Czech Republic’s foreign debt rises to CZK 5.075 trillion in Q3

The Czech Republic’s foreign debt increased by CZK 176.2 billion in the third quarter of 2024, reaching a total of CZK 5.075 trillion at the end of September, according to preliminary data from the Czech National Bank (ČNB). This marks a year-on-year increase of CZK 479 billion, with foreign debt now accounting for 64.2% of the country’s GDP.

Approximately 75% of the foreign debt is attributed to the private sector, while the remaining 25% consists of public sector liabilities. These include commitments by governmental institutions, private entities backed by state guarantees, and state-majority-owned entities.

Foreign indebtedness increased across all economic sectors during the quarter. Key highlights include:
• Government Institutions: Foreign debt in this category grew significantly, largely due to the purchase of government bonds by foreign investors. Government-related debt now accounts for 17.2% of the total foreign debt.
• Banking Sector: Including the ČNB, the banking sector’s share of foreign debt stood at 37.6%, influenced by higher demand for bank bonds from foreign investors.
• Other Sectors: The remaining 45.2% of foreign debt is attributed to other economic sectors, primarily driven by domestic companies securing trade loans from abroad and increased foreign investment in bonds.

Deposits and loans from affiliated companies remained the most prevalent forms of foreign debt financing, accounting for 53.6% of the total foreign liabilities.

The rise in foreign debt was primarily driven by:
1. Increased foreign purchases of government bonds.
2. Growing demand for bank bonds by non-residents.
3. Domestic companies drawing trade loans from abroad.

This upward trend in foreign debt highlights the growing reliance of various Czech sectors on international financing, underpinned by strong foreign investor interest in Czech financial instruments.

Source: CTK