In June 2003, the current account deficit grew by euro 258 million year-on-year, reaching euro 724 million. This mainly stemmed from a widening of the income account deficit and the trade deficit. These developments were partly offset by small increases in the transfers and services surpluses.

Specifically, underlying the widening of the non-oil trade deficit was a rise in non-oil export receipts, which was, however, more than offset by an increase in the non-oil import bill. At the same time, the net oil import bill grew over the same period in 2002. The income account deficit more than doubled year-on-year, mainly owing to increased interest payments on Greek government bonds. The small growth of the services surplus is mainly accounted for by a rise in net transport receipts, while net travel receipts decreased slightly (June figures on travel receipts and payments are comparable with those for June 2002; These figures are derived from a border survey).

Finally, the increase in the transfers surplus reflects a rise in general government net receipts (mainly net transfers from the EU).

In the first half of 2003 the current account deficit rose by euro 863 million over the same period in 2002 and reached euro 5,792 million. This reflects a widening of the oil trade deficit and the income account deficit and a narrowing of the transfers surplus. Over the same period, the non-oil trade deficit decreased, while the services surplus grew.

The non-oil trade deficit declined by euro 421 million in the first half of 2003 as a result of a euro 293 million increase in export receipts and a euro 128 million drop in the import bill. At the same time, the net oil import bill rose by euro 589 million. Over the same period, the services surplus grew, as the decrease in net travel receipts was more than offset by an increase in net transport receipts (the figures for travel receipts and payments that concern the entire January-June period of the current year are not comparable with those for the corresponding period of 2002, since the relevant border survey started only in mid-May 2002). The income account deficit widened by euro 385 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 660 million) of the transfers surplus was a reduction in transfers from the EU to general government. By contrast, net transfers to the other sectors grew.

In June 2003, direct investment showed a net inflow of euro 225 million, which is associated with the purchase of shares (worth euro 326 million) of Hellenic Petroleum S.A. (ΗELPE) by Paneuropean Oil (main shareholder of PETROLA) within the context of the ΗELPE-PETROLA merger. Under portfolio investment, a net inflow of euro 1,290 million was observed, mainly reflecting non-residents' investment in Greek government bonds (worth euro 1,832 million). Finally, as regards 'other investment', a net outflow of euro 1,007 million was recorded, connected mainly with an increase in residents? deposits and repo holdings abroad, as well as to repayment of general government loans.

In the first half of 2003, a net outflow of euro 543 million was observed under direct investment. During the same period, a considerable net inflow of euro 11,428 million was recorded under portfolio investment. This development is connected with a sizeable inflow of foreign investors? funds, mainly for the purchase of Greek government bonds. It should be pointed out that the substantial outflows for the purchase of bonds by residents are mainly accounted for by the purchase by the Bank of Greece of euro-denominated bonds issued by euro area Member States, reflecting the restructuring of the Bank?s portfolio (with a corresponding decrease in reserve assets). Finally, under 'other investment', a net outflow of euro 9,154 million was recorded. This is associated with a considerable increase in residents? (mainly credit institutions) deposits and repo holdings abroad, substantial general government loan repayments and a decrease in deposits and repo holdings by non-residents.

At end-June 2003, Greece?s reserve assets stood at euro 4.9 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' with 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 July 2003 will be released on September 18, 2003.