Balance of payments: June 2013
19/08/2013 - Press Releases
Current account balance
In June 2013, the current account balance showed a surplus of €663 million, compared with a surplus of €73 million in the same month of 2012. This development is due, primarily, to a decline in the trade deficit and, secondarily, to the surplus recorded in the services balance, which was, however, offset by the doubling of the income account deficit, whereas the current transfers surplus narrowed.
The trade deficit fell by €651 million, mainly owing to a €397 million decrease in the net oil import bill, while all other balances also improved. The trade deficit excluding oil and ships contracted slightly, by €87 million, as a result of a decline of €132 million or 7.0% in the import bill, which offset the lower (by €45 million or 4.2%) export receipts. Finally, the ships’ balance (sales minus purchases) recorded a small surplus of €2.3 million.
The surplus of the services balance increased by €268 million, almost exclusively owing to a significant rise in net travel receipts (by €273 million) and, to a much lesser extent, a contraction in net payments for “other” services (by €22 million). By contrast, net transport receipts dropped slightly (by €27 million), exclusively on account of the higher deficit in the balance of “other” transport (excluding sea transport) services. The rise in the surplus of the travel services balance is mainly attributable to a €272 million (or 20.6%) increase in travel spending by non-residents in Greece (also reflecting a rise in non-resident travellers’ arrivals by 16.1%, according to the Bank of Greece’s border survey), while travel spending by residents abroad declined marginally (by 0.8%). Finally, the narrowing of the “other” services deficit is chiefly attributable to a contraction of the deficit of insurance and communication services, and to a rise in the surplus of business services. These developments were partly offset by the increase in the financial services deficit (on account of the €63 million fee paid to the European Financial Stability Facility (EFSF) and the International Monetary Fund (IMF), compared with €5 million in June 2012) and the narrowing of the construction services surplus. The income account deficit rose by €260 million, owing to higher net interest payments and lower net receipts from reinvested earnings (mainly as a result of mergers of foreign bank subsidiaries in Greece with Greek credit institutions).
Finally, the current transfers balance showed a surplus of €265 million in June 2013 (smaller than the €334 million surplus recorded in June 2012), mainly reflecting a corresponding development in the general government balance (chiefly transfers from the EU). It should be noted that the current transfers balance includes ANFA returns, i.e. revenue passed on to Greece accruing to euro area NCBs from Greek government bonds held in their investment portfolio, which amounted to €256 million in June 2013, compared with €349 million in June 2012. (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 first half of 2013, the current account deficit contracted by €4.0 billion (or 58.3%) year-on-year to €2.9 billion. This development is attributable, primarily, to a significant decline in the trade deficit (down by €2.8 billion) and, secondarily, to a narrowing of the income account deficit by €315 million; also of importance were the increases in the current transfers and services surpluses (up by €388 and €516 million, respectively).
In more detail, the trade deficit shrank owing to respective declines in the net oil import bill by €2.0 billion (or 36.1%), in the trade deficit excluding oil and ships by €661 million (or 13.9%), and in net payments for purchases of ships by €107 million (or 16.3%). Receipts from exports of goods excluding oil and ships rose by 2.9%, while the corresponding import bill fell by 4.1%.
The increase in the services surplus in the first half of 2013 is due to higher net travel receipts and lower net payments for “other” services, which offset the drop in net transport receipts. In more detail, travel spending in Greece by non-residents increased by 17.8% year-on-year (also reflecting a rise in non-residents’ arrivals by 12.3% over the same period, according to the Bank of Greece’s border survey), while, at the same time, travel spending by residents abroad declined by 8.3%; as a result, the travel balance showed a surplus of €2.5 billion, compared with €1.9 billion in the same period of 2012.
The income account deficit decreased by €315 million year-on-year, mainly owing to a sharp decline in net interest payments on Greek government bonds held by non-residents (as a result of the PSI).
