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Balance of payments: FEBRUARY 2009

22/04/2009 - Press Releases

Current account balance

In February 2009, the current account deficit dropped by €674 million year-on-year to €1,256 million, reflecting a contraction of the trade deficit, a great part of which was offset by a decline in the surpluses of the services balance and the current transfers balance, as well as by a widening of the income account deficit.

The narrowing of the overall trade deficit reflects mainly a €579 million drop in the trade deficit excluding oil and ships (as the fall in the import bill exceeded the decrease in export receipts) and declines of €347 million and €140 million in the net oil import bill and net payments for purchases of ships, respectively.

The surplus of the services balance shrank by €170 million, mainly owing to a €174 million fall in net transport receipts.

The widening of the income account deficit by €175 million reflects higher net interest, dividend and profit payments.

The current transfers balance showed a considerable surplus of €1,593 million, which, however, fell by €47 million year-on-year. (It should be recalled that 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 January-February 2009, the current account deficit narrowed by €1,240 million or 21.1% year-on-year and stood at €4,625 million, reflecting a considerable decrease in the trade deficit, whereas in the same period the surpluses of the services balance and the current transfers balance contracted and the income account deficit grew.

The €2,038 million drop in the overall trade deficit is attributable to decreases of €1,182 million, €708 million and €148 million in the trade deficit excluding oil and ships, the net oil import bill and net payments for purchases of ships, respectively. Regarding the trade deficit excluding oil and ships, the import bill fell by €1,632 million or 24.0%, i.e. more than export receipts, which declined by €450 million or 19.7%.

The surplus of the services balance shrank by €418 million, reflecting lower net transport receipts - gross transport receipts (mainly from merchant shipping) fell by 25.1% - and higher net payments for other services. Both travel spending by non-residents in Greece and travel spending by residents abroad decreased (by 20.2% and 20.6%, respectively); as a result, net travel payments remained virtually unchanged (down by €23 million).

The income account deficit expanded by €283 million, mainly as a result of higher net interest, dividend and profit payments. This development is mainly associated with a rise in net interest payments on deposits and loans, while the increase of net interest payments on Greek government bonds and Treasury bills was very small.

Finally, the surplus of the current transfers balance declined by €97 million.


Capital transfers balance

In February 2009, the capital transfers balance showed a surplus of €162 million, compared with €887 million in February 2008. (Capital transfers mainly include receipts from the Structural Funds - except for the European Social Fund - and the Cohesion Fund under the Community Support Framework.)

In January-February 2009, the capital transfers balance showed a surplus of €231 million, considerably down (by €965 million) year-on-year. This mainly reflects a decline in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €1,700 million, compared with €2,761 million in the corresponding period of 2008.


Combined current account and capital transfers balance

The combined current account and capital transfers balance (which reflects the economy's external financing requirements) showed a deficit of €1,094 million in February 2009, compared with a deficit of €1,043 million in February 2008. In the January-February 2009 period, this deficit reached €4,394 million, compared with €4,669 million in the corresponding period of 2008, i.e. it dropped by 5.9%.


Financial account balance

In February 2009, resident' direct investment abroad showed a net outflow of €178 million. The most important transaction in this category concerned a €185 million outflow by the National Bank of Greece for the acquisition of Finansbank Malta (through its subsidiary NBG Holdings BV in the Netherlands). Non-residents' direct investment in Greece recorded a net inflow of €42 million, with no remarkable transactions.

Under portfolio investment, a net inflow of €7.0 billion was observed, reflecting a €5.4 billion rise in non-residents' holdings of Greek government bonds and Treasury bills and a €2.0 billion decrease (inflow) in residents' holdings of foreign bonds and Treasury bills. Under "other" investment, a considerable net outflow of €6.3 billion was recorded, which is mainly attributable a €4.1 billion increase (outflow) in resident credit institutions' and institutional investors' deposit and repo holdings abroad and a €2.0 billion decline (outflow) in non-residents’ deposit and repo holdings in Greece.

In January-February 2009, direct investment showed a net outflow of €42 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €151 million, while net outflows of residents' funds for direct investment abroad reached €193 million. In the same period, a net inflow of €9.1 billion was recorded under portfolio investment. Specifically, inflows due to non-residents' purchases of Greek government bonds and Treasury bills (of €5.9 billion) were considerably lower than in the corresponding period of 2008 (€13.5 billion). Inflows were also recorded owing to a €4.0 billion decrease in residents' holdings of foreign bonds and Treasury bills. Finally, under "other" investment, a net outflow of €5.0 billion is mainly attributable to a €4.2 billion increase (outflow) in resident credit institutions' and institutional investors' deposit and repo holdings abroad and - to a lesser extent - repayments of general government loans (€0.5 billion).

At end-February 2009, Greece's reserve assets stood at €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 March 2009 will be released on 22 May 2009.

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