Bank of Greece: Current account deficit increases in January 2016

26 March 2016
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The Bank of Greece has published its latest report on the balance of payments for January 2016 and found that the deficit increased by 461 million euros to 742 million euros, compared to January 2015.

According to the Bank of Greece, this is attributable to a deterioration in, mainly, the primary income account and, secondarily, the services balance and the secondary income account, which was not offset by an amelioration in the balance of goods.

Additionally, the surplus of the services balance almost halved year-on-year, having declined by €218 million, as a result of lower net transport receipts (mainly sea transport receipts, which dropped to €292 million from €631 million in January 2015). Travel receipts decreased by 4.7% and the number of non-residents’ arrivals registered a decline of 7.8%.

As a result of the above-mentioned developments, the value of exports of goods and services fell by 25.8% and the corresponding value of imports declined by 21.8%, so the deficit of the balance of goods and services eventually shrank by €76 million.

The primary income account showed a surplus of €173 million, down by €451 million year-on-year, mainly as a result of a decline in the surplus of the other primary income account (which includes taxes and subsidies on products and production). At the same time, the secondary income account also deteriorated, showing a small deficit, against a surplus in January 2015.

Capital account

In January 2016, the capital account showed a surplus of €388 million, up by €338 million year-on-year, mainly due to a rise in net capital transfers from the EU to general government.

Combined current and capital account

In January 2016, the combined current and capital account (corresponding to the economy’s external financing requirements) showed a deficit of €354 million, up by €123 million year-on-year.

Financial account

In January 2016, no remarkable transactions were recorded under direct investment.  Under portfolio investment, a net increase of €678 million was recorded in residents’ external assets, which is mainly attributable to a rise of €949 million in residents’ holdings of foreign bonds and Treasury bills (which mostly reflects Bank of Greece holdings). On the liabilities side, a net decrease of €416 million was recorded, which is mainly attributable to a decline in non-residents’ holdings of bonds and Treasury bills.

Under other investment, a net decline of €295 million in assets largely reflects the statistical adjustment associated with the issuance of banknotes (1). A net increase of €975 million in liabilities reflects a net rise of €1.7 billion in non-residents’ deposit and repo holdings in Greece (the TARGET account included), which was partly offset by a net decrease in the outstanding debt of the public and the private sector to non-residents (including principal payments of €459 million to the IMF).

At end-January 2016, Greece’s reserve assets stood at €5.6 billion, compared with €5.9 billion at end-January 2015.

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