Press Releases

Balance of Payments: DECEMBER 2007

19/02/2008 - Press Releases

Current account balance

In December 2007, the current account deficit grew by €2,114 million year-on-year, to reach €4,927 million. This month saw a widening mainly of the trade deficit and secondarily of the income account deficit. Moreover, the current transfers balance showed a deficit (compared with a surplus in December 2006). These developments were offset only to a small extent by an increase in the surplus of the services balance.

The year-on-year increase of €947 million in the overall trade deficit is attributable to increases of €360 million, €353 million and €234 million in the trade deficit excluding oil and ships, the net oil import bill and net payments for purchases of ships, respectively.

The surplus of the services balance widened by €150 million, as a result of an increase in net transport receipts (up €285 million), which more than offset the increases in both net travel payments and net payments for other services (by €20 million and €115 million respectively).

The €239 million rise in the income account deficit is mainly attributable to higher net interest, dividend and profit payments.

Finally, the current transfers balance showed a deficit of €415 million, compared with a surplus of €663 million in December 2006, as general government payments to the EU exceeded the corresponding receipts by far. It should be recalled that, due to the recent upward revision of Greece's GDP by 9.6%, current transfer payments were burdened by the retroactive contribution to the Community Budget, amounting to €1.1 billion, which was paid to the EU in early December. (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 the whole of 2007, the current account deficit expanded by €8,593 million over 2006 and reached €32,261 million or 14.1% of the revised GDP (compared with 11.1% of GDP in 2006), reflecting the growth mainly of the trade deficit and secondarily of the income account deficit, as well as a decrease in the current transfers surplus. By contrast, the services surplus rose, but offset these developments only to a small extent.

The €6,213 million rise in the overall trade deficit was mainly a result of increases (of €3,625 million and €2,130 million) in the trade deficit excluding oil and ships and in net payments for purchases of ships, respectively, as well as, to a much smaller extent, of a €458 million rise in the net oil import bill. With respect to the trade balance excluding oil and ships, export receipts grew by €550 million or 4.7%, i.e. much less than the corresponding import bill, which rose by €4,175 million or 12.0%.

The services surplus expanded by €1,387 million, mainly reflecting higher net transport receipts. Net travel receipts remained almost unchanged in comparison with 2006, while net payments for other services grew. It should be noted that gross transport receipts (mainly from merchant shipping) increased by 18.3%.

The income account deficit rose by €1,958 million, as a result of higher net interest, dividend and profit payments. This development is mainly associated with a rise in non-residents' holdings of public debt.

Finally, underlying the €1,809 million decline in the current transfers surplus were decreases (of €1,454 million and €355 million, respectively) in general government net receipts from the EU and in net receipts of the other sectors (i.e. excluding general government). It should be noted that EU current transfers to general government dropped by €101 million, while payments to the EU grew by €1,353 million.

Capital transfers balance

In December 2007, the capital transfers balance showed a surplus of €1,349 million, compared with €454 million in December 2006. (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 2007, the capital transfers balance showed a surplus of €4,332 million, €1,291 million up over 2006. This reflects a rise in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €5,923 million, compared with €6,441 million in 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 €3,578 million in December 2007, compared with a deficit of €2,359 million in the same month of 2006. In 2007, this deficit came to €27,929 million, compared with €20,627 million in 2006.

Financial account balance

In December 2007, residents ' direct investment abroad came to €519 million. This investment mainly featured outflows of: (a) €90 million by ALAPIS S.A. for the increase in its participation in the share capital of MICROPRISM SERVICES LTD (Cyprus); (b) €87 million by the shipping company DRYSHIP INC for the partial acquisition of OCEAN RING (Norway); (c) €85 million by the NATIONAL BANK OF GREECE for both covering the capital increase of its subsidiary VOJVODJANSKA BANKA in Serbia (€53 million) and injecting capital (€32 million) into its branch NBG BEOGRAD; and (d) €50 million by private individuals for their participation in the capital increase of LADISK LTD (Switzerland). During the same month, non-residents' investment in Greece came to €409 million. Non-residents' most important investments concerned an inflow of €300 million for the acquisition of INFOTE by the companies RHONE CAPITAL PLC and ZARKONA TRADING LTD and an inflow of €88 million for the completion of the acquisition of WIND HELLAS by the WIND Group. Under portfolio investment, a net inflow of €4,047 million was recorded, mainly reflecting on the one hand a drop in residents' holdings of foreign bonds and Treasury bills (by €1,898) and, to a much smaller extent, of foreign shares (by €300 million) and, on the other hand, a rise in non-residents' holdings of Greek government bonds and Treasury bills (by €1,318 million) and shares of Greek firms (by €471 million). ''Other'' investment recorded a small net outflow of €395 million, reflecting the fact that the increase in domestic credit institutions' holdings of, mainly, deposits and repos abroad, and, secondarily, the repayment of loans granted to the public and the private sector by non-residents were largely offset by the rise in non-resident credit institutions' deposit and repo holdings in Greece.

In 2007 as a whole, direct investment showed a net outflow of €2,499 million. Specifically, net inflows of non-residents ' funds for direct investment in Greece came to €1,401 million, while net outflows of residents ' funds for direct investment abroad reached €3,900 million. In 2007, a net inflow of €17,442 million was recorded under portfolio investment, as the inflow of non-residents ' funds for investment in Greece (mainly in Greek government bonds and Treasury bills and in shares of Greek firms, of €25.7 billion and €8.1 billion, respectively) was considerably higher than outflows of residents ' funds for investment mainly in foreign bonds and Treasury bills (worth €15.4 billion). Finally, under ''other'' investment, a net inflow of €12,741 million reflects the fact that the inflow of non-residents ' funds, mainly for investment in deposits and repos in Greece, was almost double the outflow of residents ' funds, chiefly for investment in deposits and repos abroad.

At end-December 2007, 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 January 2008 will be released on 20 March 2008.

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