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Balance of payments: MARCH 2007

22/05/2007 - Press Releases

Current account balance

In March 2007, the current account deficit narrowed by €212 million year-on-year and came to €3,098 million. This development reflects a decline principally of the trade deficit and, secondarily, of the income account deficit.

The year-on-year decrease in the overall trade deficit by €322 million reflects a drop in both the net oil import bill and the trade deficit excluding oil and ships, which is accounted for mainly by lower imports. By contrast, net payments for purchases of ships more than doubled.

The overall surplus of the services balance showed a small decline of €10 million, as a result of an increase in net payments for "other services", which more than offset a rise in the surpluses of the balances of travel and transport services.

The narrowing of the income account deficit by €30 million is mainly attributable to lower net interest, dividend and profit payments.

Finally, the surplus of the current transfers balance fell to €130 million year-on-year, as net EU transfers to both general government and the other sectors dropped. (It should be recalled that gross 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, 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 the first quarter of 2007, the current account deficit grew by €924 million over the same period of 2006 and reached €9,011 million, reflecting chiefly a €500 million decrease in the current transfers surplus and, secondarily, the growth of the trade and the income account deficits. By contrast, a small rise was observed in the services surplus.

The widening of the overall trade deficit by €330 million was a mainly a result of a €646 million increase in net payments for purchases of ships. Moreover, the trade deficit excluding oil and ships registered a small rise (of €62 million). Specifically, receipts from goods exports (excluding oil and ships) grew by €113 million or 4.1%, while payments for corresponding imports rose by €175 million or 2.0%. By contrast, the net oil import bill dropped by €377 million.

The services surplus expanded by €45 million, reflecting improvements in the transport and travel balances, which were partly offset by an increase in net payments for other services. Specifically, it should be noted that receipts for travel services grew by €56 million or 10.8% and receipts for transport services by €111 million or 3.1%.

The income account deficit rose by €139 million, as a result of higher net interest, dividend and profit payments.

Finally, underlying the considerable decline in the current transfers surplus were mainly higher general government payments to the EU (in February) and, secondarily, lower receipts (in February and March).

 

Capital transfers balance

In March 2007, the capital transfers balance showed a surplus of €1,076 million, €447 million up year-on-year. (Capital transfers mainly include receipts from the Structural Funds - except for the European Social Fund - and the Cohesion Fund under the Community Support Framework.) Thus, despite the decline in the current transfers surplus already mentioned, the overall transfers balance showed a surplus which was considerably higher than in March 2006.

In January-March 2007, the capital transfers balance showed a surplus of €1,917 million, €1,180 million up year-on-year. This reflects exclusively a rise in EU capital transfers to general government. Thus, the overall transfers balance recorded a surplus of €2,296 million, which was €680 million higher than in the corresponding period of 2006.

Combined current account and capital transfers balance (according to the old method of presentation)

The combined current account and capital transfers balance (according to the old method of presentation) showed a deficit of €2,002 million in March 2007, €659 million down year-on-year. In January-March 2007, this deficit came to €7,094 million, compared with €7,350 million during the same period of 2006.

Financial account balance

In March 2007, a net outflow of €151 million was recorded under direct investment. Specifically, residents' investment abroad came to €346 million and chiefly concerned an outflow of €100 million as an "endowment" by EFG EUROBANK - ERGASIAS S.A. to its branch in Poland, as well as a €142 million increase in the said bank's participation in the share capital of the Turkish TEKFENBANK A.S. (from 30% to 70%). Non-residents' investment in Greece reached €195 million. Under portfolio investment, a considerable net inflow of €4,444 million was recorded, mainly reflecting non-residents' purchases of Greek government bonds and shares of Greek firms (of €4.1 billion and €1.2 billion respectively). These developments were offset to a small extent mainly by residents' purchases of foreign bonds and treasury bills, worth €572 million and €191 million respectively. "Other" investment recorded a net outflow of €1,765 million, mainly because the rise in resident credit institutions' deposit and repo holdings abroad and, to a lesser extent, loan repayments by residents were only partly offset by the increase in non-resident credit institutions’ corresponding investment in Greece.

In January-March 2007, direct investment showed a net outflow of €2,052 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €138 million, while net outflows of residents' funds for direct investment abroad reached €2,190 million. During the same period, a net inflow of €11,052 million was recorded under portfolio investment, as the inflow of non-residents' funds for investment in Greece (mainly in Greek government bonds and shares of Greek firms, of €10.8 billion and €4.0 billion respectively) was considerably higher than the outflow of residents' funds for investment in foreign bonds (worth €3.6 billion). Finally, under "other" investment, a net outflow of €2,049 million mainly reflects the fact that the outflow of residents' funds to deposits and repos abroad (of €10 billion) and - to a smaller extent - repayments of loans (mainly of the general government sector, of €1.2 billion) abroad were offset to a considerable degree by the inflow of non-residents' funds to deposits and repos in Greece (of €8.8 billion).

At end-March 2007, Greece's reserve assets reached €2.2 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 April 2007 will be released on 22 June 2007.

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