Balance of payments: NOVEMBER 2005
20/01/2006 - Press Releases
Current account balance
In November 2005, the current account showed a deficit
of €2,137 million, €197 million higher than in November 2004. This
development is attributable to a relatively large increase in the income account
deficit, a decline in the services surplus and a widening of the trade deficit.
By contrast, the current transfers surplus grew considerably. (It should be
recalled that, according to the new presentation, the transfers balance is now
divided into two parts: the current transfers balance, which is classified under
the current account, and the capital transfers balance, which is a separate
section. Thus, the new current account balance now comprises the trade balance,
the services balance, the income account balance and the current transfers
balance, while the capital transfers balance is an independent part of the
balance of payments. Therefore, in this new presentation of the balance of
payments, the algebraic sum of the current account balance and the capital
transfers balance corresponds to the current account balance as presented until
recently, i.e. regarding data up to and including June 2005).
The trade deficit (excluding oil and ships) shrank by €102
million in November. However, since the net oil import bill rose by €140
million and the deficit of the ships' balance (sales minus purchases) also grew
- to a lesser extent - by €35 million, the overall trade deficit widened by
€72 million.
The overall surplus of the services balance dropped by €79
million year-on-year, reflecting a €105 million decline in the surplus of the
transport services balance, while the surplus of the travel services balance
showed a small increase and the "other services" deficit narrowed
slightly.
The €161 million increase in the income account deficit is
mainly attributable to a €129 million rise in interest payments on Greek
government bonds held by non-residents. (It should be recalled that, as from
April 2005, the methodology of recording interest on bonds in the balance of
payments statistics changed, so that interest payments are recorded on an
accruals basis, rather than on a cash basis, as they had been up to and
including March 2005. Thus, data are recorded more accurately. For comparability
purposes, the monthly data going back to January 2003 have also been revised).
Finally, the current transfers surplus grew by €114 million
year-on-year, as a €130 million rise in EU gross current transfers to general
government by far overshot a €29 million rise in general government payments
to the EU. (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 and receipts from the
European Social Fund, while current transfers to the EU include Greece's
contributions to the Community Budget.)
In January-November 2005, the current account deficit
widened by €2,919 million over the same period of 2004 and reached €11,551
million, reflecting mainly a rise in the trade deficit and the income account
deficit and, secondarily, a drop in the current transfers surplus. The increase
in the services surplus only partly offset the above developments.
The €1,659 million rise in the overall trade deficit
(including oil and ships) is mainly due to the growth of the net oil import bill
by €1,481 million and, secondarily, to the fact that the ships' balance showed
a deficit of €528 million, compared with a surplus of €389 million in the
corresponding period of 2004. These developments more than offset the favourable
outturn of the trade deficit excluding oil and ships,
which narrowed by €740 million, because exports (excluding oil and ships) grew
by €390 million, while the corresponding imports declined by €350 million in
comparison with their very high levels in the same period of 2004.
The services surplus widened (by €284 million), as a result
of an increase in net travel and transport receipts. Specifically, gross travel
receipts (i.e. travel spending in Greece by non-residents) grew by €688
million (or 6.8%), while gross payments (i.e. travel spending abroad by
residents) rose by €127 million or 6.1%, thereby pushing up net travel
receipts by €561 million year-on-year. Gross transport (mainly shipping)
receipts were higher by €497 million or 4.1%, compared with the already very
high receipts recorded in the corresponding period of 2004, despite the
continuing drop in freight rates in international markets. As gross transport
payments rose by €370 million or 7.1%, net transport receipts increased by
€127 million. By contrast, net payments for "other" services rose by
€403 million.
The income account deficit grew by €1,046 million during
the same period, as net interest, dividend and profit payments increased, mainly
because of a continuing rise in non-residents' holdings of old and new issues of
Greek Government bonds.
Finally, the €498 million year-or-year fall in the current
transfers surplus is attributable mainly to a €318 million drop in net current
transfers to the "other" sectors (excluding general government) and,
secondarily, to a €180 million decrease in net (mainly EU) current transfers
to general government. However, it should be stressed that gross current
transfers to general government (mainly from the EU) rose by €576 million or
15.7%, but general government gross current payments to the EU grew by €756
million or 38.4%.
Capital transfers balance
In November 2005, the capital transfers balance showed
a surplus of €299 million, €89 million smaller than in November 2004. (EU
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-November 2005, the capital transfers
balance showed a surplus of €1,687 million, i.e. smaller by €425 million
than in the corresponding period of 2004. This mainly reflects a €421 million
decrease in capital transfers to general government from the EU.
Combined current account and capital transfers balance
(according to the old method of presentation)
The combined current account and capital transfers balances
(on the basis of the old method of presentation) showed a deficit of €1,838
million in November 2005, compared with a deficit of €1,552 million in
November 2004. Overall, in January-November 2005, the deficit amounted to
€9,865 million, compared with €6,521 million in the same period of 2004.
Financial account balance
In November 2005, no significant flows were observed
under direct investment. Under portfolio investment, a net inflow of €356
million reflects a €1,610 million inflow of non-residents' funds, mainly for
purchases of Greek government bonds, and, secondarily, shares. However, this
inflow was largely offset by a €1,255 million outflow of residents' funds for
corresponding purchases abroad. "Other" investment showed a net inflow
of €1,264 million, which is attributable to the fact that the increase in
non-residents' repo and deposit holdings in Greece overshot the rise in the
corresponding holdings abroad by residents.
In January-November 2005, direct investment showed a
net outflow of €1,002 million (compared with a net inflow of €564
million in the corresponding period of the previous year). This development is
accounted for mainly by a net outflow of €709 million for residents' direct
investment abroad and, secondarily, by a net outflow of €293 million under
non-residents' investment in Greece. Portfolio investment recorded a net inflow
of €7,535 million during the same period, since the €17.3 billion outflow of
residents' funds for investment abroad (mainly in bonds) was more than offset by
a €24.8 billion inflow of non-residents' funds for investment primarily in
Greek government paper and - to a considerable extent - shares of Greek firms.
Finally, under "other" investment, a net inflow of €3,790 million
reflects the fact that the inflow of funds (€16,898 million), mainly for
non-residents' investment in deposits and repos in Greece, was largely offset by
the outflow of residents' funds (€13,108 million), primarily for similar
investment abroad.
At end-November 2005, Greece's reserve assets came to
€2.0 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 December 2005 will
be released on 20 February 2006.