The Czech Republic’s international investment position and external debt
as of 31 December 2023
Revised data for the previous quarters of 2023 and 2022 are being published simultaneously with the Czech Republic’s international investment position and external debt figures as of 31 December 2023. The revised data mainly reflect the results of the CNB’s annual survey of foreign direct investment for 2022 and revised CNB data from statements submitted by financial and non-financial entities.
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In 2023 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 48.3 billion to CZK 966.7 billion at the end of December. The deficit dropped by CZK 303.1 billion in year-on-year terms and represented 13.2% of GDP at current prices. The Czech Republic’s external debt amounted to CZK 4,622.2 billion at the end of Q4 (i.e. 63% of GDP). It recorded a year-on-year increase of CZK 129 billion.
Chart 1 – International investment position
(CZK billions, end-of-period balance)
External assets increased by CZK 260.5 billion to CZK 8,454.8 billion in Q4. The assets decreased by CZK 3.1 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 111.3 billion in Q4, constituting 47.2% of total assets. This was largely due to a rise in the CNB’s reserve and other assets, which recorded an increase of CZK 141.6 billion, accounting for 39.3% of total assets.
The external assets of the government sector (excluding portfolio investment and derivatives) were almost unchanged in Q4, 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 Q4 due mainly to investment in the equity capital of foreign subsidiaries. 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% 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 inflation. Their share of total investment position assets is 13.1%.
The positive fair value of derivatives decreased by CZK 56.5 billion in Q4, accounting for 3% of total investment position assets.
Investment position external liabilities rose by CZK 212.3 billion in Q4 to CZK 9,421.5 billion at the end of the year. In year-on-year terms, the liabilities fell by CZK 306.2 billion.
Chart 3 – Structure of investment position liabilities
(CZK billions, end-of-period balance)
Direct investment liabilities increased in Q4, accounting for 58.7% 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 corporations.
Portfolio investment liabilities abroad recorded repayment of domestic bonds, which was almost offset by inflation and exchange rate movements. The resulting total volume was thus virtually unchanged and portfolio investment accounted for 14% of total liabilities.
The negative fair value of derivatives declined by CZK 38.5 billion in Q4, accounting for 2.5% of total liabilities.
The Czech Republic’s external debt (the sum of its liabilities with stipulated maturity) rose by CZK 167.4 billion in Q4, totalling CZK 4,622.2 billion at the end of the year. In year-on-year terms, the debt increased by CZK 129 billion. As regards the time structure of the external debt, the share of liabilities with original maturities longer than one year was 48.1% 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 Q4.
The rise in debt in the banking sector (including the CNB) was driven mostly by an increase in deposits accepted from abroad. The banking sector accounted for 39.7% of the total debt.
The growth in the external debt of the government sector was due to a rise in the value of government bonds held by non-residents due to exchange rate and price effects. The government sector accounted for 15.8% of the total external debt.
The biggest increase was recorded for external debt of other sectors (excluding the government and banking sectors), which accounted for 44.5% of the total external debt. External liabilities increased due mainly to an increase in the stock of trade credits of domestic corporations not associated with direct investment and financial loans drawn by firms from foreign affiliated companies.
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 77.3% of the total external debt. Public sector liabilities accounted for the rest (22.7%). They comprise liabilities of the government, liabilities of private entities guaranteed by the 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)
As of 31 December 2023, debt service payments of principal and interest on long-term external liabilities planned in 2024 totalled CZK 267.5 billion (of which principal amounted to CZK 231.4 billion and interest to CZK 36.1 billion).
Chart 7 – Debt service on medium- and long-term external debt liabilities
(CZK billions)
