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Balance of Payments: JULY 2001

04/10/2001 - Press Releases

Current account

In July 2001 the current account balance recorded a deficit of €362 million, reduced by €35 million with respect to the corresponding month of 2000. This development is related to the improvement in the trade balance and in the transfers balance, which more than offset the decline in the surplus of the services balance and the increase in the deficit of the income balance compared with July 2000.

The decrease in the trade deficit in July 2001 resulted mainly from a drop in the non-oil trade deficit, while net oil imports remained at about the same level as in July 2000. As regards the services balance, the lower surplus stemmed from a fall in net transport receipts, while net travel receipts remained virtually unchanged. Besides, the higher transfers surplus reflects a considerable year-on-year rise in net EU transfers, while the increase in the deficit of the income balance was due to larger net payments for interest, dividents and profits.

In the January-July 2001 period the current account deficit decreased by €314 million relative to the corresponding period of 2000 and came to €4,358 million. This development stemmed from the decline in the non-oil trade deficit as well as from the increase in both the services and the transfers surpluses, whereas the deficit of the income balance doubled.

The decline in the non-oil trade deficit in the first seven months of 2001 was entirely accounted for by the rise in non-oil export receipts, which more than offset the increase in the import bill; as a result the non-oil trade deficit fell by €284 million. On the other hand, net imports of oil rose by €186 million. The fast growth of net travel receipts and, to a lesser extent, of net transport receipts led to a considerable rise in the services surplus, which offset a larger share of the trade deficit than in 2000. The higher deficit of the income balance stemmed mainly from an increase in net payments for interest, dividends and profits. Finally, the transfers surplus increased, owing to a rise in net transfers from the EU since April 2001, when Greece began to receive advances under the 3rd Community Support Framework (CSF); receipts under the 2nd CSF, as well as receipts from FEOGA's Guarantees Section in the context of the Common Agricultural Policy, are also continuing.

Financial account

In July 2001 direct investment and portfolio investment recorded significant inflows. As regards direct investment, the substantial rise in inflows reflects the purchase by EURΕKO of the first tranche of shares of the INTERAMERICAN insurance company, which represented a total net inflow of €978 million.

In the first seven months of 2001 direct investment recorded a net inflow of €747 million, which was almost three times higher than in the corresponding period of 2000, because of the aforementioned purchase of INTERAMERICAN shares. Net portfolio investment inflows in the first seven months of 2001 were lower compared with the corresponding period in 2000 and came to €2,244 million. This development is associated with the continuing inflow of capital for the purchase of Greek government bonds; this inflow, however, is declining, because of the gradual narrowing of interest rate differentials between Greece and the other euro area countries. As regards what appears as an outflow under “other investment”, it is partly due to the statistical recording of the decline in foreign exchange reserves following their calculation according to the ECB definition.

As a result of developments in the current and financial accounts, Greece’s foreign exchange reserve assets (according to the ECB definition) stood at €7.5 billion (USD 6.6 billion) at end-July of 2001.

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