Press Releases

Balance of Payments: SEPTEMBER 2008

19/11/2008 - Press Releases

Current account balance

 In September 2008, the current account deficit grew by €912 million year-on-year, to reach €2,602 million, as a result of, mainly, the expansion of the trade deficit and the income account deficit and, secondarily, a decline in the surpluses of the services balance and the current transfers balance.

Despite a €149 million decline in the trade deficit excluding oil and ships, the overall trade deficit grew by €716 million year-on-year owing to a large rise in the net oil import bill and an increase in net payments for purchases of ships (of €760 million and €105 million, respectively). As concerns the trade deficit excluding oil and ships, export receipts showed a particularly marked increase (of €399 million or 42.3%), while the import bill rose by €250 million or 7.5%.

 The surplus of the services balance narrowed by €30 million, as a €62 million rise in net transport receipts was offset by an equal decline in net travel receipts, while net payments for other services grew by €30 million.

The €146 million rise in the income account deficit is mostly attributable to an increase in net interest, dividend and profit payments.

The surplus of the current transfers balance dropped by €21 million in comparison with September 2007, as a €27 million rise in net EU transfers to general government was more than offset by a €48 million increase in net transfer payments by the other sectors. (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 January-September 2008 period, the current account deficit rose by €3,511 million over the corresponding period of 2007 and reached €24,591 million. This development reflects increases in, mainly, the trade deficit and, secondarily, the income account deficit, which were only partly offset by a rise in the surpluses of the services balance and the current transfers balance.

 The €4,336 million rise in the trade deficit is attributable to increases of €3,401 million, €805 million and €130 million in the net oil import bill, the trade deficit excluding oil and ships, and net payments for purchases of ships, respectively. Regarding in particular the trade balance excluding oil and ships, export receipts grew considerably (by €1,512 million or 17.0%), while the corresponding import bill rose by €2,316 million or 8.1%.

The surplus of the services balance expanded by €1,186 million, mostly reflecting higher net transport receipts (up €1,202 million). It should be noted that gross transport receipts (mainly from merchant shipping) increased considerably (by 22.5%). Net travel receipts rose by only €180 million year-on-year, as gross receipts (i.e. travel spending in Greece by non-residents) showed a limited increase (of €394 million or 4.0%), while gross payments (i.e. travel spending abroad by residents) grew by €215 million (or 12.5%). Net payments for other services rose by €195 million.

The income account deficit expanded by €1,214 million, mainly as a result of higher net interest, dividend and profit payments. This development is largely associated with a rise in non-residents' public debt holdings.

 Finally, the substantial increase of €854 million in the surplus of the current transfers balance is attributable to a strong rise in EU transfers to general government, as well as a considerable decline in general government payments to the EU, which more than offset a €124 million rise in net transfer payments by the other sectors.

 

Capital transfers balance

In September 2008, the capital transfers balance remained virtually unchanged, as it showed a small deficit of €19 million, compared with a small surplus of €8 million in September 2007. (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 the January-September 2008 period, the capital transfers balance showed a surplus of €2,954 million (up €442 million year-on-year). Finally, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €5,739 million, up €1,296 million in comparison with the corresponding period of 2007.

 

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 €2,621 million in September 2008, €940 million up year-on-year. In the January-September 2008 period, this deficit came to €21,637 million, compared with €18,569 million in the corresponding period of 2007.

 Financial account balance

In September 2008, residents' direct investment abroad came to €67 million. This amount mainly concerns lending between parent companies and subsidiaries. Non-residents' direct investment in Greece showed a net inflow of €24 million. The most important direct investments in Greece concerned an inflow of €30 million for the acquisition of the classified ads newspaper "CHRYSI EFKAIRIA" by SOUTH EASTERN EUROPE FUND (Cyprus) and an inflow of €26 million as part of the price for the acquisition of ALPHA television channel by the German RTL. Under portfolio investment, a net inflow of €5,374 million was recorded, attributable to residents' sales of foreign bonds and Treasury bills (worth €3.1 billion), non-residents' purchases of Greek government bonds and Treasury bills (worth €1.9 billion), as well as residents' sales of foreign shares (worth €0.6 billion). These developments were offset to a small extent by non-residents' sales of shares of Greek firms (worth €0.2 billion). "Other" investment recorded a considerable net outflow of €2,934 million, mainly reflecting an increase in domestic credit institutions' deposit and repo holdings abroad, as well as a decline in non-residents' deposit and repo holdings in Greece.

 In the January-September 2008 period, direct investment showed a net inflow of €1,124 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to €3,045 million, while net outflows of residents' funds for direct investment abroad reached €1,921 million. During the same period, a net inflow of €17,967 million was recorded under portfolio investment. Specifically, the inflows due to non-residents' purchases of Greek government bonds and Treasury bills (of €21.3 billion) more than offset outflows due to both residents' purchases of foreign bonds and Treasury bills (worth €2.4 billion) and non-residents' sales of shares of Greek firms (worth €1.7 billion). Finally, under "other" investment, a net inflow of €2,549 million is mainly attributable to the fact that the inflows of non-residents' funds for investment in deposits and repos in Greece (worth €23.5 billion) more than offset the increase in resident credit institutions' and institutional investors' corresponding investment abroad (worth €19.7 billion).

At end-September 2008, Greece's reserve assets reached €2.5 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 October 2008 will be released on 19 December 2008.

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