Bank of Greece
Balance of payments: December 2019
20/02/2020 - Press Releases
In December 2019, the current account deficit contracted by €974 million year-on-year to €540 million. This development mainly reflects improvements in the secondary income account, which came from an increase in general government receipts as a result of the second disbursement of SMP/ANFA profits from the European Stability Mechanism (ESM) to the Greek government in the context of the medium-term debt relief measures.
The deficit of the balance of goods narrowed, as export growth outpaced import growth. In particular, non-oil exports of goods registered a 9.8% increase at current prices (10.4% at constant prices), while the corresponding imports rose by 4.9% at current prices (5.0% at constant prices).
The surplus of the services balance remained virtually unchanged, posting a marginal increase of €8 million, as the increases in the travel and other services balances were largely offset by a decline in the surplus of the transport balance. Travel receipts increased by 6.1% and non-residents’ arrivals rose by 5.4% year-on-year. Moreover, sea transport receipts declined by 1%.
In 2019, the current account deficit halved year-on-year to €2.6 billion. This development is chiefly attributable to an increase in the surplus of the services balance and to a shift of the secondary income account from deficit to surplus. At the same time, the deficit of the primary income account also contracted.
These developments more than offset a widening in the deficit of the balance of goods, which resulted mainly from a rise in the non-oil deficit, while the oil deficit declined. Non-oil exports of goods increased (by 4.5% at current prices and by 4.9% at constant prices), outpacing the corresponding imports (which grew by 3.7% at both current prices and constant prices). However, total exports and imports remained almost unchanged due to a drop in oil exports and imports.
A rise in the services surplus is due to improvements in, primarily, the travel balance and, secondarily, the transport balance, while the deficit of the other services balance rose. Travel receipts and non-residents’ arrivals increased by 12.8% and 4.1%, respectively, year-on-year. Transport (mainly sea transport) receipts rose by 3%.
The deficit of the primary income account narrowed due to lower net interest, dividend and profit payments, offsetting a decrease in the surplus of the other income account. Finally, the secondary income account registered a surplus, against a deficit in 2018, as a result of higher general government net receipts due to the disbursement, from the ESM, of SMP/ANFA profits in May and, as already mentioned, in December 2019.
In December 2019, the capital account recorded a surplus of €216 million, against a deficit of €34 million year-on-year, while in the year as a whole it posted a surplus of €680 million, almost double that of 2018.
Combined current and capital account
In December 2019, the combined current and capital account (corresponding to the economy’s external financing requirements) showed a deficit of €324 million, significantly reduced (by €1.2 billion) against December 2018. In 2019, the combined current and capital account recorded a deficit of €1.9 billion, compared with a deficit of €4.9 billion in 2018.
In December 2019, under direct investment, residents' net external assets declined by €89 million, without any remarkable transactions. Residents' net external liabilities, which represent non-residents' direct investment in Greece, rose by €679 million. The most important transaction was the participation of Consolidated Lamda Holdings S.A. (Luxembourg) in the capital increase of Lamda Development S.A.
Under portfolio investment, a net decrease in residents' external assets is chiefly attributable to a decline of €790 million in residents' holdings of foreign bonds and Treasury bills. A net decrease in residents’ liabilities is mainly attributable to a decline of €690 million in non-residents’ holdings of Greek government bonds and Treasury bills.
Under other investment, a net decrease in residents’ external assets reflects a decline of €2.3 billion in residents’ deposit and repo holdings abroad. A net decline in liabilities reflects mainly a fall of €4.0 billion in non-residents' deposit and repo holdings in Greece (the TARGET account included).
In 2019, under direct investment, residents’ net external assets increased by €381 million and their net external liabilities rose by €4.1 billion.
Under portfolio investment, a net increase in residents’ external assets is due to a rise of €25 billion in residents’ holdings of foreign bonds and Treasury bills. The bulk of this increase is related to a loan securitisation by a systemic credit institution in September, combined with an equal increase in non-residents’ other investment in Greece. A net increase in their liabilities is mainly due to a rise of €1.7 billion in non-residents’ holdings of Greek government bonds and Treasury bills.
Under other investment, a net decrease in residents’ external assets is mainly attributable to a decline of €7.8 billion in residents’ deposit and repo holdings abroad, which was partly offset by the statistical adjustment (of €4.6 billion) related to holdings of euro banknotes. A net rise in their liabilities reflects chiefly an increase of €21.5 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included), including the transaction related to the above loan securitisation, as well as a €4.9 billion decrease in the outstanding debt of the public and the private sector to non-residents.
At end-December 2019, Greece's reserve assets stood at €7.6 billion, compared with €6.6 billion at end-December 2018, mainly on account of valuation changes.
Note: Balance of payments data for January 2020 will be released on 20 March 2020.