The Czech Republic’s international investment position and external debt
as of 30 June 2024
Simultaneously with the publication of the 2024 Q2 investment position and external debt figures, revised data for 2024 Q1 and previous quarters of 2017–2023 are being published. The revised data for 2017–2022 follow an extraordinary revision of the national accounts by the CZSO (external link) concerning the external sector, reflecting the application of the current methodology and adjustments in the historical time series. The changes are also reflected in the ordinary revision of the data for 2023, which will be further revised in March 2025 in line with the revision policy, especially following an assessment of the annual collection of data on the stocks and flows of foreign direct investment for 2024. The revised data for 2024 Q1 mainly take into account updated data from statements submitted to the CNB by financial and non-financial entities.
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In 2024 Q2, the Czech Republic’s international investment position (the balance of its financial assets and liabilities in respect of non-residents) recorded a decrease in deficit of CZK 28.7 billion to CZK 735.6 billion at the end of June. The deficit dropped by CZK 547.6 billion in year-on-year terms and represented 9.4% of GDP at current prices. The Czech Republic’s external debt amounted to CZK 4,891.1 billion at the end of Q2 (i.e. 62.8% of GDP). It recorded a year-on-year increase of CZK 370.5 billion.
Chart 1 – International investment position
(CZK billions, end-of-period balance)
External assets increased by CZK 11.3 billion to CZK 9,052.6 billion in Q2. The assets rose by CZK 1,076.3 billion year on year.
Chart 2 – Structure of investment position assets
(CZK billions, end-of-period balance)
The external assets of the banking sector (including the CNB and excluding portfolio investment and derivatives) decreased by CZK 74.3 billion in Q2, constituting 46% of total assets. This was largely due to a decline in the CNB’s reserve and other assets, which amounted to CZK 60.5 billion. The share of the CNB’s reserve and other assets in total investment position assets was 37.9%.
The external assets of the general government sector (excluding portfolio investment and derivatives) were almost unchanged in Q2, accounting for 0.6% of total assets.
The external assets of other sectors (excluding the government and banking sectors, and excluding portfolio investment and derivatives) increased in Q2 due mainly to a rise in the volume of inter-company loans provided to foreign affiliated companies and growth in the share of domestic owners in reinvested earnings in foreign firms. The volume of short term-assets of corporations not associated with direct investment also increased, albeit to a lesser extent. The external assets of other sectors accounted for 37.5% of total investment position assets.
The value of domestic investors’ holdings of foreign securities (portfolio investment) increased mainly as a result of purchases of foreign shares and ownership interests by non-bank domestic investors. Their share of total investment position assets is 14%.
The positive fair value of derivatives declined by CZK 52.4 billion in Q2, accounting for 1.9% of investment position assets.
Investment position external liabilities fell by CZK 17.4 billion in Q2 to CZK 9,788.2 billion at the end of June. In year-on-year terms, the liabilities increased by CZK 528.7 billion.
Chart 3 – Structure of investment position liabilities
(CZK billions, end-of-period balance)
Direct investment liabilities picked up in Q2, accounting for 58.7% of total external liabilities. There was an increase in equity capital in domestic companies mainly in the form of reinvestment of earnings by foreign owners.
Developments in portfolio investment liabilities abroad were driven mostly by purchases of domestic bank bonds by non-residents. The resulting volume of liabilities increased, with portfolio investment representing 14.9% of total liabilities.
The negative fair value of derivatives declined by CZK 29.5 billion to 1.8% of total liabilities in Q2.
The Czech Republic’s external debt (the sum of its liabilities with stipulated maturity) fell by CZK 26.9 billion in Q2, totalling CZK 4,891.1 billion at the end of June. In year-on-year terms, the debt increased by CZK 370.5 billion. As regards the time structure of the external debt, the share of liabilities with original maturities longer than one year was 49.4% of total debt liabilities.
Chart 4 – External debt by debtor
(CZK billions, end-of-period balance)
Turning to the sectoral breakdown of the external debt, a decrease in the debt of the government and corporate sectors (other sectors) was the key factor in Q2.
The decrease in the external debt of the general government sector was due to sales of government bonds by foreign investors. General government accounted for 16.3% of the total external debt.
The key factors affecting debt in the banking sector (including the CNB) were an increase in the volume of domestic bank bonds held by non-residents and an increase in short-term deposits received from abroad. The banking sector accounted for 38.4% of the total debt.
The external debt of other sectors represented 45.4% of the total external debt. External liabilities declined due mainly to repayment of loans drawn by domestic companies from abroad.
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 55.7% 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 77.5% of the total external debt. Public sector liabilities accounted for the rest (22.5%). 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)
As of 30 June 2024, debt service payments of principal and interest on long-term external liabilities planned in 2024 H2 totalled CZK 171.1 billion (of which principal amounted to CZK 145 billion and interest to CZK 26.1 billion).
Chart 7 – Debt service on medium- and long-term external debt liabilities
(CZK billions)
