Balance of payments: OCTOBER 2005
20/12/2005 - Press Releases
Current account balance
In October 2005, the current account showed a deficit
of €1,285 million, €408 million higher than in October 2004. This
development is mainly attributable to a widening of the trade deficit and,
secondarily, to a decline in the services surplus and an increase in the income
account deficit. By contrast, the current transfers surplus grew. (It should be
recalled that, according to the new presentation, the transfers balance is now
divided into two parts: the current transfers balance, which is classified under
the current account, and the capital transfers balance, which is a separate
section. Thus, the new current account balance now comprises the trade balance,
the services balance, the income account balance and the current transfers
balance, while the capital transfers balance is an independent part of the
balance of payments. Therefore, in this new presentation of the balance of
payments, the algebraic sum of the current account balance and the capital
transfers balance corresponds to the current account balance as presented until
recently, i.e. regarding data up to and including June 2005).)
The trade deficit (excluding oil and ships) increased only
slightly in October (by €34 million). Given that the deficit of the ships'
balance (sales minus purchases) showed a small decline, the widening of the
overall trade balance is mainly accounted for by a rise (of €317 million) in
the oil balance.
The overall surplus of the services balance dropped by €88
million year-on-year. Specifically, the surplus of the travel services balance
grew by €39 million, while, by contrast, the surplus of the transport services
balance narrowed by €113 million and the "other services" deficit
widened slightly.
The €91 million increase in the income account deficit
mainly reflects the fact that interest payments on Greek government bonds held
by non-residents rose. (It should be recalled that, as from April 2005, the
methodology of recording interest on bonds in the balance of payments statistics
changed, so that interest payments are recorded on an accruals basis, rather
than on a cash basis, as they had been up to and including March 2005. Thus,
data are recorded more accurately. For comparability purposes, the monthly data
going back to January 2003 have also been revised.)
Finally, the current transfers surplus grew by €106 million
year-on-year, as a €144 million rise in EU gross current transfers to general
government by far overshot a €29 million rise in general government payments
to the EU. (Current transfers from or to 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, receipts from the
European Social Fund and Greece's contributions to the Community Budget.)
In January-October 2005, the current account deficit
widened by €2,721 million over the same period of 2004 and reached €9,415
million, reflecting mainly a rise in the trade deficit and, secondarily, an
increase in the income account deficit and a drop in the current transfers
surplus. The increase in the services surplus only partly offset the above
developments.
The €1,587 million rise in the overall trade deficit
(including oil and ships) is mainly due to the growth of the net oil import bill
by €1,341 million and, secondarily, to the fact that the ships' balance showed
a deficit of €409 million, compared with a surplus of €474 million in the
corresponding period of 2004. These developments more than offset the favourable
outturn of the trade deficit excluding oil and ships,
which narrowed by €637 million, because exports (excluding oil and ships) grew
by €223 million, while the corresponding imports declined by €414 million in
comparison with their very high levels in the same period of 2004.
The services surplus widened considerably (by €363
million), reflecting an increase in net travel and transport receipts.
Specifically, gross travel receipts (i.e. travel spending in Greece by
non-residents) grew by €682 million (or 6.9%), while gross payments (i.e.
travel spending abroad by residents) rose by €132 million or 7.1%, thereby
pushing up net travel receipts by €550 million year-on-year. Gross transport
(mainly shipping) receipts were higher by €578 million or 5.3%, compared with
the already very high receipts recorded in the corresponding period of 2004,
despite the continuing drop in freight rates in international markets. As gross
transport payments rose by €345 million or 7.3%, net transport receipts
increased by €233 million.
The income account deficit grew by €885 million during the
same period, as net interest, dividend and profit payments increased, mainly
because of a continuing rise in non-residents' holdings of old and new issues of
Greek Government bonds.
Finally, the €612 million year-or-year fall in the current
transfers surplus is attributable on the one hand to a €279 million decrease
in net EU current transfers to general government and, on the other hand, to a
€333 million drop in net current transfers to the "other" sectors
(excluding general government). Specifically, while in the January-October 2005
period general government gross current receipts from the EU rose by €447
million or 12.7% year-on-year, general government gross current payments to the
EU grew by €726 million or 41.6%.
Capital transfers balance
In October 2005, the capital transfers balance showed
a surplus of €42 million, compared with a small deficit in October 2004. (EU
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-October 2005, the capital transfers balance
showed a surplus of €1,388 million, i.e. smaller by €336 million than in the
corresponding period of 2004. This mainly reflects a €290 million decrease in
net 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 balances
(on the basis of the old method of presentation) showed a deficit of €1,244
million in October 2005, compared with a deficit of €881 million in
October 2004. Overall, in January-October 2005, the deficit amounted to
€8,027 million, compared with €4,969 million in the same period of 2004.
Financial account balance
In October 2005, no significant flows were observed
under direct investment. Under portfolio investment, a net outflow of €2,108
million reflects a €1,684 outflow of residents' funds, mainly for purchases of
foreign bonds, and, secondarily, an outflow of non-residents' funds owing to
sales of Greek bonds. "Other" investment showed a net inflow of
€3,382 million, which is primarily attributable to an increase in
non-residents' repo and deposit holdings in Greece and, to a lesser extent, a
decline in the corresponding holdings abroad by residents.
In January-October 2005, direct investment showed a
net outflow of €920 million (compared with a net inflow of €613
million in the corresponding period of the previous year). This development is
accounted for mainly by a net outflow of €695 million for residents' direct
investment abroad and, secondarily, by a net outflow of €226 million under
non-residents' investment in Greece. Portfolio investment recorded a net inflow
of €7,180 million during the same period, since the outflow of residents'
funds for investment abroad (mainly in bonds) was more than offset by the inflow
of non-residents' funds for investment primarily in Greek government paper and -
to a considerable extent - shares of Greek firms. Finally, under
"other" investment, a net inflow of €2,525 million reflects the fact
that the inflow of funds (€14,128 million), mainly for non-residents'
investment in deposits and repos in Greece, more than offset the outflow of
residents' funds (€11,602 million), almost exclusively for similar investment
abroad.
At end-October 2005, Greece's reserve assets came to
€2.0 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 November 2005 will
be released on 20 January 2006.