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Balance of payments JANUARY 2004

18/03/2004 - Press Releases

Current account balance

In January 2004, the current account deficit remained virtually the same year-on-year. The drop in the trade deficit and the rise in the services surplus were fully offset by the decrease in the transfers surplus, while the income account deficit was almost unchanged.

Specifically, the trade deficit narrowed by €173 million in comparison with January 2003, due to a considerable fall in the net oil import bill. By contrast, the non-oil trade deficit grew slightly, because the increase in export receipts was more than offset by the rise in import payments. The increase in the services surplus stemmed from the growth of net transport receipts, while net travel receipts remained virtually unchanged. It should be stressed that the 2004 travel receipts and payments data are comparable with the 2003 data and are derived from a border survey. Finally, the narrowing of the transfers surplus reflects almost exclusively a drop in net EU transfers to general government.

Financial account balance

In January 2004, a substantial inflow of non-residents' funds (of €426 million) was observed under direct investment, associated with the ongoing procedure of acquisition of PANAFON S.A. by VODAFONE. Under portfolio investment, a net outflow of €560 million was recorded. This mainly reflects the fact that outflows of funds due to increased residents' investment in securities issued by non-residents outweighed inflows of funds associated with increased non-residents' investment in Greek government bonds and Treasury bills. Finally, as regards "other investment", a net inflow of €616 million was mainly connected with the substantial inflow of non-residents' funds for deposits and repos in Greece, which more than offset the rise in resident credit institutions' and institutional investors' deposits and repo holdings abroad, as well as the drop in residents' (mainly non-government sector) borrowing from non-residents.

At end-January 2004, Greece's reserve assets came to €4.1 billion. It should be noted that, as early as in the first months of the previous year (2003), the Bank of Greece diversified the composition of its reserve asset portfolio, by reducing its holdings of non-euro area currencies (mainly US dollars) and increasing its asset items that either offer higher yields or are denominated in euro (mainly bonds issued by euro area Member States, which are not included in the reserve assets). Since the need to maintain a high level o reserve assets has been reduced, the Bank of Greece in this way improved the return on its investments and reduced the risk of losses stemming from the continuing fall of the US dollar and the appreciation of the domestic currency, i.e. the euro. (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 February 2004 will be released on 20 April 2004.

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