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Balance of payments: APRIL 2009

24/06/2009 - Press Releases

Current account balance

 In April 2009, the current account deficit dropped by €469 million year-on-year to €2,997 million, reflecting a considerable contraction of the trade deficit, which was only partly offset by the elimination of the surplus of the current transfers balance and a decline in the surplus of the services balance. During the same period, the income account deficit did not show any remarkable change.

The narrowing of the overall trade deficit by €1,223 million reflects a €684 million drop in the trade deficit excluding oil and ships (as the import bill fell by 23.9%, i.e. at a rate double that of export receipts, which decreased by 12.2%) and declines of €332 million and €207 million in the net oil import bill and net payments for purchases of ships, respectively.

The surplus of the services balance shrank by €293 million, mainly owing to a €228 million fall in net transport receipts, while the income account deficit remained almost at last year’s levels, since the amount of net interest, dividend and profit payments, which are the main items affecting this balance, remained almost unchanged.

The current transfers balance came almost to zero (it showed a very small deficit), compared with a surplus in April 2008, almost exclusively owing to a decrease in EU transfers to general government. (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 January-April 2009, the current account deficit narrowed by €2,564 million or 19.9% year-on-year and reached €10,327 million, reflecting a considerable decrease in the trade deficit, while during the same period the surpluses of the services balance and the current transfers balance contracted and the income account deficit grew.

The €4,354 million drop in the overall trade deficit is attributable to decreases of €2,380 million, €1,464 million and €510 million in the trade deficit excluding oil and ships, the net oil import bill and net payments for purchases of ships, respectively. Regarding the trade deficit excluding oil and ships, the import bill fell by €2,934 million or 22.2%, i.e. more than export receipts, which declined by €553 million or 13.0%.

The surplus of the services balance shrank by €919 million, reflecting lower net transport receipts – gross transport receipts (mainly from merchant shipping) fell by 24.5% – and higher net payments for “other” services. Finally, travel spending in Greece by non-residents and travel spending abroad by residents of |Greece dropped (by 11.6% and 9.7%, respectively); as a result, net travel receipts also declined by €29 million.

 The income account deficit expanded by €279 million, as a result of higher net interest, dividend and profit payments. This development is mainly associated with a rise in, mainly, net interest payments on bonds, Treasury bills, deposits and loans, while net dividend and profit payments decreased.

Finally, the surplus of the current transfers balance declined by €592 million, mainly reflecting a decrease in general government net receipts from the EU.

Capital transfers balance

 In April 2009, the capital transfers balance showed a surplus of €335 million, compared with €378 million in April 2008. (Capital transfers mainly include receipts from the Structural Funds – except for the European Social Fund – and the Cohesion Fund under the Community Support Framework.)

 In January-April 2009, the capital transfers balance showed a surplus of €814 million, compared with €1,794 million in the same period of 2008. This mainly reflects a decline in EU capital transfers to general government. Thus, the overall transfers balance (current transfers plus capital transfers) recorded a surplus of €2,194 million, compared with €3,766 million in the same period of 2008.

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

The combined current account and capital transfers balance (which reflects the economy’s external financing requirements) showed a deficit of €2,662 million in April 2009, compared with a deficit of €3,088 million in April 2008. In the January-April 2009 period, this deficit reached €9,513 million, compared with €11,097 million in the same period of 2008, i.e. it dropped by 14.3%.

Financial account balance

In April 2009, non-residents’ direct investment in Greece showed a net inflow of €969 million. The most important transaction in this category concerned a €661 million inflow for the participation of Crédit Agricole S.A. (France) in the capital increase of Emporiki Bank. There was also a €111 million inflow by Dubai Financial Limited (UAE), which acquired the stake of Commerzbank AG (7.74%) in the share capital of MIG. Residents’ direct investment abroad showed a net outflow of €90 million. The most important transaction in this category concerned a €48.2 million outflow for the acquisition of 12.6% of the share capital of Albanian Mobile Communications (which is controlled by the Albanian State) by Cosmote, which increased its stake in the said company to 95%.

Under portfolio investment, a net outflow of €7.2 billion was observed, reflecting a €3.7 billion rise (outflow) in residents’ purchases of foreign government bonds and Treasury bills and a €3.4 billion decrease (outflow) in non-residents’ investment in Greek bonds and Treasury bills. Moreover, a €301 million increase (outflow) was observed in residents’ investment in foreign shares, as well as a €321 million rise (inflow) in non-residents’ investment in shares of Greek firms.

Under “other” investment, a considerable net inflow of €9.4 billion was recorded, which mainly reflects a €9.1 billion increase (inflow) in non-resident credit institutions’ and institutional investors’ deposit and repo holdings in Greece and a €619 million decline (inflow) in residents’ corresponding deposit and repo holdings abroad. This development much more than offset a €297 million outflow for the repayment of loans granted by non-residents to residents (mainly the public sector and, secondarily, the private sector).

 In January-April 2009, direct investment showed a net inflow of €967.1 million. Specifically, net inflows of non-residents’ funds for direct investment in Greece came to €1,310 million, while net outflows of residents’ funds for direct investment abroad reached €343 million.

 During the same period, a net inflow of €8.0 billion was observed under portfolio investment. Specifically, an inflow was recorded due to non-residents’ purchases of Greek government bonds and Treasury bills (of €5.9 billion). Inflows were also recorded owing to a €2.6 billion decrease in residents’ investment in foreign bonds and Treasury bills.

Finally, under “other” investment, a net inflow of €1.0 billion reflects a €11.1 billion increase (inflow) in non-resident credit institutions’ and institutional investors’ deposit and repo holdings in Greece, which was largely offset by a €8.1 billion rise (outflow) in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad and a €1.9 billion outflow for the repayment of loans granted by non-residents to both the public and the private sector.

 At end-April 2009, Greece’s reserve assets stood at €2.7 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 2009 will be released on 21 July 2009.

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