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Balance of Payments: APRIL 2008

24/06/2008 - Press Releases

Current account balance

In April 2008, the current account deficit grew by €320 million year-on-year, to reach €3,459 million, mainly as a result of an increase in the trade deficit, which was partly offset by rises in the surpluses mainly of the current transfers balance and - to a much smaller extent - of the services balance.

The year-on-year increase of €709 million in the overall trade deficit is almost exclusively attributable to increases of €370 million and €301 million in net payments for purchases of ships and in the net oil import bill. The trade deficit excluding oil and ships grew by only €38 million.

Despite a remarkable €120 million rise in net transport receipts (mainly from merchant shipping), the surplus of the services balance grew by only €49 million. This development reflects the fact that the rise in net travel receipts was small (€16 million), while at the same time net payments for other services grew (by €86 million).

The limited rise (of €13 million) in the income account deficit is exclusively attributable to an increase in net interest, dividend and profit payments by the same amount.

The surplus of the current transfers balance rose by €353 million year-on-year, exclusively because net EU transfers to general government rose. (It should be noted 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 January-April 2008, the current account deficit rose by €692 million over the same period in 2007 and reached €12,853 million. This development reflects substantial increases in both the trade deficit and the income account deficit, which were only partly offset by sizeable increases in the surpluses of the current transfers balance and the services balance.

The €2,081 million rise in the overall trade deficit is attributable to increases of €1,203 million, €541 million and €337 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 by €419 million or 11%, while the corresponding import bill rose by €960 million or 7.8%.

The surplus of the services balance expanded by €366 million, exclusively because of higher net transport receipts. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 22.6%. By contrast, travel receipts fell by €50 million year-on-year, as gross receipts (i.e. travel expenditures in Greece by non-residents) rose by only €31 million (or 3.2%), while gross payments (i.e. travel expenditure abroad by residents) increased by €81 million (or 10.6%). Moreover, net payments for other services grew by €105 million.

The income account deficit rose by €455 million, almost exclusively as a result of higher net interest, dividend and profit payments. This development is mainly associated with a rise in non-residents' public debt holdings.

Finally, the large increase of €1,478 million in the surplus of the current transfers balance is attributable mainly to a rise in EU transfers to general government and secondarily to a decline in general government payments to the EU.

Capital transfers balance

In April 2008, the capital transfers balance showed a surplus of €378 million, compared with €355 million in April 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-April 2008 period, the capital transfers balance showed a surplus of €1,794 million (down €478 million year-on-year). This reflects a decline in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €3,766 million, compared with €2,766 million in 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 €3,081 million in April 2008, compared with a deficit of €2,784 million in the corresponding month of 2007. In the January-April 2008 period, this deficit came to €11,059 million, compared with €9,888 million in the corresponding period of 2007.

Financial account balance

In April 2008, residents' direct investment abroad came to €372 million. The most important investment concerned an outflow of €260 million by the Economou Group for the partial acquisition of the Norwegian firm OCEAN RIG ASA. Non-residents' direct investment in Greece showed a small inflow of €23 million, concerning mainly loans between parent and subsidiary companies. Under portfolio investment, a net outflow of €5,540 million was recorded, attributable mainly to residents' purchases of foreign bonds (worth €4.1 billion) and secondarily to non-residents' sales of Greek government bonds and shares of Greek firms (of €0.7 and €0.3 billion, respectively). "Other" investment recorded a considerable net inflow of €9,001 million, mainly resulting from a large increase in non-resident credit institutions' deposit and repo holdings in Greece, as well as a small decline in resident credit institutions' corresponding holdings abroad.

In the January-April 2008 period, direct investment showed a net outflow of €813 million. Specifically, net inflows of non-residents' funds for direct investment in Greece came to only €63 million, while net outflows of residents' funds for direct investment abroad reached €876 million. During the same period, a net inflow of €3,786 million was recorded under portfolio investment. Specifically, the inflows due to non-residents' purchases of Greek government bonds and Treasury bills (of €8.7 billion) and residents' sales of foreign shares (of €0.9 billion) more than offset the outflows due to residents' purchases of foreign bonds and non-residents' sales of shares of Greek firms (worth €4.2 billion and €0.8 billion, respectively). Finally, under "other" investment, a net inflow of €8,441 million is attributable to the fact that the inflows of non-residents' funds for investment in deposits and repos in Greece were considerably higher than the increase in residents' corresponding deposits abroad.

At end-April 2008, Greece's reserve assets stood at €2.4 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 May 2008 will be released on 22 July 2008.

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