Canada’s net liability to foreign residents continued its long-term downward trend during the first three months of this year, Statistics Canada said today.

In the strongest quarterly decline on record, it fell by 10.4% from the fourth quarter of 2004 to $162.3 billion, the agency says.

“This liability represented only 12.2% of Canada’s annual gross domestic product at the end of March 2005, also a continuation of a downward trend.”

“In 1995, it was equivalent to 42.3% of GDP,” the agency said.

“The decline in net liability occurred because the value of Canada’s assets abroad has been increasing, on average, at a much faster pace than our foreign liabilities.”

“In addition, foreigners investing in Canada have been acquiring stocks faster than bonds, parallel to the reduction of government debt. Canadian stocks held by non-residents more than doubled in the last 10 years as a proportion of total liability.”

Statistics Canada said international assets reached $983.3 billion in the first quarter, up 2.9% compared with the previous quarter.

The agency noted that while the Canadian dollar depreciated slightly against the U.S. dollar in the first quarter, the loonie appreciated against most other currencies, lowering the value of international assets by $4.2 billion.

“On the other hand, our international liabilities totalled $1,145.6 billion, a modest 0.8% ncrease from the fourth quarter last year.”