Current account balance
The current account balance showed a surplus in September 2004, whereas it was in deficit in the corresponding month of the previous two years. This improvement is mainly accounted for by a substantial increase in the services surplus and ? to a lesser extent ? by a rise in the transfers surplus and a decline in the income account deficit. By contrast, the trade deficit grew.
Specifically, underlying the widening of the trade deficit were on the one hand an increase in the non-oil trade deficit and, on the other, a rise in the net oil import bill, reflecting substantially higher world oil prices. The services surplus improved considerably, as a result of an increase in net receipts from all categories of services. It should be noted that the ??other?? services account benefited in September from a rise in receipts from services associated with the holding of the Olympic Games (notably broadcasting fees) and that gross travel receipts grew by 10.1%. The income account deficit narrowed owing to a decline in net interest, dividend and profit payments. Finally, the growth of the transfers surplus reflects an increase in net EU transfers to general government.
In January-September 2004, the current account deficit narrowed considerably (by euro 2,049 million) over the same period of 2003 and fell to euro 2,969 million. This development mainly reflects a substantial rise in the services surplus and, secondarily, an increase in the transfers surplus, which, taken together with a small decrease in the income account deficit, more than offset a strong rise in the trade deficit. The trade deficit grew by euro 2,100 million relative to the same period of 2003. Specifically, a euro 2,615 million (or 12.6%) increase in the non-oil import bill more than offset a euro 964 million (or 13.5%) rise in non-oil export receipts, whereas the net oil import bill increased by euro 450 million. Besides, the services surplus grew by euro 3,310 million, mainly owing to a big rise (of euro 2,210 million) in net transport receipts (mainly from shipping). To a lesser extent, the larger surplus reflects a euro 690 million increase in net travel receipts (gross travel receipts grew by euro 840 million or 10.4% over the reference period) and the fact that a small surplus was recorded in the "other" services account (which had been in deficit in the corresponding period of 2002 and 2003), as a result of increased receipts (associated with the holding of the Olympic Games) in August and September 2004. Finally, the euro 780 million year-on-year growth of the transfers surplus is almost exclusively accounted for by a euro 1,036 million (or 25.0%) increase in general government receipts (mainly transfers from the EU), which far exceeded the euro 207 million rise in general government payments (mainly to the EU).

Financial account balance
In September 2004, two flows worth-noting were recorded under direct investment: first, an outflow of euro 68 million for the acquisition by GERMANOS S.A. of a mobile telephony company in Uzbekistan and, second, an inflow of euro 55 million in the context of the acquisition of KOTSOVOLOS S.A. by DIXONS. Under portfolio investment, an inflow of euro 1,585 million, mainly reflecting non-residents? purchases of Greek government securities and, secondarily, Greek companies' shares, was mostly offset by a euro 1,177 outflow, mainly accounted for by residents' increased purchases of bonds issued by non-residents and financial derivatives. Finally, as regards "other investment", the euro 2,010 million drop in residents' claims on non-residents (as a result of a decline in domestic credit institutions? and institutional investors' deposits and repos abroad) was more than offset by a decrease in residents' liabilities vis-ΰ-vis non-residents by euro 2,103 million.
In January-September 2004, non-residents' direct investment in Greece reached euro 1,013 million, while residents' direct investment abroad came to euro 386 million, resulting in a net inflow of euro 626 million under direct investment. Over the same period, a substantial net inflow of euro 11,168 million was recorded under portfolio investment, mainly reflecting inflows of non-residents' funds for the purchase of Greek government bonds (euro 16,697 million), which more than offset outflows of residents' funds for the purchase of foreign bonds (euro 6,964 million). Finally, a net outflow of euro 8,502 million under "other" investment is largely associated with domestic credit institutions' sizeable outflows (of euro 8,574 million) to deposits and repos abroad and - to a lesser extent ? outflows (of euro 1,143 million) for the repayment of loans granted to residents by non-residents, which more than offset inflows of non-residents' funds to deposits and repos (euro 1,251 million).
At end-September 2004, Greece's reserve assets came to euro 3.2 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 included in reserve assets. Given that there is less need to maintain high foreign currency reserves, by the above diversification the Bank of Greece has 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 in 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 October 2004 will be released on 17 December 2004.