Current account balance

In March 2003, the current account balance recorded a euro 990 million deficit, euro 256 million higher than in March 2002. This increase resulted from the widening of the oil and the income account deficits and the narrowing of the transfers surplus. These developments were largely offset by a decrease in the non-oil trade deficit and a rise in the services surplus.

Specifically, the narrowing of the non-oil trade deficit was mainly accounted for by the increase in non-oil export receipts and by the concurrent decline in payments for non-oil imports. By contrast, net payments for oil imports were more than double those in March 2002, mainly owing to the rise in the price of oil in the world market. Besides, the rise in the services surplus stemmed from the increase in net receipts from transport services, while net receipts from travel services decreased and net payments for other services remained unchanged. The income account deficit grew mainly because of the rise in net interest payments. Finally, the narrowing of the transfers surplus is due to the fall in the net receipts of general government (mainly net transfers from the EU).

In January-March 2003 the current account deficit rose by euro 624 million over the same period of 2002 and reached euro 3,269 million. This mainly reflects the widening of the oil and the income account deficits and the narrowing of the transfers surplus. During the same period, the non-oil trade deficit declined and the services surplus increased.

The non-oil trade deficit declined by euro 239 million in January-March 2003 as a result of a euro 124 million rise in export receipts and a fall (of euro 115 million) in payments for imports. At the same time, the net oil import bill grew by euro 377 million. Over the same period, the services surplus increased, as the drop in net receipts from travel services was more than offset by the rise in net receipts from transport services. The income account deficit grew by euro 284 million, mainly owing to an increase in net payments for interest, dividends and profits, as well as to a decline in net receipts from fees and wages. Finally, underlying the narrowing (by euro 294 million) of the transfers balance were mainly a reduction in transfers from the EU and, to a lesser extent, an increase in payments by general government (mainly to the EU). By contrast, net transfers to the other sectors of the economy grew.

Financial account balance

In March 2003, net outflows under direct investment amounted to euro 86 million. Under portfolio investment, a net inflow of euro 2,638 million was recorded, mainly reflecting non-residents' investment in Greek bonds, which were partly offset by an outflow for purchases of foreign bonds and treasury bills by residents. Specifically, it should be stressed that the largest part of residents' investment in bonds issued by non-residents is accounted for by the restructuring of the Bank of Greece's securities portfolio in favour of bonds issued by euro area countries. Finally, as regards "other investment", a net outflow of euro 3,262 million was observed, reflecting both the increase in claims, i.e. growth of deposits and repo holdings abroad by residents (solely by credit institutions), and the decrease in liabilities, mainly associated with the decline in the balance with the TARGET system.

In January-March 2003, a net outflow of euro 371 million was observed under direct investment, mainly associated with residents' investment abroad. During the same period, a considerable net inflow of euro 4,707 million was recorded under portfolio investment. This development is connected to a sizeable inflow of foreign investors' funds, mainly for the purchase of Greek bonds. As was already pointed out, the outflow of funds for the purchase of bonds by residents is mainly associated with the restructuring of the Bank of Greece's securities portfolio in favour of bonds issued by euro area countries, which corresponds to an equal decrease in reserve assets, as defined by the ECB. Finally, under ‘‘other investment'', a net outflow of euro 4,836 million was recorded. This is associated with the considerable increase in deposits and repo holdings abroad by residents (mainly credit institutions) and with substantial general government loan repayments. These developments were offset to a small extent by the growth of deposits and repo holdings by non-residents (inflow).

At end-March 2003, Greece's reserve assets came to euro 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" at the IMF, "Special Drawing Rights", and Bank of Greece's 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 payment data for April 2003 will be released on 20 June 2003.

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