Balance of payments: February 2010
20/04/2010 - Press Releases
Current account balance
In February 2010, the current account deficit more than doubled year-on-year (€3,253 million, compared with €1,237 million), mainly as a result of the evolution of current transfers to general government (chiefly from the EU), which fell to €88 million, from €1,961 million in February 2009. This decrease is attributable to a delay in inflows from the European Agricultural Guidance and Guarantee Fund (EAGGF) for the payment of direct aid under the CAP. These inflows are unevenly distributed across the year. However, the relevant amounts, of €2.1 billion, were paid to farmers in March by the Agency for Payments and Control of Community Guidance and Guarantee Aid (OPEKEPE), and the corresponding inflow is expected to be recorded in the balance of payments statistics in May. If these current transfers are not taken into account, the increase in the current account deficit in February 2010 over February 2009 is limited to €142 million.
The overall trade deficit did not change considerably. The increases in the net oil import bill and net payments for purchases of ships (of €167 million and €125 million, respectively) were offset by a €299 million decline in the trade deficit excluding oil and ships, reflecting the fact that the relevant import bill dropped by €388 million or 15.2%, i.e. more than the corresponding export receipts, which declined by €89 million or 10.1%.
The surplus of the services balance shrank by €57 million, mainly as a result of a €114 million decline in transport receipts, as gross transport (mainly shipping) receipts remained virtually unchanged (-0.4%), while the corresponding payments grew by 20.5%. By contrast, the travel services balance showed a small surplus, compared with a deficit in February 2009, as travel spending in Greece by non-residents rose by 10.5%, while travel spending abroad by residents dropped by 12.0%. Net payments for “other” services showed a small decrease.
The income account deficit did not show any remarkable change, as net interest, dividend and profit payments remained stable (they fell by a mere €2 million).
Finally, the current transfers balance recorded a deficit of €376 million, compared with a surplus of €1,593 million in February 2009, mainly owing to the aforementioned decline in net EU transfers to general government. (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 January-February 2010, the current account deficit grew by €2.3 billion or 50.8% year-on-year and reached €7 billion, reflecting primarily the large decrease in current transfers to general government (mainly from the EU): if these are not taken into account during the reviewed period, the rise in the current account deficit is limited to €0.5 billion or 7.1%.
The €167 million hike in the overall trade deficit is attributable to increases of €417 million and €76 million in the net oil import bill and net payments for purchases of ships, respectively. The trade deficit excluding oil and ships narrowed by €326 million, as the import bill fell by €597 million (11.6%), while export receipts declined by €271 million (14.8%).
The €129 million contraction in the surplus of the services balance reflects lower net transport receipts. Gross transport receipts (chiefly from merchant shipping) did not show any remarkable change (-0.8%), while the corresponding payments grew by 16.4%; as a result, net transport receipts decreased by €199 million. Moreover, travel spending in Greece by non-residents remained virtually unchanged (+1.0%), while travel spending abroad by residents declined by 8.6%; as a result, the travel services balance improved by €37 million. Finally, net payments for “other” services fell by €33 million.
The income account deficit narrowed by €50 million in comparison with the same period of 2009, because net interest, dividend and profit payments decreased slightly (by 3.2%).
Finally, the current transfers balance showed a deficit of €628 million, compared with a surplus of €1,469 million in the corresponding period of 2009, mainly owing to the aforementioned decline in EU transfers to general government.
Capital transfers balance
In February 2010, the capital transfers balance showed a surplus of €95 million, down by €68 million year-on-year. (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 January-February 2010, the capital transfers balance showed a surplus of €126 million, compared with €231 million in the corresponding period of 2009. This chiefly reflects a decline in EU capital transfers to general government. Finally, the overall transfers balance (current transfers plus capital transfers) recorded a deficit of €502 million, compared with a surplus of €1,700 million in the corresponding period of 2009, reflecting the aforementioned developments in EU current transfers in February.
Combined current account and capital transfers balance
The deficit of the combined current account and capital transfers balance (corresponding to the economy’s external financing requirements) reached €3.2 billion in February 2010, compared with €1.1 billion in February 2009. In January-February 2010, this deficit came to €6.8 billion, compared with €4.4 billion in the corresponding period of 2009.
Financial account balance
In February 2010, non-residents’ direct investment in Greece recorded a net outflow of €61 million. The most important transaction concerns an outflow (disinvestment) of €84 million as the participation of Carlyle (US) in Neochimiki was sold to the Lavrentiadis Group. Residents’ direct investment abroad showed a net outflow of €9 million. The most important transaction in this category concerns an inflow (disinvestment) of €44 million from the return of share capital by the subsidiary FAGE USA to the parent Greek company FAGE S.A.
Under portfolio investment, a net outflow of €2.5 billion was recorded, reflecting both an increase in residents’ holdings of foreign bonds and Treasury bills (of €2.4 billion) and a rise (outflow) in investment in foreign shares and financial derivatives (of €149 million and €168 million, respectively). A decline (outflow) of €267 million was also recorded in non-residents’ investment in domestic shares, while the €433 million rise (inflow) in non-residents’ investment in Greek government bonds and Treasury bills only partly offset these outflows.
Under “other” investment, a considerable net inflow of €5.1 billion was recorded, which is mainly attributable to a €5.9 billion increase (inflow) in non-residents’ deposit and repo holdings in Greece, which was partly offset by a €576 million decrease (outflow) in loan liabilities of the public and the private sector to non-residents. An increase (outflow) of €250 million was also recorded in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad.
In January-February 2010, direct investment showed a net outflow of €98 million. Specifically, net outflows of residents’ funds for direct investment abroad reached €55 million, while a net outflow (disinvestment) of €43 million was recorded under non-residents’ direct investment in Greece.
During the same period, a net inflow of €1.3 billion was also recorded under portfolio investment. Specifically, inflows were recorded due to a €3.0 billion decline in resident institutional investors’ holdings of foreign bonds and Treasury bills, which was offset to a small extent by a €0.3 billion outflow due to a decline in non-residents’ holdings of Greek government bonds and Treasury bills. At the same time, there was an outflow due to increases of €0.7 billion and €0.4 billion in residents’ investment in foreign shares and financial derivatives, respectively. Finally, a €0.3 billion outflow was recorded due to sales of shares by non-residents.
Finally, under “other” investment, a net inflow of €5.5 billion mainly reflects a €9.3 billion increase in non-residents’ deposit and repo holdings in Greece, which largely offset a €3.0 billion increase (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad and – to a smaller extent – a €0.7 billion decrease (outflow) in loan liabilities of the public and the private sector to non-residents.
At end-February 2010, Greece’s reserve assets stood at €3.8 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 2010 will be released on 25 May 2010.
Balance of payments (EUR millions - provisional)