Balance of payments: May 2013

19/07/2013 - Press Releases

Current account balance

In May 2013, the current account balance showed a small surplus of €35.5 million, against deficits of €1.2 and €1.9 billion in the same month of 2012 and 2011, respectively. This development is due to a decline in the trade deficit, a rise in the services surplus, as well as a shift in the current transfers balance from a deficit in May 2012 to a surplus in May 2013. By contrast, the income account deficit more than doubled.

The trade deficit fell by €894 million, mainly owing to a €711 million decrease in the net oil import bill. The trade deficit excluding oil and ships also shrank, by €192 million, as a result of a decline of €263 million or 12.6% in the import bill, which offset the reduced (by €72 million or 5.8%) export receipts. Finally, net payments for purchases of ships rose by €8 million.

The surplus of the services balance increased by €430 million, owing to, primarily, a significant rise in net travel receipts and, secondarily, a contraction in net payments for “other” services. By contrast, net transport receipts fell, reflecting, principally, a higher deficit in the balance of “other” transport services (excluding sea transport services) and, secondarily, a lower surplus in the sea transport services balance. The surplus of the travel services balance registered an increase of €300 million year-on-year. In more detail, travel spending by non-residents in Greece grew considerably by €293 million or 38.5% (also reflecting a 24.4% rise in non-resident travellers’ arrivals, according to the Bank of Greece’s border survey), while travel spending by residents abroad declined slightly (by 4.1%). Finally, the narrowing by €209 million of the “other” services deficit is mainly attributable to financial services, more specifically to the €38 million fee paid to the European Financial Stability Facility (EFSF) in May 2013, compared with €164 million in May 2012.

The income account deficit rose by €182 million, owing to higher net interest, dividend and profit payments.

Finally, the current transfers balance showed a surplus of €69.4 million, against a €52.5 million deficit in May 2012, reflecting improvements in the balances of both general government (mainly transfers from the EU) and the sectors other than general government. (It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF), 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 the January-May 2013 period, the current account deficit contracted by €3.4 billion or 49.2% year-on-year, to €3.5 billion. This development principally reflects a considerable decline of €2.2 billion in the trade deficit and a narrowing of the income account deficit by €574 million, as well as increases of €456 and €248 million in the current transfers and services surpluses, respectively.

In more detail, the trade deficit shrank owing to declines of €574 million (or 14.5%) and €1.6 billion (or 33.5%) in the trade deficit excluding oil and ships and the net oil import bill, respectively, whereas net payments for purchases of ships increased by €59 million or 11.9%. Receipts from exports of goods excluding oil and ships rose by 4.3%, while the corresponding import bill fell by 3.5%.

An increase in the services surplus in the January-May 2013 period reflects higher net travel receipts and lower net payments for “other” services, developments which offset a contraction in net transport receipts. More specifically, travel spending in Greece by non-residents rose by 15.4% year-on-year (also reflecting a 9.5% rise in non-resident travellers’ arrivals over the same period, according to the Bank of Greece’s border survey). At the same time, as travel spending abroad by residents declined by 10.1%, a €1.1 billion surplus was recorded, compared with €764 million in the same period of 2012.

The income account deficit fell by €574 million year-on-year, mainly owing to a sharp decline in net interest payments on Greek government bonds held by non-residents (following the PSI).

Finally, the current transfers balance showed a surplus of €1.7 billion, up by €456 million year-on-year. This development is mainly due to net receipts of €297 million of the sectors other than general government (which mainly concern emigrants’ remittances), against net payments of €28 million in the same period of 2012, while general government net transfer receipts (mainly from the EU) rose by €131 million.

Capital transfers balance

In May 2013, the capital transfers balance recorded a deficit of €14 million, against a small surplus of €2.7 million in May 2012, reflecting a decline in net transfers 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 the January-May 2013 period, the capital transfers balance showed a surplus of €1.1 billion, up by €38 million year-on-year. This development is mainly attributable to a considerable increase in net EU capital transfers to general government (up by €94 million), which more than offset a rise in the net capital transfer payments of the other sectors.

The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €2.8 billion in the January-May period, up by €494 million year-on-year, as a result of the above-mentioned development in both EU current and capital transfers, on the one hand, and the net transfer receipts of the other sectors (mainly emigrants' remittances), on the other hand.

Combined current account and capital transfers balance

In May 2013, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a surplus of €21.6 million, against a deficit of €1.2 billion in May 2012. In the January-May 2013 period, this balance showed a deficit of just €2.4 billion, compared with €5.9 billion in the same period of 2012 (down by 58.9%), i.e. it fell at a faster pace than the current account deficit.

Financial account balance

In May 2013, non-residents’ direct investment in Greece showed a net outflow (decline) of €26 million (compared with a net outflow of €89 million in May 2012), while residents’ direct investment abroad recorded a net outflow (increase) of €20 million, without any remarkable transactions.

Under portfolio investment, a net outflow of €11.9 billion was recorded mainly as a result of a €7.2 billion rise in residents’ investment in foreign bonds, as well as a €5.3 billion decline in non-residents’ purchases of Greek bonds and Treasury bills (outflow). These developments were partly offset by a €200 million drop in residents’ holdings of foreign Treasury bills and a €324 million rise in non-residents’ purchases of shares of Greek firms (inflows). Under “other” investment, a net inflow of €11.6 billion was recorded (compared with a net inflow of €8.9 billion in the same month of 2012), mainly as a result of a net €14.3 billion increase (inflow) in the outstanding debt of the public and the private sector to non-residents (of which €14.2 billion concern public sector borrowing from the EFSF. An inflow was also recorded as a result of a €511 million decrease in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad. These developments were partly offset by a €3.1 billion decline (outflow) in non-residents’ deposit and repo holdings in Greece (including the TARGET account).

In the January-May 2013 period, direct investment showed a net inflow of €1.1 billion (against a net outflow of €224 million in the same period of 2012). Specifically, non-residents’ direct investment in Greece showed a net inflow (increase) of €946 million, while residents’ direct investment abroad showed a net decline (disinvestment) of €173 million (inflow).

A net outflow of €11.1 billion was observed under portfolio investment (compared with a net outflow of €71.9 billion in the same period of 2012). In more detail, a capital outflow was recorded due to increases of €4.8 billion and €279 million in resident institutional investors’ holdings of foreign bonds and Treasury bills and residents’ investment in foreign financial derivatives, respectively. A capital outflow was also recorded on account of a €6.9 billion decline in non-residents’ purchases of Greek bonds and Treasury bills (outflow). By contrast, a capital inflow was recorded as a result of a €345 million decline in residents’ investment in foreign shares, and of a €578 million increase in non-residents’ holdings of shares of Greek firms.

Under “other” investment, a net inflow of €11.4 billion was recorded (compared with a net inflow of €79.0 billion in the corresponding period of 2012). This is chiefly attributable to a €20.5 billion increase (inflow) in the net outstanding debt of the public and the private sector to non-residents and to a €16.5 billion decrease in resident institutional investors’ deposit and repo holdings abroad. These developments were partly offset by a €24.8 billion decline in non-residents’ holdings of deposits and repos in Greece (outflow).

At end-May 2013, Greece’s reserve assets stood at €4.9 billion, compared with €5.0 billion at end-April 2013. (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 non-euro area residents. Excluded are euro-denominated claims on non-euro area residents, claims (in foreign currency and in euro) on euro area residents, and the Bank of Greece share in the capital and reserves of the ECB.)

Note: Balance of payments data for June 2013 will be released on 19 August 2013.