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| 18.06.09 |
| Israel's International Investment Position (IIP), March 2009 |
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At the end of the first quarter of 2009, the surplus of Israel's assets abroad over its liabilities abroad maintained the level it had reached at the end of 2008, $3.9 billion. |
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The value of Israelis' portfolio investments abroad climbed by about $0.5 billion (1 percent) in the first quarter of 2009 after falling steeply in the last quarter of 2008. This resulted from continued investment abroad, and the moderation in the rate of price decreases in world equity markets |
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The value of nonresidents’ portfolio investments in Israel increased by 5 percent in the first quarter of 2009, due to rising prices on the Tel Aviv Stock Exchange and a small increase in net investments. |
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The short-term (debt instrument) assets surplus, an indication of economic liquidity, increased by about $3 billion in the first quarter of 2009. |
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| Balances of assets and liabilities |
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| Israel's balance of assets abroad exceeded liabilities abroad by $3.9 billion, unchanged from the end of 2008 due to similar increases in assets and liabilities. It should be recalled that at the end of 2008, assets abroad exceeded liabilities abroad for the first time, after more than ten years when Israel had surplus liabilities abroad. |
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| The balance of assets |
| Israel's balance of assets abroad was about $191 billion at the end of March 2009, up $2.1 billion (1.1 percent) from the level at the end of 2008. |
| The balance of Israelis’ portfolio investments abroad increased by $0.5 billion (1.4 percent), to $36.1 billion. A $1.6 billion increase in the net flow of investment abroad was partly offset by a decrease in portfolio value occasioned by continued price declines on stock exchanges abroad in the first quarter of 2009 (mainly in January–February). |
| The balance of direct investments abroad was $54 billion at the end of March 2009. The net investment flow increased by $0.4 billion, similar to the increase in the last quarter of 2008. |
| The balance of other investments abroad—including banks' deposits and credit to nonresidents—decreased by $0.9 billion, mainly because the decrease in exports led to a $1.5 billion decline in customer credit. Israeli banks built up their deposits with foreign banks markedly ($1.5 billion) after drawing them down by $5.5 billion in the fourth quarter of 2008. |
| Israel's foreign-exchange reserves rose by $1.8 billion, a consequence of the foreign-currency purchasing policy that the Bank of Israel has been implementing since March 2008. |
| Composition of the external assets portfolio |
| The composition of the overseas assets portfolio was largely unchanged in the first quarter of 2009 from the end of 2008. About one-fourth of the balance of private-sector assets abroad (around $35 billion) was invested with foreign banks that are considered relatively low-risk; the rest was held in tradable securities, direct investment, and other credit. |
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| Balance of liabilities |
| The balance of Israel's liabilities abroad increased by $2.1 billion (1.2 percent) in the first quarter of 2009, and stood at $188 billion at the end of March. |
| The balance of foreign direct investment was about $58 billion at the end of March 2009; the flow of direct investments was around $1.8 billion in the first quarter of 2009, similar to the level in the previous quarter. |
| The balance of portfolio investment increased by $3.3 billion, mainly due to the effect on portfolio value of rising equity prices on the Tel Aviv Stock Exchange (8 percent), in contrast to the fourth quarter of 2008, when falling prices depreciated the portfolio by 15 percent. Net of price effects and changes in the exchange rate, the foreign portfolio investment inflow was $0.7 billion in the first quarter of 2009 as against only $0.4 billion in the last quarter of 2008. |
| Israel's external debt |
| Israel's gross external debt at the end of March 2009 was about $84 billion, $2 billion (2.3 percent) less than at the end of 2008. The decrease was abetted by a decline in suppliers’ credit that was partly offset by an increase in the external liabilities of the banking system. |
| The ratio of external debt to GDP rose to around 50 percent, mainly due to the depreciation of the shekel. |
| The balance of assets abroad (debt instruments) was almost unchanged in the first quarter of 2009 ($130 billion), as the $1.7 billion increase in the foreign-currency reserves was partly offset by a decline in customer credit. |
| The data on the net external debt show that net external lending continued to increase. Thus, the assets surplus abroad in debt instruments stood at $46 billion at the end of March 2009 (up $2 billion from the end of 2008). The short-term assets surplus, an indicator of economic liquidity, increased by about $3 billion, reaching $58 billion at the end of March 2009. This reflecting a high coverage ratio, with short-term assets two-and-a-half times short-term debt. |
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