Czech foreign debt rises to 57.2% of GDP at end-2013.

By bne IntelliNews March 31, 2014

The Czech Republic's external debt increased by 13.5% on the year to CZK 2.215tn as of end-2013 mainly on the back of rising short-term liabilities of commercial banks, the central bank said. The debt equalled to 57.15% of the GDP at end-December 2013, up from 50.6% at end-September. In the fourth quarter alone, the debt increased by more than 250bn, after decreasing by CZK 77bn in the third quarter.

In euro terms, the country's foreign debt as of end-Dec totalled EUR 80.8bn, compared to EUR 76.3bn at end-September and EUR 77.7bn a year ago.

The Czech long-term external debt grew by 9.1% y/y to CZK 1.63tn in 2013, while the short-term debt expanded at the much faster annual rate of 28% to CZK 585.7bn.

The rise in the banking sector’s external debt, which made up 27.2% of the overall debt, was driven by a 56% jump in the short-term debt to CZK 443bn at end-2013.

The corporate sector’s external liabilities accounted for 44.8% of total foreign debt and their increase was driven by investments in corporate bonds and short-term trade credits, the central bank said. The external liabilities of the government sector comprised 28% of the total external debt. The government's external debt was due to the purchases of government bonds by foreign investors and the drawdown of European Investment Bank (EIB) loans for financing investment in infrastructure.

The Czech Republic's international investment position, which is the balance of its financial assets and liabilities in respect of non-residents, recorded a deficit of CZK 1.77tn in 2013, down by CZK 63.1bn q/q and CZK 103.8bn y/y. The ratio of the investment position deficit to GDP at current prices fell to 45.7% at end-December from 48.7% at end-September.

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