Balance of Payments: March 2016
20/05/2016 - Press Releases
Current account
In March 2016, the current account showed a deficit of €708 million, down by €770 million year-on-year. This development is attributable to a decrease in the deficit of the balance of goods and to an improvement in the primary and the secondary income accounts, whereas the surplus of the services balance shrank.
The deficit of the balance of goods decreased by €438 million year-on-year, mainly on account of the lower net oil import bill, while net payments for purchases of ships increased. Exports and imports of goods excluding oil and ships did not show any substantial change (1.3% and -1.5% respectively), but the corresponding balance improved.
The surplus of the services balance declined by €124 million, mainly as a result of lower net sea transport receipts, which dropped to €392 million, from €640 million in March 2015. Travel receipts increased by 8.3%, while non-residents' arrivals rose by 6.2%, but the travel balance deteriorated slightly due to a hike in the corresponding payments. Finally, the other services balance showed a surplus, against a deficit in March 2015.
As a result of the above-mentioned developments, exports of goods and services fell by 18.5% and imports declined by 19.2%, so the deficit of the balance of goods and services eventually shrank by €314 million.
The primary income account showed a surplus of €432 million, against a deficit of €74 million in March 2015, mainly as a result of a rise in the surplus of the other primary income account (which includes taxes and subsidies on products and production). At the same time, the secondary income account showed a surplus of €47 million, against a deficit of €52 million in the corresponding month of 2015, mainly on account of the improved general government balance.
In the first quarter of 2016, the current account improved by €960 million and showed a deficit of €2.3 billion. This development is attributable mainly to the improvement in the primary and secondary income accounts as well as to the improvement in the balance of goods and services. The latter recorded a deficit of €3.4 billion, down by €302 million year-on-year. Overall, the value of exports of goods and services declined by 20.9% while the corresponding value of imports decreased by 17.6%.
The deficit of the balance of goods fell by €870 million in the first quarter of 2016, due to an improvement in all subaccounts. The fall in oil prices resulted in a significant improvement in the oil balance, while the reduction in transactions concerning purchases and sales of ships is largely due to the fact that they are conducted outside the Greek banking system, following the imposition of capital controls. Finally, it should be noted that exports of goods excluding oil and ships remained effectively flat, while the corresponding imports declined by 1.4%.
The surplus of the services balance shrank in the first quarter, as net transport receipts registered a decline, which is also largely attributable to capital controls. This development was partly offset by an improvement in the travel and other services balance. It should be noted that total non-residents' arrivals decreased by 6.2% and the corresponding receipts remained unchanged.
The primary income account showed a surplus of €1.1 billion, up by €487 million year-on-year, on account of lower net interest, dividend and profit payments, as well as of lower payments for wages and salaries. This improvement offset the contraction in the surplus of the other primary income account. Finally, the secondary income account also improved.
Capital account
In March 2016, the capital account showed a surplus of €57 million, down by €264 million year-on-year, mainly due to a drop in net capital transfers from the EU to general government. In the first quarter of 2016, the surplus stood at €689 million, up by €209 million year-on-year.
Combined current and capital account
In March 2016, the combined current and capital account (corresponding to the economy's external financing requirements) showed a deficit of €651 million, down by €506 million year-on-year. In the first quarter of 2016, the deficit shrank by €1.2 billion, to stand at €1.6 billion.
Financial account
In March 2016, under direct investment, residents' net external assets rose by €336 million. The most important transactions concern the purchase (€245 million) of new stocks of NBG Finance PLC (Great Britain) by National Bank of Greece and the purchase (€55 million) of new stocks of Eurobank Bulgaria (Bulgaria) by Eurobank. Non-residents' direct investment in Greece did not record any remarkable change.
Under portfolio investment, a net increase of €587 million was recorded in residents' external assets, which is mainly attributable to a rise of €764 million in residents' holdings of foreign bonds and Treasury bills (mostly reflecting Bank of Greece holdings). On the liabilities side, a net increase of €486 million was recorded, which is mainly accounted for by a rise in non-residents' holdings of Greek government bonds and Treasury bills.
Under other investment, a net decline of €1.6 billion in residents' assets is mainly the result of a decrease of €888 million in resident credit institutions' and institutional investors' deposit and repo holdings abroad and of the statistical adjustment related to the issuance of banknotes. A net decline of €125 million in liabilities reflects a drop of €1.2 billion in the outstanding debt of the public and the private sector to non-residents (including principal payments of €871 million to the IMF) and the statistical adjustment. These developments were partly offset by a €1.6 billion net increase in non-residents’ deposit and repo holdings in Greece (including the TARGET account).
In the first quarter of 2016, residents' net assets from direct investment abroad rose by €427 million, while the corresponding liabilities that represent non-residents' direct investment in Greece dropped by €30 million.
Under portfolio investment, a net increase of €2.5 billion in residents' external assets is mainly due to a rise of €2.9 billion in their holdings of foreign bonds and Treasury bills. Moreover, residents’ net external liabilities grew by €91 million, mainly on account of a rise in non-residents’ investment in shares of Greek firms.
Under other investment, a net decline in residents' external assets largely reflects the statistical adjustment related to the issuance of banknotes (1), as well a fall in resident credit institutions' and institutional investors' deposit and repo holdings abroad. On the liabilities side, a net increase of €2.8 billion was recorded, which is attributable to a rise in non-residents’ deposit and repo holdings in Greece (the TARGET account included), as well as a decrease of €1.7 billion in residents’ outstanding debt.
At end-March 2016, Greece’s reserve assets stood at €6.6 billion, compared with €6.1 billion in the corresponding month of 2015.
Note: Balance of payments data for April 2016 will be released on 21 June 2016.
Related link: Balance of Payments: March 2016 - Table
(1) In the first quarter of 2016, both assets and liabilities registered a decrease on account of the statistical adjustment related to the issuance of banknotes, which came to €1.1 billion and €1 billion respectively.