Debt Portfolio Management Quarterly Report - 1st - 3rd Quarter of 2022
The Ministry of Finance presents to the public the Debt Portfolio Management Quarterly Report, which contains, in particular, the evaluation of the announced strategic targets and limits, the operational fulfilment of the funding programme, and issuance activity plans, which were specified in the Czech Republic Funding and Debt Management Strategy for 2022 published on 6 January 2022 and updated on 1 April 2022 and on 5 August 2022. It also includes regular quarterly evaluations of primary dealers for the period from the fourth quarter of 2021 to the third quarter of 2022.
The absolute value of the state debt reached CZK 2,890.4 billion at the end of September 2022, which represents 43.8% of GDP. Compared to the beginning of 2022, there is an increase of CZK 424.6 billion. This is mainly due to pre-financing of the state budget deficit, which was approved on 18 October 2022 by the Chamber of Deputies Parliament of the Czech Republic as part of the amendment Act No. 57/2022 Coll., on the state budget of the Czech Republic for 2022 in the amount of CZK 375.0 billion. For this purpose, the Ministry of Finance also realized short-term operations on the money market in the form of increased sales of state treasury bills and short-term borrowings on the euro money market, whereas redemptions of state treasury bills in the fourth quarter of 2022 amount to CZK 104.0 billion. The refinancing of these redemptions will be operatively adapted to the actual performance of the state budget during the fourth quarter of 2022. Due to the fact that the average auction yield of these treasury bills this year was below the average yield achieved from investing thus obtained reserve liquidity of the state treasury, these operations had also a positive impact on the income side of the state budget.
During the first three quarters of 2022, the Ministry of Finance sold CZK-denominated medium-term and long-term government bonds on the primary and secondary markets in a total nominal value of CZK 346.8 billion. The Ministry of Finance issued two new issues of the “Dluhopis Republiky” government bonds as well as new tranches of already issued government bonds in the form of reinvested yields in a total nominal value of CZK 43.2 billion. In total, the Ministry of Finance sold CZK-denominated government bonds with maturities of over one year in a total nominal value of CZK 390.0 billion. The Ministry of Finance issued medium-term government EUR-bonds on the primary and secondary markets in a total nominal value of EUR 1.0 billion.
On 14 October 2022, the rating agency S&P Global Ratings confirmed their current rating on the Czech Republic while maintaining a stable outlook at AA level for long-term liabilities in local currency and at AA- level for long-term liabilities in foreign currencies. During the third quarter of 2022, other major rating agencies also confirmed their current ratings. Scope Ratings in July and then Moody’s in August, while changing the outlook from stable to negative, due to the increased risk of gas supply outages from Russia. The Czech Republic is assigned the highest overall rating of all Central and Eastern European countries and has higher rating than the Euro Area member countries average for several years.