The Czech Republic’s international investment position and external debt

as of 31 December 2024

Simultaneously with the publication of the 2024 Q4 investment position and external debt figures, revised data for all quarters of 2023 and 2024 Q1–Q3 are being published. The revised data mainly take into account updated data from statements submitted to the CNB by financial and non-financial entities, the annual sample survey of foreign direct investment in the country and domestic direct investment abroad.

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In 2024 Q4, the Czech Republic’s international investment position (i.e. the balance of its financial assets and liabilities in respect of non-residents) recorded a quarter-on-quarter decrease in deficit of CZK 228.7 billion to CZK 575.5 billion. The deficit dropped by CZK 529 billion in year-on-year terms and represented 7.2% of GDP at current prices. The gross external debt of residents of the Czech Republic amounted to CZK 5,271 billion at the end of Q4 (i.e. 65.8% of GDP). It recorded a year-on-year increase of CZK 460.4 billion. The net external debt of residents of the Czech Republic amounted to CZK -857.1 billion at the end of Q4. Net external debt is the difference between external debt liabilities and assets. A negative value thus indicates that residents of the Czech Republic were in a net creditor position vis-à-vis the rest of the world (10.7% of GDP).

Chart 1 – International investment position
(CZK billions, end-of-period balance)

External assets increased by CZK 422.1 billion to CZK 9,765 billion in Q4. Assets rose by CZK 1,228.1 billion year on year.

The external assets of the banking sector (including the CNB and excluding portfolio investment and derivatives) increased by CZK 79 billion in Q4, constituting 44% of total assets. This was largely due to a rise in the CNB’s reserve and other assets, which amounted to CZK 68.5 billion. The share of the CNB’s reserve and other assets in total investment position assets was 36.4%.

The external assets of the general government sector (excluding portfolio investment and derivatives) increased by CZK 34.7 billion in Q4 as a result of a rise in long-term loans provided, and the share of general government assets in total assets amounts to 1.2%.

The external assets of other sectors (excluding the government and banking sectors, and excluding portfolio investment and derivatives) increased by CZK 233.5 billion in Q4 due mostly to an increase of CZK 88.3 billion in short-term trade credits and advances provided to corporations not associated with direct investment. Another significant factor was the increase in the share of domestic owners in foreign subsidiaries by CZK 39.8 billion and the rise in short-term inter-company loans to foreign subsidiaries by CZK 64.6 billion. The external assets of other sectors (excluding the government and banking sectors, and excluding portfolio investment and derivatives) accounted for 39.1% of total investment position assets.

The value of domestic investors’ holdings of foreign securities (portfolio investment) rose by CZK 78.9 billion mainly due to purchases of ownership interests and bonds by non-bank domestic investors. Their share in total investment position assets is 14.2%.

The positive fair value of derivatives decreased by CZK 4 billion in Q4, accounting for 1.6% of total investment position assets.

Investment position external liabilities rose by CZK 193.3 billion in Q4 to CZK 10,340.5 billion at the end of December 2024. In year-on-year terms, the liabilities increased by CZK 699.1 billion.

Chart 3 – Structure of investment position liabilities
(CZK billions, end-of-period balance)

Direct investment liabilities increased by CZK 86.4 billion  in Q4, accounting for 58.3% of total external liabilities. Foreign investors increased their share in domestic subsidiaries, while domestic companies simultaneously drew loans from foreign affiliates and subsidiaries.

Developments in portfolio investment liabilities abroad were driven mostly by purchases of domestic short-term bank debt securities by non-residents. The resulting volume of liabilities increased by CZK 150.2 billion, with portfolio investment representing 16.9% of total liabilities.

The negative fair value of derivatives rose by CZK 14.1 billion in Q4, accounting for 1.8% of total liabilities.

The Czech Republic’s external debt (the sum of its liabilities with stipulated maturity) increased by CZK 92.9 billion in Q4, totalling CZK 5,271 billion at the end of December 2024. In year-on-year terms, the debt increased by CZK 460.4 billion. As regards the time structure of the external debt, the share of liabilities with original maturities longer than one year was 50.3% of total debt liabilities.

Turning to the sectoral breakdown of the external debt, in Q4, debt increased in the banking sector (including the CNB) and other sectors, while general government debt declined.

The rise in debt in the banking sector (including the CNB) was driven mostly by growing demand for bank bonds by non-residents. The banking sector accounted for 37.8% of the total debt.

The external debt of other sectors represented 46.3% of the total external debt. External liabilities rose due mainly to drawdown of long-term loans by domestic companies from abroad and, to a lesser extent, through purchases of bonds by foreign investors.

General government external debt decreased by 38.1 billion CZK in Q4, mainly due to sales of government bonds by foreign investors. General government accounted for 15.9% of the total external debt.

Turning to the breakdown of the external debt by instrument, deposits and loans from subsidiaries are the most frequently used forms of debt financing (together accounting for 52.1% 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 77.2% of the total external debt. Public sector liabilities accounted for the rest (22.8%). They comprise liabilities of the 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)

As of 31 December 2024, debt service payments of principal and interest on long-term external liabilities planned for 2025 totalled CZK 369.8 billion (of which principal amounts to CZK 311.2 billion and interest to CZK 58.6 billion). For 2026, total debt service payments of CZK 485.6 billion (including interest) are planned, with a total of CZK 2,110.6 billion scheduled for the following years.

Chart 7 – Debt service on medium- and long-term external debt liabilities
(CZK billions)