grew
by €728 million (travel receipts rose by
€637 million or 6.8%, while payments declined by
€90 million or 5.0%). The income account deficit
increased by €1,198 million, mainly as a result of
higher net interest, dividend and profit payments. Finally, the current
transfers surplus narrowed by €104 million, as the
decrease in net current transfers (mainly from the EU) to general government
more than offset a rise in net current transfers to the other sectors (excluding
general government).
Capital transfers balance
In September 2006, the capital transfers balance showed a surplus of
only €60 million, compared with a surplus of
€264 million in the same month of 2005, mainly as a
result of lower capital transfers from the EU to general government. (Capital
transfers from the EU mainly include receipts from the Structural Funds - except
for the European Social Fund - and the Cohesion Fund under the Community Support
Framework.)
In January-September 2006, the surplus of the capital transfers
balance grew substantially year-on-year and reached €2,065
million. This reflects almost exclusively a €709
million (or 50%) rise in EU capital transfers to general government.
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 €1,107
million in September 2006, €754 million up
year-on-year. In January-September 2006, the overall deficit reached
€13,972 million, compared with €7,255
million in the same period of 2005.
Financial account balance
In September 2006, no considerable flows were recorded under direct
investment. It should be pointed out that, as regards non-residents' direct
investment in Greece, an inflow of €142 million
primarily reflects borrowing by subsidiaries in Greece from their parent
companies abroad.
Under portfolio investment, a net inflow of €1,857
million was recorded, mainly reflecting non-residents' purchases of Greek
government bonds (of €3,125 million) and,
secondarily, purchases of shares of Greek firms by non-residents (of
€459 million), which, however, were partly offset
mainly by purchases of foreign bonds by residents. "Other" investment recorded a
net outflow of €503 million, chiefly because the
decline in foreign credit institutions' deposit and repo holdings in Greece
outweighed the decrease in residents' corresponding holdings abroad.
In January-September 2006, direct investment showed a net inflow of
€888 million (compared with a net outflow of
€635 million in the same period of 2005).
Specifically, net inflows of non-residents' funds for direct investment in
Greece reached €3,711 million, while net outflows of
residents' funds for direct investment abroad came to €2,823
million. Over the same period, a net inflow of €5,647
million was recorded under portfolio investment, as the inflow of non-residents'
funds for investment in Greece (mainly in Greek government bonds and shares of
Greek firms, of €11.3 billion and €3.8
billion respectively) by far exceeded the repayment of short-term Greek
government securities and the outflow of residents' funds for investment in
foreign bonds, shares and Treasury bills. Finally, under "other" investment, a
net inflow of €7,873 million mainly reflects the
fact that the inflow of non-residents' funds to deposits and repos in Greece was
more than double the outflow of residents' funds for corresponding investment
abroad.
At end-September 2006, 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 October 2006 will be released on 20
December 2006.