Current account balance

In April 2004, the current account deficit increased year-on-year. Underlying this increase were the widening of the non-oil trade deficit, the narrowing of the transfers surplus and the rise in the income account deficit. By contrast, the services surplus grew.

Specifically, the widening of the trade deficit is accounted for by an increase in the non-oil import bill, which more than offset the rise in non-oil export receipts and the fall in the net oil import bill. The services surplus improved considerably as a result of a rise in net transport (mainly shipping) receipts. The increase in the income account deficit stemmed from higher net interest, dividend and profit payments. Finally, the narrowing of the transfers surplus in April mainly reflects a decrease in net EU transfers to general government.

In January- April 2004, the current account deficit narrowed considerably (by Euro972 million) over the same period in 2003 and reached Euro 3,357 million. This development reflects mainly a big rise in the services surplus and secondarily a considerable rise in the transfers surplus, which together more than offset the widening of the trade deficit.

Specifically, the trade deficit grew by ?514 million relative to the same period in 2003. This reflects a Euro1,203 million (or 13.4%) increase in the non-oil import bill, which more than offset both a Euro391 million (or 12.6%) rise in non-oil export receipts and a Euro297 million decrease in the net oil import bill. The services surplus grew by Euro1,020 million owing to a big rise (of Euro959 million, or 65.1%) in net transport (mainly shipping) receipts and, to a much lesser extent, a drop in net payments for ??other services??. Net travel receipts did not change considerably, because a ?120 million (or 15.4%) rise in gross receipts (i.e. travel expenditure in Greece by non-residents) was offset by a Euro132 million (or 27.2%) increase in gross payments (i.e. travel expenditure abroad by residents of Greece). The income account deficit also remained virtually unchanged. Finally, the growth of the transfers surplus by Euro470 million in January-April 2004 is accounted for by a Euro478 million increase in net EU transfers to general government.

Financial account balance

In April 2004, a small net outflow was observed under direct investment. Under portfolio investment, a net inflow of Euro4,878 million mainly reflects non-residents? purchases of Greek government bonds. Finally, as regards "other investment", a net outflow of Euro3,571 million largely reflects an increase in residents? (credit institutions?) deposits and repos abroad, as well as a decrease in non-residents? deposits and repos in Greece.

In January-April 2004, a net inflow of ?486 million was observed under direct investment, which mainly reflects inflows of funds in January (because of the procedure of acquisition of PANAFON S.A. by VODAFONE) and in March (because of the acquisition of the General Bank by Sociιtι Gιnιrale), as pointed out in previous press releases. Over the same period, a substantial net inflow of Euro8,717 million was recorded under portfolio investment, which mainly reflects non-residents? purchases of Greek government bonds. Finally, a net outflow of Euro 6,631 million under other investment is largely connected with residents? (mainly credit institutions?) sizeable outflows to deposits and repos abroad and, to a lesser extent, outflows for the repayment of loans granted by non-residents.

At end-April 2004, Greece?s reserve assets came to Euro 3.5 billion. (It should be recalled that since the first months of 2003 the Bank of Greece has started to diversify its portfolio, by reducing its non-euro area currency holdings, which are included in reserve assets, and by increasing its higher-yield or euro-denominated assets -- mainly bonds issued by euro area Member States, which are not includedin reserve assets. Given that there is less need to maintain high foreign currency reserves, by the above diversification the Bank of Greece improved the return on its investments. It has been noted repeatedly 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 2004 will be released on 23 July 2004.

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