Current account balance

In February 2003, the current account balance recorded a EURO995 million deficit, slightly higher (by EURO42 million) than in February 2002. This increase resulted from the widening of the income account deficit and the narrowing of the transfers surplus. These developments were largely offset by a decrease in the trade deficit and a small rise in the services surplus.

Specifically, the narrowing of the trade deficit was mainly accounted for by the increase in non-oil export receipts, which more than offset the growth of the non-oil import bill, and by the decline in the net oil import bill. Besides, the small 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 showed a small increase. The income account deficit grew because of the rise in net payments for interest, dividends and profits. Finally, the narrowing of the transfers surplus reflects the fall in net receipts of general government (mainly net receipts from the EU).

In January-February 2003 the current account deficit rose by EURO369 million over the same period in 2002 and reached EURO2,279 million. This mainly reflects the narrowing of the transfers surplus and the widening of the income account deficit. During the same period, no significant change was observed in the trade and services balances. The non-oil trade deficit declined by EURO103 million in January-February 2003 as a result of a EURO26 million rise in export receipts and a fall (of EURO77 million) in the import bill. At the same time, the net oil import bill grew by EURO121 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 EURO146 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 EURO226 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. By contrast, net transfers to the other sectors grew.

Financial account balance

In February 2003, both residents' direct investment abroad and non-residents' investment in Greece were low. Under portfolio investment, a net inflow of EURO878 million was recorded, mainly reflecting non-residents' investment in Greek bonds, and was partly offset by an outflow for purchases of foreign bonds 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 Member States, which corresponds to an equal decrease in reserve assets, as defined by the ECB. Finally, as regards "other investment", a small net outflow of EURO1,198 million was observed, connected mainly to an outflow for repayment of general government loans, as well as to an increase in deposits and repo holdings abroad by residents. These developments were partly offset by the growth of deposits and repo holdings by non-residents.

In January-February 2003, a net outflow of EURO285 million was observed under direct investment, mainly associated with residents' investment abroad in January. During the same period, a considerable net inflow of EURO2,069 million was recorded under portfolio investment. This development is connected to a sizeable inflow of foreign investors' funds, for the purchase of, mainly, Greek bonds and, secondarily, equities. It should be pointed out that there was a notable outflow of funds for the purchase of bonds by Greek investors. Finally, under ‘‘other investment'', a net outflow of EURO1,575 million was recorded. This is associated with the considerable increase in deposits and repo holdings abroad by residents and with substantial general government loan repayments. These developments were partly offset by a sizeable inflow stemming from the growth of deposits and repo holdings by non-residents.

At end-February 2003, Greece's reserve assets came to EURO7.2 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 March 2003 will be released on 20 May 2003.

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