Press Releases

Balance of payments: SEPTEMBER 2007

20/11/2007 - Press Releases

Current account balance

In September 2007, the current account deficit grew by €487 million year-on-year, to reach €1,711 million. This month saw a widening mainly of the trade deficit and, secondarily, of the income account deficit, as well as a narrowing of the surplus of the current transfers balance. These developments were only partly offset by an increase in the surplus of the services balance.

The year-on-year increase of €490 million in the overall trade deficit is mainly attributable to a €449 million rise in the trade deficit excluding oil and ships. At the same time, net payments for purchases of ships grew by €90 million. By contrast, the net oil import bill dropped by €49 million.

The overall surplus of the services balance widened by €142 million, exclusively as a result of a considerable increase (of €193 million) in net transport receipts. By contrast, net travel receipts declined slightly (by €11 million) and net payments for other services grew (by €40 million).

The €104 million rise in the income account deficit is mainly attributable to higher net interest, dividend and profit payments.

Finally, the surplus of the current transfers balance shrank by €35 million year-on-year, because both net EU transfers to general government and net transfers to the other sectors decreased. (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-September 2007, the current account deficit expanded by €4,836 million over the same period of 2006 and reached €20,977 million, reflecting the growth mainly of the trade deficit and, secondarily, of the income account deficit, as well as – to a smaller extent – a decrease in the current transfers surplus. By contrast, the services surplus rose.

The €3,787 million rise in the overall trade deficit was a result of increases (of €2,747 million and €1,288 million) in the trade deficit excluding oil and ships and in net payments for purchases of ships respectively, while the net oil import bill dropped by €248 million. With respect to the trade balance excluding oil and ships, export receipts grew by €412 million or 4.9%, while the corresponding import bill rose by €3,160 million or 12.4%.

The services surplus expanded by €755 million, reflecting a rise mainly in net transport receipts. The increase in net travel receipts was small, while net payments for other services grew. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 13.7% and gross travel receipts by 1.1%.

The income account deficit rose by €1,450 million, as a result of higher net interest, dividend and profit payments. This development is associated with a rise in non-residents' holdings of public debt, as well as with the increase in interest rates.

Finally, underlying the decline of €354 million in the current transfers surplus were lower (by €367 million) net receipts of the other sectors (i.e. excluding general government), while general government net receipts from the EU grew by €13 million. It should be noted that EU current transfers to general government rose by €287 million, while payments to the EU grew by €274 million.

Capital transfers balance

In September 2007, the capital transfers balance showed a small surplus of €8 million, compared with €60 million in September 2006. (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 2007, the capital transfers balance showed a surplus of €2,511 million, €446 million up year-on-year. This reflects a rise in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €4,443 million, compared with €4,351 million 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 €1,703 million in September 2007, compared with a deficit of €1,164 million in the same month of 2006. In January- September 2007, this deficit came to €18,466 million, compared with €14,076 million in the same period of 2006.

Financial account balance

In September 2007, residents' direct investment abroad came to €115 million, of which €55 million concerned the acquisition of INTERNATIONAL COMMERCE BANK (Ukraine) by PIRAEUS BANK. During the same month, non-residents' investment in Greece recorded an outflow of €125 million, which mainly concerned a decrease in financial liabilities of Greek firms to their parent companies abroad.

Under portfolio investment, a net inflow of €646 million was recorded, reflecting the fact that inflows of non-residents' funds for purchases of Greek government bonds and Treasury bills (worth €3,229 million) and shares of Greek firms (worth €320 million) more than offset an outflow of residents' funds for purchases of foreign bonds and Treasury bills (worth €2,517 million) and investment in shares of foreign firms and financial derivatives (of €50 million and €336 million respectively).

"Other" investment recorded a net inflow of €2,092 million, mainly because of a rise in non-resident credit institutions' deposit and repo holdings in Greece, which was more than double than the corresponding increase in residents' investment in deposits and repos abroad.

In January-September 2007, direct investment showed a net outflow of €2,451 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €681 million, while net outflows of residents' funds for direct investment abroad reached €3,132 million. During the same period, a net inflow of €14 billion was recorded under portfolio investment, as the inflow of non-residents' funds for investment in Greece (mainly in Greek government bonds and Treasury bills, of €20.5 billion, as well as shares of Greek firms, of €7.8 billion) was considerably higher than the outflow of residents' funds for investment mainly in foreign bonds and Treasury bills (worth €12.4 billion) and, secondarily, in foreign shares and financial derivatives (worth €1.0 billion and €0.9 billion respectively). Finally, under "other" investment, a net inflow of €7.8 billion mainly reflects the fact that the inflow of non-residents' funds for investment in deposits and repos in Greece was almost double the outflow of residents' funds for investment in deposits and repos abroad.

At end-September 2007, Greece's reserve assets reached €2.4 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 2007 will be released on 19 December 2007.

 

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