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Australia's International Investment Position
Greg Baker and Tony Kryger
Statistics Group
30 June 1998
Introduction
This Research Note shows that
- foreign ownership of Australian assets is growing at a faster rate
than Australia's foreign debt; and
- Commonwealth general government and Reserve Bank foreign debt is a
small and declining part of Australia's foreign debt.
Foreign Investment
The Australian Bureau of Statistics publishes quarterly estimates of
Australia's foreign investment position. These provide a balance sheet
showing foreign financial assets and liabilities of Australian residents.
It includes details of the makeup of Australia's foreign debt and how
that debt is apportioned between public and private sectors.
At the end of December 1997-the most recent time for which detailed statistics
are available-gross foreign investment in Australia totalled $549 544
million and foreign assets held by Australian residents amounted to $233 504
million. These figures are shown in Table 1 as foreign liabilities and
foreign assets.
Net foreign investment is derived from gross foreign investment
by deducting Australia's investments abroad from gross foreign investment
in Australia. Table 1 shows that at the end of December 1997 net foreign
investment in Australia was $316 040 million, up 4.8% on the year
before.
Foreign investment can be divided into two components-debt and equity.
The debt component is known as Australia's foreign debt.
At the end of December 1997 Australia's net foreign investment of $316 040
comprised net foreign equity of $93 865 million and net
foreign debt of $222 175 million.
Since 1985-86 net foreign equity has grown by an average 15.0% per annum
while net foreign debt has grown more slowly at 9.5%.
In the same period gross foreign equity-direct foreign ownership of
Australian assets-has grown at an average 16.1% per annum and gross
foreign debt has grown at 10.1%.
Foreign Debt
Gross foreign debt is the sum of all overseas borrowings by residents
of Australia. As Table 1 shows this amounted to $328 063 million
at the end of December 1997.
Net foreign debt is equal to gross foreign debt less lending by
Australian residents to non-residents. At the end of December 1997 net
foreign debt was $222 175 million.
Foreign Debt-Public
The public share of foreign debt in Australia is relatively small.
As Table 2 shows, at $93 339 million the public sector had incurred
only 28.5% of gross foreign debt at the end of December 1997. Of this
the Commonwealth general government and Reserve Bank had a gross foreign
debt of $41 498 million or 12.6% of Australia's gross foreign
debt. Allowing for foreign assets held by Australians, the public sector
had net foreign debt of $56 098 million at the end of December
1997 which amounted to 25.2% of net foreign debt. The Commonwealth government
and Reserve Bank had net foreign debt of $12 788 million at
the same time which represented only 5.8% of Australia's net foreign debt.
This latter figure was down from 10.5% at the end of 1996.
Foreign Debt-Private
The private share of gross foreign debt in Australia was $234 724
million at the end of December 1997 which accounted for 71.5% of gross
foreign debt. The private sector had net foreign debt of $166 078 million
at the end of December 1997 which amounted to 74.8% of net foreign debt.
This latter figure was up from 65.7% at the end of December 1996.
Note that the direct investment adjustment in Table 2 is a statistical
device to prevent double counting.
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