As in the preceding three quarters, the Estonian economy was a net provider of financing to other countries in the first quarter of 2015. The outflow of 128 million euros of capital was caused by an increase of assets abroad of 64 million euros as pension funds invested in foreign shares and fund units and non-financial companies put money in foreign deposits, and by a reduction of another 64 million euros in the liabilities of the financial sector as less was reinvested and foreign deposits in Estonian banks shrank.

The international net investment position, which is foreign assets minus foreign liabilities¹, was negative by 8 billion euros by the end of the first quarter of 2015, or 41% of GDP of the last four quarters. Assets abroad were equal to 77% of liabilities, and the movement in the direction of balance continues (see International investment position). Debt assets exceeded debt liabilities (gross external debt)² by 2 billion euros; debt assets of the central bank exceeded the debt liabilities from investments in bonds by 1.9 billion euros, and the intra-group assets of companies by 1.5 billion euros (see External debt). The first quarter of 2015 is the tenth in a row where Estonian debt assets to the rest of the world are larger than gross external debt. This means that the rest of the world owed more to Estonia than Estonia owed abroad.

The Estonian external assets position was 2% larger than in the fourth quarter of 2014, and 10% larger than a year earlier, at 28 billion euros. Three quarters of this, or 21 billion euros, was in debt assets, equal to 108% of the GDP of four quarters. Net flows of 0.1 billion euros from the purchase of assets increased the value of foreign assets, as did changes in prices and exchange rates, which added 0.6 billion euros.

The external liabilities position was 1% larger than at the end of the previous quarter, and 5% larger than a year earlier at 36 billion euros, of which 19 billion euros or around half was debt liabilities worth 97% of the GDP of four quarters. Foreign transactions reduced the liabilities position by 0.1 billion euros, but changes in prices and exchange rates increased it by 0.3 billion euros.

¹ The international investment position is a consolidated balance sheet of the external assets and liabilities of all the institutional sectors of a country as at the balance sheet date at market prices.

² Debt assets and debt liabilities are components of the international investment position that have a repayment obligation. The external debt does not include direct, portfolio or other investment in equity capital, reinvested earnings, financial derivatives, or the gold of the central bank reserves. The external debt includes the debt assets and liabilities between companies in a direct investment relationship.

Background Information

Eesti Pank compiles external sector statistics that include data on the balance of payments, foreign debt, the international investment position and foreign exchange reserves, on which Eesti Pank publishes two statistical press releases:

1. a balance of payments comment that focuses on explaining the changes in the current and capital accounts of the balance of payments;
2. a statistical comment on the financial account of the balance of payments, the international investment position and the external debt in a separate review of foreign financing.

Alongside these two statistical reviews, Eesti Pank publishes an economic policy comment that analyses the causes of the changes shown in the external sector statistics.

Eesti Pank will release the next statistics for the balance of payments and the external debt with a statistical and economic policy comment on 8 September.  

For further information:
Andres Lauba
Eesti Pank Statistics Department
Telephone: +372 668 0906
Email: [email protected]