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Balance of payments: AUGUST 2001

07/11/2001 - Press Releases

In August 2001, the current account balance recorded a 25 million euro deficit, against a 64 million euro surplus in August 2000. This development is related to the reduction in the services surplus and the increase in the income account deficit, which more than offset the improvement in the trade balance and the transfers balance with respect to August 2000.

The decrease in the trade deficit in August 2001 is the result of the reduction in the non-oil trade deficit, whereas net imports of oil increased compared with August 2000. The decrease in the services surplus reflects the fall in net travel and transport receipts. Besides, the increase of the transfers surplus is due to receipts from UMTS licenses, which are included in the "other sectors" item; the increase in the income account deficit is due to the increase in net payments for interest, dividends and profits.

In the January - August 2001 period, the current account deficit decreased by 225 million euro against the corresponding 2000 period and stood at 4,383 million euro. This development is due to the reduction in the non-oil trade deficit and the increase in both the services and the transfers surpluses. The income account deficit, however, almost doubled.

The decrease in the non-oil trade deficit in the January-August period is exclusively due to the considerable increase in export receipts, which more than offset the growth of the import bill. As a result, the trade deficit decreased by 385 million euro. By contrast, net oil imports rose by 260 million euro. The increase in net travel receipts led to a considerable rise of the services surplus, which covered a larger part of the trade deficit than in the corresponding period of 2000. The widening of the income account deficit stems mainly from the increase in net payments for interest, dividends and profits. Finally, the transfers balance recorded a larger surplus, mainly due to the above-mentioned receipts from UMTS licenses.

Financial account balance

In August 2001, portfolio investment recorded a considerable capital inflow, which is due to non-residents' investment in government bonds (including bonds convertible to equity). By contrast, "other investment" recorded a considerable outflow, owing to the decrease in non-residents' deposits in Greece and the parallel increase in residents' (mainly banks') deposits abroad.

In the January - August 2001 period, direct investment recorded a net inflow (700 million euro), compared with a considerable outflow in the corresponding 2000 period. This development is attributable to the inflow of capital for the purchase of a part of INTERAMERICAN's share capital by EUREKO in July 2001. The net inflow for portfolio investment reached 8,120 million euro and was higher than in the corresponding 2000 period, due to the continuing inflow of capital for the purchase of Greek government bonds and bonds convertible to equity (as mentioned above), despite the gradual decrease in interest rate differentials between Greece and the other euro area countries. As regards the "outflow" appearing under "other investment", this is due, to a significant extent, to the gradual release, as from the beginning of 2001, of banks' foreign currency redeposits with the Bank of Greece. It is also due to redemption of the General Government's foreign debt, as well as to the statistical recording of the change in foreign exchange reserves brought about by harmonisation with the ECB definition. According to this definition, as of the beginning of 2001 foreign exchange reserves do not include (i) claims on non-euro area residents in euro, (ii) claims on euro area residents in foreign currency and euro and (iii) the contribution of the Bank of Greece to the ECB share capital and foreign reserve assets.

As a result of the evolution of the current account and the financial account, Greece's foreign exchange reserves (on the basis of the ECB definition) stood at 7.8 billion euro (or 7.1 billion US dollars) at end-August 2001.

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