Graphs & Datav In the fourth quarter of 2014, Israel’s surplus of assets over liabilities vis-à-vis abroad increased by about $4.9 billion (about 9.5 percent), in contrast to the previous three quarters of 2014, in which there was a cumulative decline of about $9.7 billion (16 percent). The increase in the surplus derived mainly from the continued flow of investments by Israeli residents in foreign bonds, and from banks’ net deposits abroad.
v For the full year of 2014, the surplus of assets over liabilities vis-à-vis abroad declined by $4.8 billion (7.7 percent), to about $57 billion at the end of December—the first such decline since 2009. An increase of $27.3 billion (about 10.9 percent) in the value of Israelis’ liabilities to abroad was partly offset by an increase of $22.5 billion (about 7.2 percent) in the value of Israelis’ assets abroad.
v The increase in the gross balance of liabilities to abroad derived mainly from an increase in the prices of shares held by nonresidents (about 21 percent), but also by the net investment flow in Israel ($9.5 billion, 3.8 percent), which was significantly larger in 2014 than the average of the previous 3 years.
v The increase in the value of the asset portfolio derived mainly from the flow of investments in all channels: A combination of financial investment abroad ($10.1 billion), an increase in foreign exchange reserve assets ($7.4 billion), and net deposits by Israeli banks abroad ($3.1 billion).
v In 2014, the gross external debt to GDP ratio increased by 3.3 percentage points, to 34.9 percent at the end of December, in contrast with a decline of 5.1 percentage points in 2013. The increase derived mainly from the effect of the shekel’s depreciation on the shekel value of the debt.
v The surplus of assets over liabilities vis-à-vis abroad in debt instruments alone (negative net external debt) increased in 2014 by about $10.7 billion (12.3 percent), to about $97 billion at the end of the year.
Israel's net assets abroad (the surplus of assets over liabilities) declined by $4.8 billion (7.7 percent) in 2014, to around $57 billion at the end of December. An increase of $27.3 billion (about 10.9 percent) in the value of Israelis’ liabilities to nonresidents was partly offset by an increase of about $22.5 billion (7.2 percent) in the value of Israelis’ assets abroad (Figure 1).
The increase in the gross value of liabilities during the year mainly reflected an increase in the prices of shares held by nonresidents traded on the Tel Aviv Stock Exchange, while the increase in the value of Israelis’ assets abroad mainly reflected a significant flow of investment in all channels, totaling about $25 billion.
A notable phenomenon in 2014 was that the flow of Israelis’ investments abroad was about $15 billion higher than the flow of nonresidents’ investments in Israel. In contrast, the effect of prices and the exchange rate on the increase in the value of liabilities was about $20 billion higher than its effect on the value of Israel’s assets. As a result, the surplus of Israel’s assets over liabilities declined this year, for the first time since 2009. It should be noted that nonresidents hold shares in a small number of large Israeli companies whose values increased markedly, mainly in the first half of the year.
In the fourth quarter of the year, the downward trend in the surplus of Israelis’ assets was halted, and the surplus grew by about $5 billion, continuing the increase in the flow of investments abroad, which was not accompanied by an increase in the balance of liabilities to abroad.
The value of Israel's assets abroad increased in 2014 by about $22.5 billion (7.2 percent), to about $334 billion at the end of the year, mainly reflecting significant flow of investments in all channels, totaling $25 billion.
The value of the shares portfolio increased by $4.3 billion (7.7 percent) in 2014: net flow of investments by Israelis was $2.9 billion, and there were about $1.2 billion in respect of stock price increases on markets abroad.
The balance of investments in tradable bonds abroad increased by about $6.4 billion (16.4 percent) in 2014: Net flow of investments in foreign bonds—$7.2 billion—mainly by institutional investors and households, was partly offset by price and exchange rate differentials totaling $1.1 billion.
Other investments abroad increased by about $5 billion (8.4 percent) in 2014, of which about $3.1 billion were growth in deposits by Israeli banks in foreign banks, and about $1.5 billion were growth in the balance of loans and credit to customers. This increase was partly offset by withdrawals of about NIS 1.6 billion by Israelis from banks abroad.
The value of foreign exchange reserves increased by $4.3 billion (5.3 percent) in 2014. Bank of Israel foreign exchange purchases totaling $7.4 billion were partly offset by the effect of the strengthening of the dollar against major currencies.
The composition of residents' securities portfolio abroad, did not significantly change in the fourth quarter of the year (Figure 2).
During 2014, the increase in the share of stocks in the portfolio moderated, as did the decline in the share of deposits abroad—trends that were greatly accelerated following the recovery from the global financial crisis.
The balance of Israel's liabilities to abroad increased during the 2014 by about $27.3 billion (10.9 percent), derived from a combination of a marked increase in the prices of Israeli shares held by nonresidents (21 percent) and a flow of financial investments totaling $9.8 billion, which was significantly greater in 2014 than the average of the preceding three years (withdrawals of $2.3 billion).
An additional contributing factor to the growth in the balance of liabilities was the net flow of direct investments in Israel of $6.4 billion, which was more moderate than in the past two years.
In contrast, there was a decline in the balance of nonresidents’ other investments in Israel in 2014, mainly deposits by nonresidents ($4.1 billion) and loans ($2.1 billion).
The value of nonresidents' financial portfolio on the Tel Aviv Stock Exchange increased in 2014 by around $3.6 billion (12 percent), to about $33.6 billion at the end of December. Nonresidents invested about $3.5 billion in bonds and makam, and $0.8 billion in shares.
The gross external debt
Israel's gross external debt increased by $2.2 billion (2.3 percent) in 2014, reflecting nonresidents’ investments in Israeli bonds and an increase in the balance of owners’ loans. These were partly offset by nonresidents’ withdrawals from deposits in Israeli banks and by a decline in loans.
The ratio of gross external debt to GDP increased by 3.3 percentage points in 2014, to 34.9 percent at the end of December, in contrast to a decline of 5.1 percentage points in 2013 (Figure 4). The increase derived mainly from the effect of the shekel’s depreciation on the shekel value of the debt.
The net external debt
The surplus of assets over liabilities abroad in debt instruments alone (negative net external debt) increased by about $10.7 billion (12.3 percent) in 2014, and reached $97 billion at the end of December (Figure 5).
The balance of short-term debt assets was about $138 billion at the end of December, mostly in the foreign exchange reserves, reflecting a coverage ratio of 3.4 of short-term debt, an increase compared to the end of 2013.
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