Balance of payments – commentary

2020 Q2

Simultaneously with the publication of the Q2 balance of payments figures, revised data for 2020 Q1 are being published. The revised data mainly take into account updated CZSO data on exports and imports of goods and services and, on the financial account, an update of data from statements submitted to the CNB by financial and non-financial entities.


The balance of payments in 2020 Q2 was affected by the quarantine measures imposed to curb the spread of the coronavirus in individual countries, which had a major impact on economic activity both domestically and in the Czech Republic’s largest trading partners. The current account ended in a surplus of CZK 7.4 billion. The financial account recorded an outflow of funds (net lending abroad) of CZK 1.5 billion owing to higher repayments of external liabilities compared with a decline in assets. Reserve assets increased by CZK 17 billion (without adjustment for valuation differences) as a result of the surplus on transactions for CNB clients. The current account surplus was 0.02% of GDP on an annual basis, owing to a goods and services surplus of 5%.

The current account

Ratio of Current Account and Goods and Services Balance to GDP
(CZK billions, right-hand scale in %)

Ratio of Current Account and Goods and Services Balance to GDP

The goods and services balance ended Q2 in a surplus of CZK 60 billion. The year-on-year surplus fell by CZK 55.6 billion due to a decrease in exports of goods and hence a decline in the trade balance of CZK 46.7 billion. The decline in the services surplus of CZK 8.9 billion was associated mainly with falling surpluses on foreign travel and transport services. The total year-on-year goods and services turnover at current prices declined by 20.5% in Q2 (amid year-on-year declines in exports and imports of CZK 239.9 billion and CZK 184.3 billion respectively).

The primary income deficit was CZK 42.4 billion in Q2. The annual decline in the deficit of CZK 45.1 billion was affected by a direct investment income deficit due to a lower volume of dividends paid out abroad and lower estimated reinvestment of earnings by foreign owners. The dividend volume from direct and portfolio investment paid out abroad was CZK 63.8 billion, decreasing by CZK 33.4 billion year on year.

In Q2 the secondary income balance recorded a deficit of CZK 10.2 billion, while it was balanced in the same period of 2019. Net income from the EU budget recorded under secondary income was lower.

The capital account

The capital account ended Q2 in a surplus of CZK 20.6 billion. The year-on-year rise in the surplus of CZK 8.3 billion was due to growth in net income from the EU budget recorded on the capital account.

The financial account

The financial account (including the change in the CNB’s reserve assets) recorded a net outflow (net lending abroad) of CZK 1.5 billion in Q2, owing to a larger decline in external liabilities against a decline in external assets.

Ratio of Financial Account to GDP
(CZK billions, right-hand scale in %)

Ratio of Financial Account to GDP

Under direct investment, a net inflow of CZK 43 billion was recorded. The main factor on the assets side was loan repayment by foreign affiliated companies to domestic companies, while on the liabilities side, a decrease was recorded due to a decline in ownership interests in domestic companies. 

Portfolio investment saw a net inflow (net borrowing) of CZK 36.9 billion due to purchases of government bonds by non-residents. 

Derivatives trading recorded an inflow of CZK 0.2 billion.

Other investment saw an outflow (net lending) of CZK 64.6 billion.

The banking sector recorded a change in the short-term position of banks as a result of a decrease in short-term liabilities. The net outflow (including the CNB excluding reserve assets) was CZK 37 billion.

The government sector made repayments of loans from abroad and recorded a net outflow abroad totalling CZK 9.2 billion.  

Other sectors saw a net outflow of CZK 18.4 billion, owing to a decline in the liabilities of corporations.

The surplus on transactions for CNB clients led to an increase in reserve assets of CZK 17 billion (adjusted for valuation differences).