Finally, the current transfers balance showed a surplus of €1.9 billion, up by €388 million year-on-year. This development is mainly due to net receipts of €358 million recorded in the sectors other than general government (which mainly concern emigrants’ remittances), against net payments of €48 million in the same period of 2012, while general government net transfer receipts (mainly from the EU) recorded a negligible decline of €19 million.
Capital transfers balance
In June 2013, the capital transfers balance showed a deficit of €11 million, compared with a deficit of €14 million in June 2012, reflecting a rise 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 first half of 2013, the capital transfers balance showed a surplus of €1.1 billion, up by €41 million year-on-year. This development is mainly attributable to a €109 million increase in net EU capital transfers to general government, which more than offset a rise in the net capital transfer payments of the other sectors.
The overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3.0 billion in the first half of the year, up by €428 million year-on-year, as a result of the above-mentioned developments in EU current and capital transfers, as well as in net transfer receipts of the other sectors (mainly emigrants' remittances).
Combined current account and capital transfers balance
In June 2013, the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) showed a surplus of €652 million, compared with a surplus of €59 million in the same month of 2012. In the first half of 2013, this balance showed a deficit of just €1.8 billion, compared with €5.8 billion in the same period of 2012, decreasing by 69.6%, i.e. at a faster pace than the current account deficit.
Financial account balance
In June 2013, non-residents’ direct investment in Greece showed a small net outflow (decrease) of €43 million (against a net inflow of €360 million in June 2012), without any remarkable transactions. Residents’ direct investment abroad also recorded a small net outflow (increase) of €25 million, without any remarkable transactions.
Under portfolio investment, a net inflow of €1.2 billion was recorded (compared with a net inflow of €307 million in June 2012), mainly as a result of a €2.2 billion decline (inflow) in residents’ investment in foreign bonds and Treasury bills, partly offset by a €1.0 billion decline (outflow) in non-residents’ purchases of Greek bonds and Treasury bills. As regards “other” investment, a net outflow of €1.9 billion was recorded (compared with a net outflow of €703 million in the same month of 2012), which is mainly attributable to a €7.7 billion decrease (outflow) in non-residents’ deposit and repo holdings in Greece (including the TARGET account). This development was partly offset by a €1.0 billion decline (inflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad and a €4.8 billion increase (inflow) in the outstanding debt of the public and the private sector to non-residents (of which €3.3 and €1.7 billion concern public sector borrowing from the EFSF and the IMF, respectively).
In the first half of 2013, direct investment showed a net inflow of €1.0 billion (compared with a net inflow of €82.4 million in the corresponding period of 2012). More specifically, non-residents’ direct investment in Greece showed a net increase (inflow) of €903 million, whereas residents’ direct investment abroad showed a net decline (disinvestment) of €148 million (inflow).
Under portfolio investment, a net outflow of €9.8 billion was observed in the first half of 2013 (compared with a net outflow of €71.6 billion in the same period of 2012). In more detail, a capital outflow was recorded, as a result of a €7.9 billion decrease in non-residents’ purchases of Greek bonds and Treasury bills, but also of increases in resident institutional investors’ holdings of foreign bonds and Treasury bills by €2.6 billion and of foreign financial derivatives by €299 million. By contrast, a capital inflow was recorded due to a €370 million decline in residents’ holdings of foreign shares, but also to a €606 million rise in non-residents’ investment in shares of Greek firms.
Under “other” investment, a net inflow of €9.5 billion was recorded (compared with a net inflow of €78.3 billion in the first half of 2012). This is chiefly attributable to a €25.4 billion increase in the net outstanding debt of the public and the private sector to non-residents, but also to a €17.6 billion decline in resident institutional investors’ deposit and repo holdings abroad (inflows). These developments were partly offset by an €32.6 billion decrease in non-residents’ deposit and repo holdings in Greece (outflow).
At end-June 2013, Greece’s reserve assets stood at €4.3 billion, compared with €4.9 billion at end-May 2013. (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 non-euro area residents. 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 July 2013 will be released on 18 September 2013.
Related link: Balance of payments: June 2013 - Table