The income and savings of households increased faster in 2014 than their debt liabilities did
Economist at Eesti Pank
Corporate indebtedness and leverage edged upwards slightly in 2014. The increased need for external funds meant that the growth in corporate debt liabilities accelerated somewhat last year to 5%. Domestic debt liabilities increased by 3.3% and borrowing from abroad and issues of bonds abroad increased by 8%. Growth in corporate equity in 2014 slowed in contrast, to 1.3%, as corporate profits declined. As a result reinvested profits declined and there was also a slight decline in the value of shares listed on the stock exchange.
The income and savings of households increased faster in 2014 than their debt liabilities did. Higher incomes helped the cash and deposits of households to increase by 9% while debt liabilities increased by 3% at the same time. Long-term debt liabilities grew by 2.8%, mainly because of the growth in the housing loan stock, while short-term debt liabilities increased by 5%.
The unconsolidated debt liabilities of the general government grew by 186 million euros last year to some 2.2 billion euros. Although the general government budget for 2014 was in surplus, some subsectors of the general government still borrowed additional funds. Debt liabilities also increased by 27 million euros because of Estonia’s participation in the European Financial Stability Facility, the EFSF. The liquid financial assets of the general government in the form of deposits, bonds and listed shares and its credit claims together grew by 180 million euros last year to some 2.8 billion euros.
As domestic saving was again bigger than investment, the Estonian economy as a whole was a net lender in the fourth quarter of 2014 and in the year as a whole, just as in the past five years. This means that more funds were invested abroad or returned there than were taken in from abroad.
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