The net outflow of capital in the third quarter was caused by securities transactions abroad
The net outflow of capital shown in the financial account of the balance of payments was 214 million euros in the third quarter of 2015 because of investments by pension funds and the general government in debt securities. The general government invested 125 million euros in foreign debt securities, and pension funds invested 104 million euros.
The net inflow of direct investment recovered as reinvested income was back to its usual level after the payouts of dividends in the second quarter, and it stood at 152 million euros as Estonian direct investment equity liabilities are substantially larger than assets.
The net inflow of other investment was 76 billion euros. Previously announced dividend payouts were made at the expense of a reduction in external claims. Liabilities to offshore countries related to deposits fell by 111 million euros.
The net international investment position1 at the end of the third quarter of 2015 showed that the external liabilities of Estonian residents exceeded their external assets by 7.9 billion euros, or 39% of the GDP of the previous four quarters. During the quarter the investment position moved in the direction of net balance by 82 million euros. A large part in this was played by direct investments abroad by other financial intermediaries and by increased general government investment in securities (see the International investment position).
The Estonian external assets position was 2.6% larger than a year earlier, but was down 1.4% or 27.4 billion euros from the end of the second quarter of 2015. Three quarters of this, or 20.7 billion euros, was in debt assets, equal to 102% of the GDP of four quarters. The position of assets was reduced by 0.2 billion euros because of the net flow, and by 0.2 billion euros by changes in prices and exchange rates.
The external liabilities position was 0.6% smaller than a year earlier, and 1.3% or 35.3 billion euros smaller than at the end of the second quarter. More than half of this, or 18.9 billion euros, was in debt liabilities, equal to 93% of the GDP of four quarters. The volume of external liabilities fell by 0.5 billion euros because of external transactions, but increased by 0.1 billion euros because of changes in prices and exchange rates.
At the end of the quarter, the debt assets abroad of residents were 1.8 billion euros larger than debt liabilities owed to non-residents2. The gap between the debt positions was 345 million euros larger than in the previous quarter. The reason for this was primarily that non-financial companies had increased their deposits abroad and the general government had increased its securities investments. Debt liabilities were reduced by non-financial companies paying off trade credit and by the general government reducing its other debt liabilities (see External debt). Unlike in the previous quarter, there was no major change in the intra-group debts of direct investment groups, but debt assets shrank by 36 million euros. The debt assets of the central bank fell as credit institutions reduced their deposits at the central bank.
Eesti Pank will release the statistics for the balance of payments and the external debt for the fourth quarter of 2015 and the full year 2015 together with a comment on 10 March 2016.
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 does include the debt assets and liabilities between companies in a direct investment relationship.
From this year Eesti Pank is accompanying the release of balance of payment and external debt statistics with a separate statistical comment and an economic policy explanation, which can be found on the Eesti Pank website.
The balance of payments comment focuses on analysis of the current account and the capital account. The statistical comment on external financing gives more depth on the financial account, the investment position and the external debt (see External sector statistics)
For further information:
Eesti Pank Statistics Department
Telephone: +372 668 0725
Email: andres.lauba [at] eestipank.ee