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Balance of payments: JANUARY 2005

21/03/2005 - Press Releases

Current account balance

In January 2005, the current account deficit rose by €308 million year-on-year. This development is accounted for by a widening of the trade deficit and a decrease in the transfers surplus, which were only partly offset by an increase in the services surplus and a decline in the income account deficit.

Specifically, underlying the widening of the trade deficit was a rise in both the net oil import bill (by €173 million) and the non-oil trade deficit (by €119 million). The services surplus improved by €133 million, exclusively as a result of the growth of net transport (mainly shipping) receipts, while net travel receipts fell (given that gross payments, i.e. residents' travel expenses abroad, increased more than gross receipts, i.e. non-residents' travel expenses in Greece) and net payments for "other" services rose. The income account deficit decreased considerably (by €97 million), as a result of a drop in interest payments on Greek Government bonds and loans in comparison with January 2004. Finally, the €246 million year-on-year decrease in the transfers surplus is mainly accounted for by the fact that the €189 million rise in general government payments (mainly payments to the EU as a national contribution to the Community Budget) far exceeded the €36 million increase in general government receipts (mainly transfers from the EU). As a result, net EU transfers to general government were slightly negative (-€10 million), while they are usually positive. Moreover, the net receipts of the other sectors (emigrants' remittances etc.) fell by €93 million.

Financial account balance

In January 2005, there were no significant flows under direct investment. Under portfolio investment, a net outflow of €1,544 million was observed in residents' foreign assets, mainly reflecting investment in bonds issued by non-residents (€1,518 million), while a net inflow of €1,713 million was recorded in liabilities, which is largely accounted for by non-residents' investment mainly in Greek government bonds or Treasury bills (€1,225 million), as well as shares of Greek firms. Finally, as regards "other investment", a substantial inflow of non-residents' funds was observed, mainly to deposits and repos, which was largely offset by an outflow of residents' (mainly credit institutions' and institutional investors') funds to deposits and repo holdings abroad.

At end-January 2005, Greece's reserve assets came to €2.0 billion. (It should be recalled that since the first months of 2003 the Bank of Greece has started to diversify its portfolio, by reducing its non-euro area currency holdings, which are included in reserve assets, and increasing its assets which had higher yields and are mainly denominated in euro - predominantly bonds issued by euro area Member States, which are not included in reserve assets. It has been noted repeatedly 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 in 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 February 2005 will be released on 20 April 2005.

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