Balance of Payments: February 2016

20/04/2016 - Press Releases

Current account

In February 2016, the current account showed a deficit of €804 million, down by €650 million year-on-year. This development is principally attributable to an improvement in the primary and the secondary income accounts and, secondarily, to a decrease in the deficit of the balance of goods. These favourable developments offset the narrowing in the surplus of the services balance.

The deficit of the balance of goods dropped by €138 million year-on-year. Specifically, the oil balance ameliorated due to the fall in oil prices. Moreover, the balance of ships also improved, but the relevant transactions are not fully recorded by the domestic banking system, following the imposition of capital controls. Finally, the deficit of the balance of goods excluding oil and ships rose, despite an increase in exports, given that the value of imports grew more.

The surplus of the services balance declined by €226 million, to stand at almost 40% of the corresponding surplus in 2015, mainly as a result of lower net sea transport receipts, which dropped to €399 million, from €625 million in 2015. Travel receipts decreased by 6.6%, while non-residents’ arrivals declined by 14.9%.

As a result of the above-mentioned developments, the value of exports of goods and services fell by 18.6% and the corresponding value of imports declined by 11.9%, so the deficit of the balance of goods and services eventually shrank by €88 million.

The primary income account showed a surplus of €440 million, against a deficit of €140 million in February 2015, mainly as a result of a rise in the surplus of the other primary income account (which includes taxes and subsidies on products and production). At the same time, the secondary income account showed a surplus of €48 million, against a deficit of €110 million in the corresponding month of 2015, mainly on account of the improved general government balance.

In the January-February 2016 period, the current account improved by €189 million and showed a deficit of €1.6 billion. This development is attributable to an improvement in the primary and the secondary income accounts, while the balance of goods and services recorded a deficit of €2.2 billion, almost the same as in the corresponding period of 2015. Overall, the value of exports of goods and services registered a decrease of 22.2%, mainly due to lower transport receipts, and the value of imports declined by 16.7%.

The deficit of the balance of goods fell by €432 million in the January-February 2016 period, due to an improvement in all subaccounts. As already mentioned, the fall in oil prices resulted in a significant improvement in the oil balance, while the reduction in transactions concerning purchases and sales of ships is largely due to the fact that they are conducted outside the Greek banking system, following the imposition of capital controls. Finally, it should be noted that exports of goods excluding oil and ships remained practically flat, while the corresponding imports declined by 1.4%.

The surplus of the services balance narrowed in the January-February 2016 period, as net transport receipts registered a decline, which is also largely attributable to capital controls. This development was offset to a small extent by an improvement in the travel and other services balance. It should be noted that total non-residents' arrivals decreased by 11% and the corresponding receipts by 5.6%.

In the same period, the primary income account showed a surplus of €613 million, up by €129 million year-on-year, due to lower net interest, dividend and profit payments, as well as lower payments for wages and salaries. This improvement offset the contraction of the surplus of the other primary income account. Finally, the secondary income account also improved.

Capital account

In February 2016, the capital account showed a surplus of €244 million, up by €135 million year-on-year, mainly due to a rise in net capital transfers from the EU to general government. In the January-February 2016 period, the surplus stood at €632 million, up by €473 million year-on-year.

Combined current and capital account

In February 2016, the combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of €561 million, down by €785 million year-on-year. In the January-February 2016 period, the deficit shrank by €662 million, to stand at €915 million.

Financial account

In February 2016, no remarkable transactions were recorded under direct investment.

Under portfolio investment, a net increase of €1.2 billion was recorded in residents' external assets, which is attributable to a rise of €1.2 billion in residents' holdings of foreign bonds and Treasury bills. This hike largely reflects Bank of Greece holdings. On the liabilities side, a net increase of €21 million was recorded, which is mainly attributable to a rise in non-residents' investment in shares of Greek firms.

Under other investment, a net decline of €50 million in residents' assets is the net result of, on the one hand, a decrease on account of the statistical adjustment related to the issuance of banknotes and, on the other, an increase in resident credit institutions' and institutional investors' deposit and repo holdings abroad. The net increase of €1.9 billion in liabilities mainly reflects a net rise of €2.2 billion in non-residents' deposit and repo holdings in Greece.

In the January-February 2016 period, residents' net assets from direct investment abroad rose by €91 million, while the corresponding liabilities that represent non-residents' direct investment in Greece dropped by €32 million.

Under portfolio investment, a net increase of €1.9 billion in residents' external assets is mainly due to a rise of €2.2 billion in their holdings of foreign bonds and Treasury bills. Moreover, residents’ net external liabilities fell by €395 million, mainly on account of a decline in non-residents’ investment in Greek government bonds and Treasury bills, which was partly offset by a rise in non-residents' investment in shares of Greek firms.

Under other investment, a net decline in residents' external assets and liabilities largely reflects the statistical adjustment related to the issuance of banknotes (1), which was offset by an increase in resident credit institutions' and institutional investors' deposit and repo holdings abroad. On the liabilities side, a net increase of €2.9 billion was recorded, which is attributable to a rise in non-residents’ deposit and repo holdings in Greece (the TARGET account included), as well as a decrease of €484 million in residents’ outstanding debt.

At end-February 2016, Greece’s reserve assets stood at €6.4 billion, compared with €5.7 billion in the corresponding month of 2015.

Note: Balance of payments data for March 2016 will be released on 20 May 2016.

(1) In the January-February 2016 period, both assets and liabilities registered a decrease on account of the statistical adjustment related to the issuance of banknotes, which came to €584 million and €530 million respectively.