Israel's International Investment Position (IIP), June 2008

16.09.2008
 
Israel's International Investment Position (IIP), June 2008
 
 
    Net liabilities declined in the first half of 2008 because of a greater increase in the assets of residents held abroad over the increase in the economy's external liabilities.
  Israel's net external surplus (debt instruments) continued to increase by around $4 billion during the first quarter of 2008, reaching a historical highpoint of $45 billion.
  The short-term asset (debt-instrument) surplus, which reflects the degree of the economy’s liquidity, totaled around $54 billion at the end of June 2008.
Israel's net balance of external liabilities (the balance of nonresidents’ assets in Israel minus the balance of Israeli residents' assets abroad) at the end of June 2008 totaled around $15 billion, a decrease of some $530 million (3.4%) from the balance at the end of 2007. The decline in net liabilities resulted from an increase of $7.4 billion in the assets of residents held abroad compared to an increase of only $6.9 billion in the economy's external liabilities. First half 2008 activity was marked by price decreases in financial markets in Israel and abroad in the first quarter of the year and by the appreciation of the shekel relative to other major currencies. These developments can be seen from data published today by the Information and Statistics Division of the Bank of Israel.
The balance of assets abroad totaled around $197 billion at the end of June 2008, an increase of $7.4 billion (3.9%) from the end-2007 position. During the first half of 2008 the balance of direct investment grew by about $3.2 billion (6.7%). The balance of portfolio investment decreased, by $0.9 billion (2%), mainly due to price decreases in foreign financial markets that lowered the value of holdings by $1.3 billion. The balance of other investment – a category that includes mainly deposits and credit - grew by about $2.3 billion (3.4%) during the first half of the year, mainly because of an increase in credit extended abroad.
The balance of Israel's external liabilities also increased, by $6.9 billion (3.4%), and totaled around $212 billion at the end of June 2008. Nonresidents’ direct investment totaled $3.7 billion during the first half of 008, whereas their portfolio investment in equity totaled $1.4 billion. The economy's external liabilities increased in the first half of 2008 largely due to the depreciation of the dollar relative to other major currencies.
Israel's gross external debt increased by $0.8 billion (0.9%) and totaled $90 billion at the end of June 2008. The increase in private nonbanking sector debt of $2.5 billion (8%) was partially offset by a decrease of some $1.7 billion mainly in public sector debt. The main increase in private nonbanking sector debt was due to an increase in suppliers' credit ($1.1 billion) and a bond float of a billion dollars.
Assets abroad (debt instruments) increased by $4.9 billion (3.7%) during the first half of 2008, and reached $136 billion in June. Most of the increase was due to an increase in Bank of Israel reserves of 2.8 billion dollars (10%) and an increase in the private nonbanking sector's assets abroad of $1.8 billion (2.7%). The increase in reserves stemmed from the central bank's policy of increasing its foreign currency balances by purchasing foreign currency in the open market (starting from March 2008).
Israel's net external surplus (in debt instruments only)continued to increase by around $4 billion during the first half of 2008 (10%), reaching a historical highpoint of $45 billion at the end of June 2008. The short-term asset (debt-instrument) surplus, which reflects the degree of the economy’s liquidity, totaled around $54 billion at the end of June 2008.
 
Gross, Net and Forward Amortization Payments of External Debt and Assets
($ million)
  Balance Maturing in Balance Maturing in
as of up to one over as of up to one over
31.12.07 year one year 30.06.08 year one year
  External debt
1 Public sector 31,717 3,949 27,768 30,010 3,561 26,449
2 Private sector 31,320 13,533 17,787 33,856 14,587 19,269
3 Banking system 26,545 22,783 3,762 26,505 22,819 3,686
4 Total gross external liabilities
  (debt instruments) 89,582 40,264 49,318 90,371 40,967 49,405
  (Percent ) 100 45 55 100 45 55
 
  External assets (debt instruments)
5 Public sector 29,313 29,088 225 32,052 31,831 220
6 Private sector 64,876 33,446 31,430 66,654 34,323 32,331
7 Banking system 36,659 28,292 8,367 37,012 28,717 8,295
8 Total external assets 130,847 90,825 40,022 135,718 94,871 40,846
  (Percent ) 100 69 31 100 70 30
 
  Distribution of net external debt
9 Public sector (1-5) 2,404 -25,139 27,544 -2,042 -28,270 26,229
10 Private sector (2-6) -33,556 -19,913 -13,643 -32,798 -19,736 -13,062
11 Banking system (3-7) -10,114 -5,509 -4,604 -10,506 -5,898 -4,609
12 Total external liabilities  
  less external assets (4-8) -41,265 -50,561 9,296 -45,346 -53,905 8,558
 
International Investment Position
($ Million )
  Position     Exchg. Other Position
as of Trans- Price Rate Adjust- as of
Q4_2007 Transactions Changes Changes Adjustments Q2_2008
A. Assets
1 Total assets 189,885 7,912 -1,822 1,245 96 197,316
  Of which: debt instruments 130,847 3,795 130 1,171 -226 135,718
2 Direct investment abroad 47,456 3,065 -622 55 696 50,652
2.1 Equity capital and reinvested earnings 38,030 3,119 -622 55 426 41,010
2.2 Real estate 0 96 0 0 -96 0
2.3 Equity-holders' loans 9,426 -150 0 0 366 9,641
3 Portfolio investment 45,005 42 -1,331 526 -141 44,099
  3.1 Equity securities 17,868 418 -1,331 19 85 17,058
  3.2 Debt securities 27,137 -377 0 507 -226 27,042
4 Other investment 68,603 2,345 1 354 -364 70,939
4.1 Deposits of Israeli residents abroad 21,089 322 0 -239 -375 20,797
4.2 Deposits of Israeli banks abroad 23,979 -593 0 241 2 23,629
4.3 Loans 7,842 1,344 0 214 7 9,408
4.4 Trade credits 12,610 853 0 138 0 13,601
4.5 Other Assets 3,083 418 1 0 2 3,504
5 Reserve Assets 28,764 2,395 130 310 0 31,600
6 Financial derivatives 56 65 0 0 -95 27
B. Liabilities 0 0 0 0 0 0
1 Total liabilities 205,362 4,683 -2,582 4,959 -159 212,263
  Of which: debt instruments 89,583 -731 0 1,169 350 90,371
2 Direct investment in reporting economy 58,269 3,660 -462 1,235 -1,129 61,573
2.1 Equity capital and reinvested earnings 54,288 3,323 -462 1,235 164 58,548
2.2 Real estate .. 719 0 0 -719 ..
2.3 Equity-holders' loans 3,981 -382 0 0 -574 3,025
3 Portfolio investment 88,272 970 -2,120 3,059 -7 90,174
3.1 Equity securities 61,491 1,372 -2,120 2,555 46 63,344
3.2 Debt securities 26,781 -402 0 504 -53 26,830
4 Other investment 58,821 53 0 665 977 60,516
4.1 Deposits of foreign residents 24,466 -272 0 444 51 24,689
4.2 Deposits of foreign banks 2,079 -275 0 12 0 1,816
4.3 Loans 20,676 -344 0 49 926 21,308
4.4 Trade credits 11,600 944 0 159 0 12,703
C. Net liabilities 15,477 -3,229 -760 3,714 -255 14,947
Of which: debt instruments -41,265 -4,527 -130 -2 576 -45,346