National Bank of Serbia : Serbia's International Investment Position

January 15, 2014 at 01:01 pm

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Serbia's International Investment Position Third Quarter 2013

December 2013

Serbia's net international investment position was negative (net debtor) at EUR 29,252.9 mln or

91.3% of GDP in late September 2013. Relative to end-June 2013, the negative net position narrowed
EUR 646.2 mln against the backdrop of increased financial assets and lowered liabilities. At the same time, its share in GDP fell 4.8 pp.

Serbia's external financial assets1 reached EUR 17,186.7 mln. In the course of Q3 2013, they gained

EUR 131.0 mln - an impetus came from net transactions and price changes (EUR 326.0 mln and EUR
19.5 mln respectively), while a negative contribution was provided by cross-currency and other changes
(EUR 85.0 mln and EUR 129.5 mln respectively - chiefly due to delays in reporting on short-term trade loans).
NBS FX reserves accounted for the largest portion of financial assets - 60.8%, followed by cash and deposits - 20.0% (consisting of available FX reserves of domestic banks abroad and foreign cash owned by residents), and direct resident investment abroad - 10.3%.
In terms of types of capital, resident assets abroad (equity, equity securities, real estate and reinvested profit) amounted to EUR 1,717.9 mln or 10.0%, lending to non-residents (deposits, foreign cash, loans and debt securities) to EUR 4,980.8 mln or 29.0%, other receivables (technical reserves of insurance companies) to EUR 43.5 mln or 0.3%, while the remainder concerned NBS FX reserves.
Broken down by sector, the largest share of Serbia's financial assets was that of the NBS, comprised entirely of its FX reserves. In the period July-September 2013, NBS assets shrank EUR 228.3 mln due to an outflow from reserves (EUR 163.6 mln net), cross-currency changes (EUR 84.2 mln), a higher price of gold (EUR 37.1 mln) and a lower price of securities (EUR 17.6 mln).
The public sector share in total assets was 0.2% or EUR 27.6 mln. Public sector assets consisted of investment in real estate abroad and receivables under financial loans to non-residents (EUR 15.6 mln and EUR 12.0 mln respectively).
The share of banks in total assets equalled 9.7% or EUR 1,659.5 mln. Bank assets comprised available FX reserves abroad (EUR 1,418.8 mln), portfolio investment (EUR 108.0 mln), direct investment (EUR 51.5 mln) and receivables under extended financial loans (EUR 81.0 mln). From July to September 2013, bank assets rose EUR 229.4 mln, on account of rising available FX reserves, loans and investment in debt securities (EUR 193.8 mln, EUR 30.2 mln and EUR 7.9 mln respectively) and a decline in portfolio equity (EUR 2.6 mln).
Corporate assets accounted for 29.4% or EUR 5,055.2 mln, consisting of foreign cash (EUR 2,880.7 mln), direct investment abroad (EUR 1,709.4 mln), receivables under trade loans (EUR 294.5 mln), portfolio investment (EUR 74.2 mln), receivables under financial loans (EUR 53.0 mln), and other receivables (EUR 43.5 mln). In the July-September 2013 period, corporate assets went up EUR 128.9 mln, in response to an increase in external corporate loans (EUR 113.8 mln), intercompany loans (EUR
9.8 mln), direct investment abroad (EUR 3.5 mln) and portfolio investment (EUR 1.8 mln).

Serbia's external financial liabilities2 came at EUR 46,439.5 mln in late September, down EUR

515.2 mln on Q1. The reduction was triggered by other changes (EUR 776.9 mln) and cross-currency changes (EUR 256.9 mln), while net transactions had a neutralising effect of EUR 518.6 mln.
The structure of financial liabilities shows the greatest share of FDI (42.2%), financial loans (40.7%), portfolio investment (13.2%) and liabilities under cash and deposits (1.9%). Liabilities under drawn SDRs, trade loans and other liabilities made up 0.9%, 1.0% and 0.1% respectively.
Non-resident assets in Serbia equalled EUR 16,100.9 mln or 34.7% of total liabilities, and they pertained to equity and shares of investment funds, debt conversion into capital, equity securities, real estate purchase in the country, non-resident investment in branches and reinvested profit. Liabilities stemming from lending to residents amounted to EUR 30,298.3 mln or 64.6%, and pertained to

1 Serbia's financial assets include resident equity abroad and receivables from non-residents.

2 Serbia's financial liabilities include non-resident equity in the country and debt to non-residents.

2
intercompany loans, debt securities, non-resident term and demand deposits in domestic banks, financial and trade loans, and liabilities under the drawn SDR allocation. Other liabilities, consisting mainly of technical reserves of insurance companies, accounted for EUR 40.4 mln or 0.1%.
Observed by sector, the NBS share in financial liabilities was 2.0% or EUR 942.0 mln, made up entirely of long-term financial loans. In the period July-September 2013, NBS liabilities contracted EUR
194.7 mln on account of debt repayment and negative cross-currency changes - EUR 178.9 mln and EUR
15.8 mln respectively.
The public sector share of total liabilities equalled 28.1% or EUR 13,045.8 mln. Public sector liabilities comprised non-resident liabilities under debt securities (EUR 4,664.5 mln), liabilities under foreign financial loans (EUR 7,940.5 mln), and liabilities under drawn SDRs (EUR 440.9 mln). The EUR
44.1 mln decline in public sector liabilities was triggered by a EUR 227.2 mln decline in liabilities under debt securities, while liabilities under financial loans had an opposite effect and increased EUR 183.1 mln
(net borrowing under financial loans).
The share of banks in total liabilities amounted to 21.1% or EUR 9,804.7 mln. Bank liabilities comprised FDI (EUR 4,660.0 mln), liabilities under financial loans (EUR 3,462.7 mln), liabilities under non-resident deposits (EUR 862.2 mln), portfolio investment (EUR 819.6 mln), and liabilities under trade loans (EUR 0.2 mln). From July to September 2013, bank liabilities dropped EUR 120.9 mln, reflecting a decline in liabilities under short-term term deposits.
Corporates accounted for 48.8% or EUR 22,647.0 mln of total liabilities. Corporate liabilities composed of FDI (EUR 14,929.3 mln), liabilities under financial loans (EUR 6,579.3 mln), portfolio investment (EUR 636.2 mln), liabilities under trade loans (EUR 461.8 mln) and other investment (EUR
40.4 mln). During the review period, corporate liabilities were down EUR 155.6 mln. Non-resident FDI
in domestic enterprises declined EUR 103.6 mln, reflecting operating losses at the expense of non- resident capital. Debt under financial loans fell EUR 139.7 mln, while liabilities under trade loans and portfolio and other investment were up EUR 84.2 mln, EUR 1.1 mln and EUR 2.5 mln respectively.
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( A"elirninary data)

B.JR million

NBS

Financial loans

Reserve assets

Public sector

Direct investm ent Portfolio investment Financial loans

Special drawing rights

Banks and other financial institutions

Direct investm ent Portfolio investment Cash and deposits Financial loans

Trade loans and advances

Other sectors