Balance of payments: February 2013

22/04/2013 - Press Releases

Current account balance

In February 2013, the current account balance showed a deficit of €716 million, down by 410 million (or 36.4%) year-on-year. This development is mainly due to a decline in the trade deficit.

The trade deficit contracted by €296 million, as a result of decreases in all of its components, most notably a €168 million decline in the net oil import bill. Net payments for purchases of ships dropped by €65 million and the trade deficit excluding oil and ships shrank by €62 million on the back of a rise in export receipts (of €83 million or 8.4%), while the corresponding import bill increased slightly (by €20 million or 1.2%).

The services surplus narrowed by €36 million, given that an improvement in the travel balance was offset by lower net receipts from transport services and higher net payments for services. Specifically, travel spending in Greece by non-residents rose by €13 million, while travel spending abroad by residents fell by €8 million; as a result, the travel balance showed a €27 million surplus in February 2013, up by €21 million year-on-year. Net transport receipts fell by €43 million, mainly on account of lower net receipts from “other” transport services.

The income account deficit shrank by €27 million, principally owing to a decline in net interest, dividend and profit payments.

Finally, the current transfers balance showed a €122 million higher surplus than in February 2012, reflecting an increase mainly in general government net receipts (chiefly from the EU). (It should be recalled that gross current transfers from the EU mainly include receipts from the European Agricultural Guidance and Guarantee Fund (EAGGF), 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-February 2013 period, the current account deficit narrowed by €1.5 billion or 59% year-on-year, to €1.1 billion. This development principally reflects significant declines in both the trade deficit (–€984 million) and the income account deficit (–€316 million), as well as an increase in the current transfers surplus (+€246 million), while the services surplus contracted by €35 million.
In more detail, the trade deficit narrowed on account of a €435 million (or 25%) decline in the trade deficit excluding oil and ships, lower net payments for purchases of ships (down by €83 million, or 27%) and a lower net oil import bill (down by €467 million, or 22%). Receipts from exports of goods excluding oil and ships rose by 10%, while the corresponding import bill fell by 5.8%.

A decrease in the services surplus in the first two months of 2013 is due to a drop in net receipts from transport – mainly “other” transport – services, which offset an improvement in the travel balance, while net payments for other services remained broadly unchanged. More specifically, in the January-February 2013 period, non-residents’ arrivals rose by 6.9%; as a result, travel spending in Greece by non-residents increased by 2.9% year-on-year, while travel spending by residents abroad fell by 25%, hence a €52 million surplus was recorded, against a €23 million deficit in the same period of 2012.

The income account deficit fell by €316 million year-on-year, mainly owing to a sharp decline in net interest payments on Greek government bonds held by non-residents (following the PSI).

Finally, the current transfers balance showed a surplus of €1.6 billion, up by €246 million year-on-year. This development is mainly due to net receipts of €221 million of the sectors other than general government (mainly emigrants’ remittances), against net payments of €85 million year-on-year; general government net transfer receipts (mainly from the EU) did not change considerably.

Capital transfers balance

In February 2013, the capital transfers surplus fell to €641 million, compared to €1,046 million in February 2012, reflecting a decline in net transfers to general government. (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-February 2013 period, the capital transfers balance showed a surplus of €631 million, compared to €1 billion in the same period of 2012. This mainly reflects a decline in net EU capital transfers to general government.

The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €2.3 billion in the first two months of 2013, down by €144 million year-on-year, reflecting the above-mentioned development in EU current transfers.

Combined current account and capital transfers balance

The combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a small deficit of €76 million in February 2013, compared with €81 million in the same month of 2012. In the January-February 2013 period, this balance showed a deficit of just €430 million, compared with €1.6 billion in the same period of 2012 (down by 72.3%), i.e. it fell at a faster pace than the current account deficit.

Financial account balance

In February 2013, non-residents’ direct investment in Greece showed a net inflow (increase) of €35 million (against a net outflow of €151.5 million in the same month of 2012), without any remarkable transaction. Residents’ direct investment abroad also recorded a net inflow (decline) of €738.5 million (against a net outflow of €29.8 million in February 2012). The most important transactions concerned: (i) a €700 million inflow on account of an intra-group loan extended to OTE S.A. by its subsidiary OTE PLC (United Kingdom), and (ii) a €55 million inflow owing to the completion of the sale (disinvestment) of Emporiki Bank’s former subsidiaries (Bulgaria, Romania and Albania) to Crédit Agricole (France).

Under portfolio investment, a net inflow of €553 million was recorded (against a net outflow of €1.5 billion in February 2012). This is mainly attributable to a capital inflow on account of declines of €2.6 billion and €88 million in residents’ holdings of foreign bonds and foreign shares, respectively. There was also a €42 million rise in non-residents’ investment in Greek shares (inflow). These developments were partly offset by a €1.1 billion outflow due to an increase in residents’ holdings of foreign Treasury bills, as well as by a €1.0 billion outflow owing to a decline in non-residents’ holdings of Greek government bonds and Treasury bills.

Under “other” investment, a net outflow of €1.4 billion was recorded (against a net inflow of €2.4 billion in February 2012), which is mainly attributable to a €6.9 billion decrease in non-residents’ deposit and repo holdings in Greece (including the TARGET account). These developments were partly offset by an inflow as a result of a €2.5 billion increase in the net outstanding debt of the public and the private sector to non-residents, which mainly reflects public sector net borrowing of €2.8 billion from the EFSF. Also, a net inflow of €2.9 billion was recorded as a result of a decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.

In the January-February 2013 period, direct investment showed a net inflow of €1.3 billion (against a net outflow of €383 million in the same period of 2012). Specifically, non-residents’ direct investment in Greece showed a net inflow of €619 million, while residents’ direct investment abroad fell by €714 million (inflow).

Under portfolio investment, a net inflow of €1.4 billion was observed (against a net outflow of €1.6 billion in the same period of 2012). Specifically, a capital inflow was recorded due to decreases of €3.7 billion and €184 million in residents’ investment in foreign bonds and shares, respectively. A capital inflow was also recorded on account of a €214 million increase in non-residents’ purchases of shares and financial derivatives of Greek firms. In the same period, there was a €1.5 billion increase in residents’ investment in foreign Treasury bills and financial derivatives (outflow) and a €1.1 billion decline in non-residents’ holdings of Greek government bonds and Treasury bills (outflow).

Under “other” investment, a net outflow of €2.8 billion was recorded (against a net inflow of €4.6 billion in the same period of 2012). This is almost exclusively attributable to a €19.1 billion decrease in non-resident credit institutions’ and institutional investors’ deposit and repo holdings in Greece (outflow). This development was partly offset by a €9.0 billion decline in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad (inflow), as well as a €7.3 billion rise in the net outstanding debt of the public and the private sector to non-residents (inflow).

At end-February 2013, Greece’s reserve assets stood at €5.3 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. Excluded are euro-denominated claims on non-euro area residents, claims (in foreign currency and in euro) on euro area residents, and the Bank of Greece share in the capital and reserves of the ECB.)

Note: Balance of payments data for March 2013 will be released on 22 May 2013.