Balance of payments: September 2004
19/11/2004 - Press Releases
Current account balance
The current account balance showed a surplus in September 2004,
whereas it was in deficit in the corresponding month of the previous two years.
This improvement is mainly accounted for by a substantial increase in the
services surplus and - to a lesser extent - by a rise in the transfers surplus
and a decline in the income account deficit. By contrast, the trade deficit grew.
Specifically, underlying the widening of the trade deficit were on the one
hand an increase in the non-oil trade deficit and, on the other, a rise in the
net oil import bill, reflecting substantially higher world oil prices. The
services surplus improved considerably, as a result of an increase in net
receipts from all categories of services. It should be noted that the ''other''
services account benefited in September from a rise in receipts from services
associated with the holding of the Olympic Games (notably broadcasting fees) and
that gross travel receipts grew by 10.1%. The income account deficit narrowed
owing to a decline in net interest, dividend and profit payments. Finally, the
growth of the transfers surplus reflects an increase in net EU transfers to
In January-September 2004, the current account deficit narrowed
considerably (by €2,049 million) over the same period of 2003 and fell to
€2,969 million. This development mainly reflects a substantial rise in the
services surplus and, secondarily, an increase in the transfers surplus, which,
taken together with a small decrease in the income account deficit, more than
offset a strong rise in the trade deficit. The trade deficit grew by €2,100
million relative to the same period of 2003. Specifically, a €2,615 million (or
12.6%) increase in the non-oil import bill more than offset a €964 million (or
13.5%) rise in non-oil export receipts, whereas the net oil import bill
increased by €450 million. Besides, the services surplus grew by €3,310
million, mainly owing to a big rise (of €2,210 million) in net transport
receipts (mainly from shipping). To a lesser extent, the larger surplus reflects
a €690 million increase in net travel receipts (gross travel receipts grew by
€840 million or 10.4% over the reference period) and the fact that a small
surplus was recorded in the ''other'' services account (which had been in
deficit in the corresponding period of 2002 and 2003), as a result of increased receipts
(associated with the holding of the Olympic Games) in August and September 2004.
Finally, the €780 million year-on-year growth of the transfers surplus is
almost exclusively accounted for by a €1,036 million (or 25.0%) increase in
general government receipts (mainly transfers from the EU), which far exceeded
the €207 million rise in general government payments (mainly to the EU).
Financial account balance
In September 2004, two flows worth-noting were recorded under direct
investment: first, an outflow of €68 million for the acquisition by GERMANOS
S.A. of a mobile telephony company in Uzbekistan and, second, an inflow of €55
million in the context of the acquisition of KOTSOVOLOS S.A. by DIXONS. Under
portfolio investment, an inflow of €1,585 million, mainly reflecting non-residents'
purchases of Greek government securities and, secondarily, Greek companies'
shares, was mostly offset by a €1,177 outflow, mainly accounted for by
residents' increased purchases of bonds issued by non-residents and financial
derivatives. Finally, as regards "other investment", the €2,010
million drop in residents' claims on non-residents (as a result of a decline in
domestic credit institutions' and institutional investors' deposits and repos
abroad) was more than offset by a decrease in residents' liabilities vis-a-vis
non-residents by €2,103 million.
In January-September 2004, non-residents' direct investment in Greece
reached €1,013 million, while residents' direct investment abroad came to
€386 million, resulting in a net inflow of €626 million under direct
investment. Over the same period, a substantial net inflow of €11,168 million
was recorded under portfolio investment, mainly reflecting inflows of non-residents'
funds for the purchase of Greek government bonds (€16,697 million), which more
than offset outflows of residents' funds for the purchase of foreign bonds
(€6,964 million). Finally, a net outflow of €8,502 million under ''other''
investment is largely associated with domestic credit institutions' sizeable
outflows (of €8,574 million) to deposits and repos abroad and - to a lesser
extent - outflows (of €1,143 million) for the repayment of loans granted to
residents by non-residents, which more than offset inflows of non-residents'
funds to deposits and repos (€1,251 million).
At end-September 2004, Greece's reserve assets came to €3.2 billion.
(It should be recalled that since the first months of 2003 the Bank of Greece
has started to diversify its portfolio, by reducing its non-euro area currency
holdings, which are included in reserve assets, and by increasing its higher-yield
or euro-denominated assets - mainly bonds issued by euro area Member States,
which are not included in reserve assets. Given that there is less need
to maintain high foreign currency reserves, by the above diversification the
Bank of Greece has improved the return on its investments. It has been noted
repeatedly 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 in 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
Note: Balance of payments data for October 2004 will be released on 17