Current account balance

In May 2003, the current account deficit remained almost unchanged year-on-year, standing at euro 738 million. Specifically, a rise in the services surplus offset a widening of the trade deficit, as well as a limited decrease in the transfers surplus and a small increase in the income balance.

Underlying the widening of the non-oil trade deficit was a fall in export receipts and a rise in the import bill. The net oil import bill also increased year-on-year. Besides, the growth of the services surplus stemmed mainly from a rise in net transport receipts, whereas net travel receipts fell. The income account deficit grew, mainly due to increased payments for interest, dividends and profits. Finally, the decline in the transfers surplus reflects a fall in net receipts of general government (mainly net transfers from the EU).

In January-May 2003 the current account deficit rose by euro 605 million over the same period in 2002 and reached euro 5,069 million. Specifically, there was an increase in the net oil import bill, a widening of the income account deficit and a narrowing of the transfers surplus, these developments more than offset a decrease in the non-oil trade deficit and a rise in the services surplus.

The non-oil trade deficit declined by euro 488 million in January-May 2003 as a result of a Euro 143 million increase in export receipts and a euro 345 million fall in the import bill. By contrast, the net oil import bill rose by euro 543 million. Over the same period, the services surplus grew, as the increase in net transport receipts more than offset the fall in net travel receipts. (It should be recalled at this point that, as from mid-May 2002, statistics for travel receipts and payments are compiled on the basis of a sample "border survey" hence the data for the January-May 2003 period are not fully comparable with those for the corresponding period of 2002). The income account deficit widened by euro 154 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 724 million) of the transfers surplus was mainly a reduction in transfers from the EU to general government. By contrast, net transfers to the other sectors grew.

Financial account balance

In May 2003, direct investment showed a net outflow of euro 333 million, which is associated with a euro 272 decrease in TELENOR's participation in COSMOTE's share capital. It should be noted, however, that this outflow was offset by a corresponding increase in liabilities (i.e. an inflow) under portfolio investment, as the shares previously held by TELENOR were purchased by non-residents, whose holdings in COSMOTE?s capital are small on an individual basis (hence this purchase is not recorded under direct investment). Under portfolio investment, a net inflow of euro 3,458 million was recorded, mainly reflecting non-residents' investment in Greek government bonds. Finally, as regards "other investment", a net outflow of euro 2,133 million was observed, connected mainly to an increase in deposits and repo holdings abroad by residents (domestic credit institutions and institutional investors), as well as to reduced deposits and repo holdings of non-residents and repayment of general government loans.

In January-May 2003, a net outflow of euro 769 million was observed under direct investment. During the same period, a considerable net inflow of euro 10,138 million was recorded under portfolio investment. This development is connected to a sizeable inflow of foreign investors' funds, mainly for the purchase of Greek government bonds. It should be recalled that the substantial year-on-year increase in outflows under portfolio investment is accounted for by the purchase (particularly in February and March 2003) by the Bank of Greece of bonds issued by euro area member countries and reflects the restructuring of the Bank?s portfolio (with a corresponding decrease in reserve assets). Finally, under "other investment", a nest outflow of euro 8,148 million was recorded. This is associated with a considerable increase in deposits and repo holdings abroad by residents (mainly credit institutions), general government loan repayments and a decrease in deposits and repo holdings by non-residents.

At end-May 2003, Greece's reserve assets stood at euro 4.8 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 June 2003 will be released on 18 August 2003.

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