The Czech Republic’s international investment position and external debt
as of 30 September 2024
Simultaneously with the publication of the 2024 Q3 investment position and external debt figures, revised data for 2024 Q2 are being published. The revised data mainly take into account updated data from statements submitted to the CNB by financial and non-financial entities.
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In 2024 Q3, the Czech Republic’s international investment position (i.e. the balance of its financial assets and liabilities in respect of non-residents) recorded a decrease in deficit of CZK 90.6 billion to CZK 654 billion at the end of September. The deficit dropped by CZK 481.3 billion in year-on-year terms and represented 8.3% of GDP at current prices. The Czech Republic’s external debt amounted to CZK 5,075.2 billion at the end of Q3 (i.e. 64.2% of GDP). It recorded a year-on-year increase of CZK 479 billion.
Chart 1 – International investment position
(CZK billions, end-of-period balance)
External assets increased by CZK 313.4 billion to CZK 9,364.8 billion in Q3. The assets rose by CZK 1,149.6 billion year on year.
The external assets of the banking sector (including the CNB and excluding portfolio investment and derivatives) increased by CZK 58.6 billion in Q3, constituting 45% of total assets. This was largely due to a rise in the CNB’s reserve and other assets, which amounted to CZK 47.9 billion. The share of the CNB’s reserve and other assets in total investment position assets was 37.2%.
The external assets of the general government sector (excluding portfolio investment and derivatives) increased slightly in Q3 as a result of trade credits provided, accounting for 0.7% of total assets.
The external assets of other sectors (excluding the government and banking sectors, and excluding portfolio investment and derivatives) increased in Q3 due mainly to purchases of foreign shares and growth in the share of domestic owners in reinvested earnings in affiliated foreign firms. An increase in the volume of inter-company loans provided to foreign affiliates and growth in the stock of the short-term assets of corporations not associated with direct investment were also major factors. The external assets of other sectors accounted for 38.6% of total investment position assets.
The value of domestic investors’ holdings of foreign securities (portfolio investment) increased mainly as a result of purchases of ownership interests and bonds by non-bank domestic investors. Their share in total investment position assets is 14%.
The positive fair value of derivatives decreased by CZK 15 billion in Q3 and accounted for 1.7% of investment position assets.
Investment position external liabilities rose by CZK 222.7 billion in Q3 to CZK 10,018.8 billion at the end of September. In year-on-year terms, the liabilities increased by CZK 668.2 billion.
Chart 3 – Structure of investment position liabilities
(CZK billions, end-of-period balance)
Direct investment liabilities increased in Q3, accounting for 58.2% of total external liabilities. Foreign investors increased their share in reinvested earnings in domestic subsidiaries, while domestic companies simultaneously drew loans from foreign affiliates.
Developments in portfolio investment liabilities abroad were driven mostly by purchases of domestic government and bank bonds by non-residents. The resulting volume of liabilities increased, with portfolio investment representing 16% of total liabilities.
The negative fair value of derivatives decreased by CZK 12.4 billion in Q3, accounting for 1.7% of total liabilities.
The Czech Republic’s external debt (the sum of its liabilities with stipulated maturity) rose by CZK 176.2 billion in Q3, totalling CZK 5,075.2 billion at the end of September. In year-on-year terms, the debt increased by CZK 479 billion. As regards the time structure of the external debt, the share of liabilities with original maturities longer than one year was 50.1% of total debt liabilities.
Turning to the sectoral breakdown of the external debt, an increase in debt was evident across all economic sectors in Q3.
The largest increase was recorded for the external debt of the general government sector, mainly due to purchases of government bonds by foreign investors. General government accounted for 17.2% of the total external debt.
Debt in the banking sector (including the CNB) was also driven by increased demand for the purchase of bank bonds by non-residents. The banking sector accounted for 37.6% of the total debt.
The external debt of other sectors represented 45.2% of the total external debt. External liabilities rose due mainly to drawdown of trade credits from abroad by domestic companies and purchases of bonds by foreign investors.
Turning to the breakdown of the external debt by instrument, deposits and loans from affiliated companies are the most frequently used forms of debt financing (together accounting for 53.6% of the external debt).
Chart 5 – External debt by instrument
(CZK billions, end-of-period balance)
The external debt of the private sector accounted for 75% of the total external debt. Public sector liabilities accounted for the rest (25%). They comprise liabilities of general government, liabilities of private entities guaranteed by the government and liabilities of entities majority-owned by the state.
Chart 6 – External debt of public and private sectors
(CZK billions, end-of-period balance)
