In March 2002, the current account balance recorded a deficit of 603 million euro, which was about half that in March 2001. This decrease resulted mainly from the reduction in the trade deficit and the significant increase in the transfers surplus. The services surplus decreased, while the income account deficit increased slightly.

The decrease in the trade deficit in comparison with March 2001 is due primarily to the reduction in the value of net fuel imports and secondarily to the contraction of the non-oil trade deficit. The bigger surplus of the transfers balance is attributable to the fact that net EU transfers more than doubled. As far as the services balance is concerned, the reduction in net travel and transport receipts resulted in a smaller surplus. Finally, the small rise in the income account deficit is due to the increase in net payments for interest, dividends and profits.

During the first quarter of 2002, the current account deficit decreased by 467 million euro, compared with that in the corresponding 2001 period, and stood at 2,030 million euro. This development is mainly due to the increase of the transfers surplus (owing to the rise in net EU transfers) and, to a lesser extent, to the reduction in the trade deficit, which reflects the decrease in the value of net fuel imports. Over the same period, the services surplus fell marginally, while the income account deficit recorded a slight increase.

The non-oil trade deficit increased by 131 million euro during the first quarter of 2002, because the reduction of export receipts more than offset the slight decrease in the import bill. By contrast, net oil imports fell by 166 million euro. In the period under review, the increase in net receipts from travel and other services failed to cover the fall in net transport receipts, thus resulting in a marginal decrease in the services surplus. The small rise of the income account deficit stems mainly from the increase in net payments for interest, dividends and profits. Finally, the transfers balance recorded a larger surplus, due to the increase in net EU transfers by 558 million euro.

Financial account balance

In March 2002, direct investment and portfolio investment recorded net outflows of 58 and 1,047 million euro respectively. Direct investment outflows are mainly due to residents' investments abroad, while portfolio investment outflows are the result of the reduction in the portfolio of Greek government bonds held by non-residents, as well as of the purchase of foreign bonds by residents. "Other investment" showed an inflow of 849 million euro, attributable to the increase in non-residents' deposits.

During the first quarter of 2002, direct investment recorded a 218 million euro net outflow, in contrast with the net inflows for portfolio and "other" investment during the same period. The 2,409 million euro net inflow for portfolio investment is attributable to the significant inflow of funds for the purchase of Greek government bonds in February 2002. The 1,805 million euro net inflow for "other investment" is the result of the considerable increase in non-residents' deposits in Greece, which more than offset the growth of residents' deposits abroad, which was substantial also. At the same time, the repayment of general government loans continued during the first quarter of 2002.

As a result of the evolution of the current account and the financial account balances, Greece's reserve assets came to 8.5 billion euro at end-March 2002.