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Balance of Payments: July 2015

21/09/2015 - Press Releases

Balance of Payments: July 2015 (1) 

Current account  

In July 2015, the current account showed a surplus of €4.3 billion, up by 3 billion year-on-year. This is mainly attributable to an inflow of €1.8 billion due to SMP (Securities Market Program, 2014) returns. The relevant inflow, which contributed to a significant improvement in the secondary income account, was followed by the transfer of the funds to a Greek government account held with the ECB (recorded under other investment as an increase in assets), as cash collateral for the disbursement by the European Financial Stabilization Mechanism (EFSM) of €7.2 billion under a bridge financing agreement. Moreover, in July 2015, the goods and services surplus rose by €1.2 billion, mainly due to a large decrease (of 40.7%) in imports.

More specifically, the deficit of the balance of goods fell by €1.4 billion year-on-year. This improvement mainly reflects a substantial decrease in imports, which was largely attributable to the imposition of capital controls. Additionally, the improvement in the oil balance also reflects the drop in oil prices. It should be noted that in July, the value of goods exports excluding oil and ships rose by 3% year-on-year.

The surplus of the services balance fell by €118 million, as a result of lower net receipts from sea transport services. By contrast, the travel and other services balances improved. An improvement was also recorded in the balance of other transport (excluding sea transport) services. The surplus of the travel balance rose by €135 million, as a result of a 3.5% increase in receipts and an 18.7% decline in travel spending abroad by residents. It should be noted that non-residents' arrivals in July rose by only 4.4%, reflecting the negative sentiment due to capital controls and the bank holiday.

In July 2015, the primary income account showed a small deficit, against a small surplus in July 2014, while the secondary income account improved substantially, as already mentioned.

In the January-July 2015 period, the current account showed a surplus of €357 million, against a deficit of €2.7 billion in the same period of 2014. This mainly reflects the improved balance of goods and services, as well as the improvement in the secondary income account observed in July. The deficit of the balance of goods and services was by €2.5 billion smaller than in the same period of 2014, mainly due to the reduced import bill. Overall, receipts from exports of goods and services fell by 3.8% in the January - July 2015 period, but the corresponding import bill decreased at a faster pace of 10.3%.

The deficit of the balance of goods declined by €2.7 billion, primarily owing to lower net payments for purchases of ships and, secondarily, due to the reduced net import bill for oil (as a result of falling oil prices) and other goods. It should be noted that receipts from exports of goods excluding oil and ships rose by 9.0%, while the corresponding import bill increased by a mere 2.3%.

The surplus of the services balance shrank, as net transport and other services receipts declined, which was partly offset by a rise in net travel receipts. In the January-July 2015 period, total non-residents’ arrivals rose by 14.2% year-on-year and the corresponding receipts grew by 6.2%.

In the January-July 2015 period, the surplus of the primary income account turned into a deficit, mainly reflecting higher net investment income payments (interest, dividends and profits) and lower net other primary income. The secondary income account improved substantially, as already mentioned.

Capital account

In July 2015, the capital account did not show any remarkable change. In the January-July 2015 period, the capital account showed a surplus of €609 million, down by €1.2 billion year-on-year.


Combined current and capital account

In July 2015, the combined current and capital account (corresponding to the economy's external financing requirements) showed a surplus of €4.3 billion, up by €3.0 billion year-on-year. In the January-July 2015 period, a surplus of €966 million was recorded, against a deficit of €805 million in the same period of 2014.

Financial account

In July 2015, under direct investment, residents' net external assets rose by €73 million. The most remarkable transaction concerned an outflow of €50 million for the participation of Aegean Airlines S.A. in the capital increase of Aegean Airlines Cyprus Ltd. (Cyprus). It should be noted that the funds came from a company account held in Germany. Residents' external liabilities (non-residents' direct investment in Greece) recorded a net decrease of €51 million, without any remarkable transactions.

Under portfolio investment, a net increase of € 1.2 billion in residents' external assets reflected mainly a rise of €1.1 billion in residents' holdings of foreign bonds and Treasury bills. A €3.4 billion drop in residents' net external liabilities reflected exclusively a net decline in non-residents’ holdings of Greek bonds and Treasury bills.

Under other investment (2), the net increase in residents' external assets is attributable to an increase of €844 million in resident credit institutions' and institutional investors', as well as private enterprises' deposit and repo holdings abroad (3). The increase in residents' external liabilities mainly reflects a net increase of €5.1 billion in the outstanding debt of the public and the private sector to non-residents (4). This increase in residents’ external liabilities was partly offset by a €3.2 billion net decrease in non-residents’ deposit and repo holdings in Greece (including the TARGET account).

In the January-July 2015 period, residents’ net assets from direct investment abroad rose by €215 million, while the corresponding liabilities that represent non-residents’ direct investment in Greece grew by €33 million.

Under portfolio investment, a net decrease of €3.0 billion in residents’ external assets was mainly due to a drop of €10.2 billion in residents’ holdings of foreign bonds and Treasury bills, which was partly offset by a rise of €7.1 billion in residents’ investment in shares of foreign firms. Moreover, residents’ net external liabilities fell by €6.9 billion, mainly on account of a decline in non-residents’ investment in Greek government bonds and Treasury bills and in shares of Greek firms.

Lastly, under other investment, a net increase in residents' external assets and liabilities mainly reflects the statistical adjustment associated with the issuance of banknotes, as already mentioned (5). In addition, regarding assets, in January-July 2015 residents' deposit and repo holdings abroad registered a net increase of €5.8 billion. On the liabilities side, a net increase of €17.9 billion in non-residents' deposit and repo holdings in Greece (including the TARGET account) was considerably offset by a decrease in residents' outstanding debt.

At end-July 2015, Greece’s reserve assets stood at €5.1 billion, compared with €5.0 billion at end-July 2014.

Note: Balance of payments statistics for August 2015 will be released on 21 October

(1) Starting from data referring to July 2015, the Bank of Greece will use ELSTAT trade statistics instead of the settlements data used until June 2015 inclusive. For more information on the transition to the new methodology, see the relevant Press Release published by the Bank of Greece together with this Press Release. Moreover, as from reference month January 2015, the presentation of the balance of payments is in accordance with the IMF’s Balance of Payments Manual 6th edition (BPM6).

(2) It should be noted that, as from January 2015, other investment includes a statistical adjustment related to the issuance of (euro) banknotes above the key for subscription to the European Central Bank’s capital, which is recorded under liabilities, representing liabilities of the Bank of Greece vis-à-vis the Eurosystem. This entry is mirrored by an entry of the same amount under assets, representing residents’ assets vis-à-vis the Eurosystem. In July 2015, the decrease in assets associated with this statistical adjustment came to €550 million and the corresponding decrease in liabilities to €743 million.

(3) Including a deposit of €1.8 billion to an account held by the Greek government with the ECB, as cash collateral for the disbursement by the EFSM of €7.2 billion under a bridge financing agreement.

(4) Including a new loan of €7.2 billion to the Greek government by the EFSM under a bridge financing agreement and principal payments of €2 billion to the IMF.

(5) See footnote 2. In the first seven months of 2015, the increase in assets and liabilities as a result of the statistical adjustment came to €17 billion each.

Related link: Balance of Payments: July 2015 - Table

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