Balance of payments: JUNE 2004
18/08/2004 - Press Releases
Current account balance
In June 2004, the current account deficit decreased
slightly year-on-year. Underlying this improvement was mainly the widening of
the services surplus and, secondarily, the narrowing of the income account
deficit, whereas the trade deficit grew and the transfers surplus declined.
Specifically, the widening of the trade deficit is mainly
accounted for by an increase in the non-oil trade deficit, while the net oil
import bill showed a small rise. The services surplus improved considerably as a
result of a rise in net transport (mainly shipping) receipts. The decline in the
income account deficit stemmed from lower interest payments on Greek Government
bonds. Finally, the narrowing of the transfers surplus in June reflects the fact
that net EU transfers to general government were negative.
In the first half of 2004, the current account deficit
narrowed considerably (by €1,047 million) over the same period in 2003 and
reached €4,744 million. This development mainly reflects a substantial rise in
the services surplus and, secondarily, an increase in the transfers surplus,
which, together, more than offset the widening of the trade deficit, while the
income account deficit remained virtually unchanged. Specifically, the trade
deficit grew by €862 million relative to the same period in 2003. This
reflects a €1,636 million (or 11.8%) increase in the non-oil import bill,
which more than offset both a €655 million (or 13.9%) rise in non-oil export
receipts and a €119 million decrease in the net oil import bill. Besides, the
services surplus grew by €1,682 million owing to a big rise (of €1,464
million) in net transport (mainly shipping) receipts and, to a much lesser
extent, an increase in net travel receipts and a drop in net payments for ''other
services''. Finally, the €212 million growth of the transfers surplus during
the first half of 2004 is accounted for by a €176 million increase in net EU
transfers to general government, largely stemming from the February inflows.
Financial account balance
In June 2004, a small net outflow was observed under
direct investment. Under portfolio investment, the net outflow of €104 million
mainly reflects the fact that residents' purchases of bonds issued by non-residents
exceeded non-residents' purchases of Greek bonds and shares. Finally, as regards
"other investment", the net inflow of €772 million reflects the fact
that the increase in residents' (credit institutions') deposits and repos abroad
was lower than the rise in non-residents' deposits and repos in Greece, combined
with the inflow of funds for the securitisation of housing loans amounting to
€750 million and with the granting of loans to residents.
In January-June 2004, a net inflow of €346 million
was observed under direct investment, which mainly reflects the acquisition of
PANAFON S.A. by VODAFONE in January and the acquisition of the General Bank of
Greece by Societe Generale in March, as mentioned in earlier press releases.
Over the same period, a substantial net inflow of €5,571 million was recorded
under portfolio investment, mainly reflecting non-residents' purchases of Greek
government bonds, which more than offset residents' outflows to foreign bonds.
Finally, a net outflow of €1,838 million under ''other investment'' is largely
associated with residents' (mainly credit institutions') sizeable outflows to
deposits and repos abroad and, to a lesser extent, outflows for the repayment of
loans granted by non-residents, which more than offset non-residents' inflows to
deposits and repos.
At end-June 2004, Greece's reserve assets came to
€3.3 billion. It should be noted that, as early as in the first months of
2003, the Bank of Greece diversified its portfolio, reducing its non-euro area
currency holdings, which are included in reserve assets, and 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 improved the return on its investments. (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 July 2004 will be
released on 17 September 2004.