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Saturday, January 25, 2014

Greece's International Investment Position

The respective data base about Greece's International Investment Position can be found by following this link to the Bank of Greece.

The International Investment Position shows all foreign assets which residents of Greece (institutional, corporate and private) have outside the country's borders as well as their liabilities to foreigners. The below numbers are as of 3Q2013 (in BEUR).





Assets
Liabilities







Direct Investment




Abroad/In-country
33.371
17.008







Portfolio investment




Equity securities
4.807
7.716

Debt securities
101.195
46.856







Derivatives

3.322
0







Other investment











Monetary authorities
1.303
52.884

General government
1.306
222.818

MFIs

37.523
72.049

Other sectors
35.031
16.993







Reserve assets

4.559
0




---------
---------
TOTAL ASSETS/LIABILITIES
222.417
436.324















NET INTERNATIONAL DEFICIT

-213.907


Greece had foreign assets of 222 BEUR and foreign liabilities of 436 BEUR. Thus, Greece owed 214 BEUR more abroad than it owned abroad. That should come as no surpise for anyone who has been reading newspapers about Greece's debt in the last 4 years. Figuratively speaking, if Greece were to fall into the Aegean and disappear, the rest of the world would be out of 214 BEUR (provided that there is no successor entity which could claim the assets).

The first question which comes to mind is why does Greece owe 'only' 214 BEUR abroad when the sovereign debt alone is over 320 BEUR? Well, a country is more than only the central government; a country also has foreign assets and not only foreign liabilities; and, finally, some of Greece's sovereign debt is owed to Greek residents.

Direct Foreign Investments would be investments by Greek residents (such as Greek banks) in other countries (such as subsidiaries in neighboring countries). The 'liabilities' from direct foreign investments represent that part of foreign assets which was not sourced out of Greece (such as profits retained abroad).

The really interesting category is Portfolio Investment. The assets would be foreign securities which Greek residents (institutional, corporate or private) buy through their Greek bank.

Greeks held 101 BEUR of foreign debt securities at 3Q2013. Interestingly, back in 2011, this figure was about 50 BEUR lower. Since then, the Greek banking sector had lost about 80 BEUR in bank deposits, 25-30 BEUR of which was capital flight according to the Bank of Greece. Consequently, the 50 BEUR could well be former bank deposits which the customers converted into foreign debt securities to hedge against a bank collapse and/or Grexit (instead of saving cash under the mattrass).

The liabilities under Portfolio Investment would be Greek securities held by foreigners at a Greek bank. What is interesting is that the debt securities, now 47 BEUR, are dramatically lower than the more than 200 BEUR at the outset of the crisis. It shows that foreigners reduced their holdings of Greek securities massively.

Other Investments represent the foreign debt of Greek residents (government, institutions, corporate, private). The assets are loans, currency, deposits, etc. which Greek residents have transferred abroad officially and the liabilities are Greece's foreign debt. The figures would suggest, for example, that 'only' 223 BEUR of Greece's sovereign debt of over 320 BEUR is held by foreigners.

Anyone who wants to know how Greece's international investment position stacks up with that of other countres should open this link to a Wikipedia article.

3 comments:

  1. Herr Klaus lets assume that 223 b euros "do not exist" ( i mean if deposits where +90 b or assets portofoplio invstment valued much better), the international investment position would be less negative?
    As an explanation can be asssesed that many of those assets are depreciated showing our real credit assessment?

    MS

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    Replies
    1. This is not like a balance sheet of a company where the assets and liabilities have the same 'owner'. The table shows the position of the entire country. To illustrate: if the assets were all owned by Greek citizens but the debt all the government's, Greece would have a broke government but wealthy citizens. There is no right of offset.

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  2. Lieber Herr Kastner,

    warum stellen Sie ihren Artikel bei Christian Ortner hier bei ihnen nicht online?

    http://www.ortneronline.at/?p=26778

    Er sagt alles über Griechenland aus.

    Gruß
    Bakwahn
    ehemals PC-Support und Netzwerkadministration
    Hamburg Bangkok Düsseldorf

    ReplyDelete