The Czech Republic’s international investment position and external debt
as of 31 March 2024
In 2024 Q1, 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 251.1 billion to CZK 715.6 billion at the end of March. The deficit dropped by CZK 596.8 billion in year-on-year terms and represented 9.7% of GDP at current prices. The Czech Republic’s external debt amounted to CZK 4,852.8 billion at the end of Q1 (i.e. 65.5% of GDP). It recorded a year-on-year increase of CZK 519 billion.
Chart 1 – International investment position
(CZK billions, end-of-period balance)
External assets increased by CZK 567.5 billion to CZK 9,022.3 billion in Q1. The assets rose by CZK 880.9 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) increased by CZK 239.8 billion in Q1, constituting 46.9% of total assets. This was largely due to a rise in the CNB’s reserve and other assets, which recorded an increase of CZK 169.6 billion, accounting for 38.7% of total assets.
The external assets of the government sector (excluding portfolio investment and derivatives) were almost unchanged in Q1, 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 Q1 due mainly to a rise in the volume of inter-company loans provided to foreign affiliated companies. The volume of trade credits and other 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 36.8% of total investment position assets.
The value of domestic investors’ holdings of foreign securities (portfolio investment) increased due to purchases of foreign shares and bonds and as a result of exchange rate and price effects. Their share of total investment position assets is 13.2%.
The positive fair value of derivatives decreased by CZK 26.8 billion in Q1, accounting for 2.5% of total investment position assets.
Investment position external liabilities rose by CZK 316.4 billion in Q1 to CZK 9,737.9 billion at the end of March. In year-on-year terms, the liabilities increased by CZK 284.1 billion.
Chart 3 – Structure of investment position liabilities
(CZK billions, end-of-period balance)
Direct investment liabilities increased in Q1, accounting for 58.8% of total external liabilities. There was an increase in equity capital in domestic companies in the form of reinvestment of earnings by foreign owners and in loans received from affiliated companies.
In portfolio investment liabilities abroad, exchange rate and price effects exceeded repayment of domestic bonds by non-residents. The resulting volume of liabilities increased slightly, with portfolio investment representing 13.6% of total liabilities.
The negative fair value of derivatives declined by CZK 25 billion in Q1, accounting for 2.1% of total liabilities.
The Czech Republic’s external debt (the sum of its liabilities with stipulated maturity) rose by CZK 230.6 billion in Q1, totalling CZK 4,852.8 billion at the end of March. In year-on-year terms, the debt increased by CZK 519.0 billion. As regards the time structure of the external debt, the share of liabilities with original maturities longer than one year was 48.8% 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, growth in the debt of all main economic sectors was recorded in Q1.
The rise in debt in the banking sector (including the CNB) was driven mostly by an increase in short-term loans and deposits received from abroad. The banking sector accounted for 38.4% of the total debt.
The increase in the external debt of the government sector was due to purchases of government bonds by foreign investors. The government sector accounted for 15.4% of the total external debt.
The biggest increase was recorded for external debt of other sectors, which accounted for 46.2% of the total external debt. External liabilities increased due mainly to growth in trade credits and loans drawn by domestic companies 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 54% 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 77.4% of the total external debt. Public sector liabilities accounted for the rest (22.6%). They comprise liabilities of the general government sector, liabilities of private entities guaranteed by general government and liabilities of entities majority-owned by general government.
Chart 6 – External debt of public and private sectors
(CZK billions, end-of-period balance)
