Press Releases

Balance of Payments: NOVEMBER 2008

23/01/2009 - Press Releases

Current account balance

In November 2008, the current account deficit remained virtually unchanged year-on-year (it showed a small decline of €3 million) and reached €3,458 million. The decrease in the surplus of the services balance, the widening of the income account deficit and the shift of the current transfers balance from a small surplus in November 2007 to a deficit were offset by a drop in the trade deficit.

As a result of a considerable €413 million decrease in the trade deficit excluding oil and ships, and decreases in net payments for purchases of ships and in the net oil import bill (of €175 million and €62 million, respectively), the overall trade deficit dropped by €650 million. Regarding in particular the trade balance excluding oil and ships, export receipts showed an increase (of €94 million or 9.1%), while the import bill fell considerably (by €318 million or 9.7%).

The surplus of the services balance narrowed by €328 million, as net transport and travel receipts fell by €316 million and €13 million, respectively, while net payments for other services remained unchanged.

The €221 million rise in the income account deficit is mostly attributable to an increase in net interest, dividend and profit payments.

The current transfers balance showed a deficit of €87 million, in comparison with a surplus of €11 million in November 2007, chiefly because of a rise in net general government payments to the EU. (Current transfers from the EU mainly include receipts from the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) in the context of the Common Agricultural Policy, 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-November 2008 period, the current account deficit rose by €4.4 billion over the same period of 2007 and reached €31.9 billion. This development reflects increases in, mainly, the trade deficit and, secondarily, the income account deficit, which were offset only to a small degree by a rise in the surpluses of the services balance and the current transfers balance.

The €3.7 billion rise in the trade deficit is attributable to increases of €3.5 billion and €586 million in the net oil import bill and the trade deficit excluding oil and ships, respectively, while net payments for purchases of ships dropped by €419 million. Regarding in particular the trade balance excluding oil and ships, export receipts grew considerably (by €1.8 billion or 16.1%), while the import bill rose by €2.4 billion or 6.7%.

The surplus of the services balance expanded by €649 million, mostly reflecting higher net transport receipts (up by €795 million). It should be noted that gross transport receipts (mainly from merchant shipping) increased considerably in January-November 2008 (by €2.4 billion or 15.8%), as throughout this period receipts on a monthly basis were higher than in the corresponding months of 2007, with the exception of November, when they were lower. Net travel receipts rose by only €151 million year-on-year, as gross receipts (i.e. travel spending in Greece by non-residents) showed a limited increase (of €330 million or 3.0%), while gross payments (i.e. travel spending abroad by residents of Greece) grew by €179 million (or 8.2%). Net payments for other services rose by €297 million.

The income account deficit expanded by €1.8 billion, mainly as a result of higher net interest, dividend and profit payments. This development is largely associated with a rise in non-residents' holdings of Greek public debt.

Finally, the substantial increase of €442 million in the surplus of the current transfers balance is attributable to a strong rise (of €490 million) in EU transfers to general government, as well as a considerable decline (of €164 million) in general government payments to the EU, which more than offset a €212 million rise in net payments by the other sectors.

Capital transfers balance

In November 2008, the surplus of the capital transfers balance almost doubled year-on-year, reaching €923 million. (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-November 2008 period, the capital transfers balance showed a surplus of €3.9 billion (up by €1 billion year-on-year). Finally, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €6.4 billion, up by €1.4 billion in comparison with the same period of 2007.

Combined current account and capital transfers balance (according to the old method of presentation)

The combined current account and capital transfers balance (according to the old method of presentation) showed a deficit of €2.5 billion in November 2008, down by €466 million year-on-year. In the January-November 2008 period, this deficit came to €27.9 billion, compared with €24.5 billion in the corresponding period of 2007.

Financial account balance

In November 2008, residents' direct investment abroad recorded a net outflow of €133 million. The most important transaction in this category concerns an outflow of €160 million by "Titan Cement Atlantic S.A." for its participation in the capital increases of, on the one hand, "Titan America LLC" in the United States (€132 million) and, on the other hand, "Columbus Properties" in the Netherlands (€28 million). Non-residents' direct investment in Greece showed a net inflow of €527 million. The largest transactions in this category concerned (a) an inflow of €431 million due to the transfer by the Greek State of a 3.03% stake in the capital of the Hellenic Telecommunications Organisation (OTE) to the German company "Deutsche Telecom"; and (b) an inflow of €46 million concerning the increase in the stake of "Crédit Agricole" in the capital of "Emporiki Bank" from 68.2% to 77.5%.

Under portfolio investment, a net outflow of €1.3 billion was recorded, attributable to a €4.6 billion rise in residents' investment in foreign bonds and Treasury bills, and non-residents' sales of shares of Greek firms (worth €471 million). These developments were partly offset by a €3.3 billion increase in non-residents' holdings of Greek government bonds and Treasury bills, and residents' sales of foreign shares (worth €440 million). "Other" investment recorded a considerable net inflow of €3.2 billion, mainly reflecting inflows of non-residents' funds (€2.7 billion) for investment in deposits and repos in Greece, and a €555 million decrease in domestic credit institutions' deposit and repo holdings abroad.

In the January-November 2008 period, direct investment showed a net inflow of €1.3 billion. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €3.3 billion, while net outflows of residents' funds for direct investment abroad reached €2.0 billion. During the same period, a net inflow of €15.8 billion was recorded under portfolio investment. Specifically, the inflows due to non-residents' purchases of Greek government bonds and Treasury bills (of €23.5 billion) and residents' sales of foreign shares (worth €2.6 billion) more than offset outflows due to both residents' purchases of foreign bonds and Treasury bills (worth €6.6 billion) and non-residents' sales of shares of Greek firms (worth €3.3 billion). Finally, under "other" investment, a net inflow of €10.3 billion is mainly attributable to the fact that the inflows of non-residents' funds for investment in deposits and repos in Greece (worth €33.4 billion) more than offset the increase in resident credit institutions' and institutional investors' corresponding investment abroad (worth €21.6 billion).

At end-November 2008, Greece's reserve assets reached €2.5 billion. (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 December 2008 will be released on 19 February 2009.

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