Balance of payments: MAY 2004
22/07/2004 - Press Releases
Current account balance
In May 2004, the current account deficit decreased
year-on-year. Underlying this development was exclusively the widening of the
services surplus, whereas the trade deficit and the income account deficit grew
and the transfers surplus narrowed.
Specifically, the widening of the trade deficit is accounted
for by an increase in the net oil import bill, while the non-oil import deficit
was virtually unchanged. The services surplus improved considerably as a result
of a rise in net transport (mainly shipping) receipts and, secondarily, an
increase in net travel receipts. The growth of the income account deficit
stemmed from higher net interest payments on Greek Government bonds. Finally,
the narrowing of the transfers surplus reflects a decrease in net EU transfers
to general government.
In January-May 2004, the current account deficit
narrowed considerably (by €1,029 million) over the same period of 2003 and
reached €4,038 million. This development mainly reflects a substantial rise in
the services surplus and, to a lesser extent, an appreciable increase in the
transfers surplus, which, together, more than offset the widening of the trade
deficit and the income account deficit.
Specifically, the trade deficit grew by €660 million
relative to the same period of 2003. This reflects a €1,296 million (or 11.4%)
increase in the non-oil import bill, which more than offset both a €477
million (or 12.2%) rise in non-oil export receipts and a €160 million decrease
in the net oil import bill. Besides, the services surplus grew by €1,384
million owing to a big rise (of €1,219 million) in net transport (mainly
shipping) receipts and, to a much lesser extent, a drop in net payments for ''other
services''. The income account deficit showed a small rise. Finally, the €371
million growth of the transfers surplus during the period under review is
accounted for by a €368 million increase in net EU transfers to general
government, which mainly stemmed from the inflows in February.
Financial account balance
In May 2004, a small net outflow was observed under
direct investment. Under portfolio investment, a net outflow of €3,042 million
mainly reflects residents' increased purchases of bonds issued by non-residents.
Finally, as regards "other investment", a net inflow of €4,021
million largely reflects a decrease in residents' (credit institutions')
deposits and repos abroad, as well as an increase in non-residents' deposits and
repos in Greece.
In January-May 2004, a net inflow of €439 million
was observed under direct investment, which mainly reflects the acquisition of
PANAFON S.A. by VODAFONE in January and the acquisition of the General Bank of
Greece by Societe Generale in March, as mentioned in earlier press releases.
Over the same period, a substantial net inflow of €5,675 million was recorded
under portfolio investment, mainly reflecting non-residents' purchases of Greek
government bonds, which more than offset the corresponding outflows by residents
to foreign bonds. Finally, a net outflow of €2,610 million under ''other
investment'' is largely associated with residents' (mainly credit institutions')
sizeable outflows to deposits and repos abroad and, to a lesser extent, outflows
for the repayment of loans granted by non-residents, which more than offset non-residents'
inflows to deposits and repos.
At end-May 2004, Greece's reserve assets came to
€3.4 billion. It should be noted that, as early as in the first months of
2003, the Bank of Greece diversified its portfolio, reducing its non-euro area
currency holdings, which are included in reserve assets, and increasing its
higher-yield or euro-denominated assets (mainly bonds issued by euro area Member
States, which are not included in reserve assets). Given that there is
less need to maintain high foreign currency reserves, by the above
diversification the Bank of Greece improved the return on its investments. (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 June 2004 will be
released on 18 August 2004.