ČR's foreign debt falls to CZK 1,887bn in Q3

Prague, Dec 31 (CTK) - The Czech Republic's external debt fell by Kc39bn to Kc1,887bn in the third quarter of this year, making up 49.1 percent of gross domestic product (GDP), the Czech National Bank (CNB) said Sunday.

The decrease was mainly thanks to a change in the position of the banking sector.

Year-on-year, the external debt was Kc58.5bn higher.

The decrease in external debt was aided chiefly by the development of the banking sector’s foreign liabilities. Commercial banks repaid a part of short-term deposits and financial loans accepted from non-residents. The external liabilities of the banking sector including the CNB fell to 21.8 percent of the total external debt.

Foreign liabilities with an original maturity of more than one year accounted for 74.8 percent of debt liabilities.

The share of the corporate sector’s external liabilities was 49.4 percent.

The increase in corporate debt was due to the development of net liabilities of domestic subsidiaries to foreign affiliated companies in connection with the drawing of trade credits and financial loans from abroad and Czech corporate bond issues on foreign markets.

The government’s external debt rose as a result of purchases of government bonds by foreign investors and drawing of loans from the European Investment Bank (EIB) for infrastructure development.

The government sector accounted for 28.8 percent of the total debt.

"Turning to the breakdown by instrument, the decrease in external debt was visible mainly in a lower share of deposits and loans and a higher share of bonds and inter-company loans between affiliated companies," the CNB said.

Bonds and loans are the most commonly used debt instruments in relation to abroad (64.2 pct).

The private sector accounts for 45 percent of the long-term external debt. Public sector liabilities account for the rest (55 pct). This includes liabilities of, or guaranteed by, the government and liabilities of entities majority-owned by the state with maturities longer than one year.

The Czech Republic’s international investment position, which means the balance of its financial assets and liabilities in respect of non-residents, recorded an increase in deficit of Kc59.5 billion to Kc2,034bn.

In year-on-year comparison, the investment position deficit rose by Kc97.4bn.