No 4 (211) 26 June 2000

Estonia's International Investment Position and External Debt
as of 31 March 2000

At the end of the first quarter of 2000, Estonian economic sectors' investments into foreign countries reached EEK 38.8 billion (see Table 1). In a quarter they decreased by approximately 0.5% and formed nearly half against the expected gross domestic product (GDP) of Estonia of last four quarters. Of capital invested abroad, more than one third was made up of gold and foreign currency reserves of the central bank and one fifth was made up of Estonian residents' settlement accounts and deposits with banks abroad. Sums invested in foreign bonds and sums due from the sale of goods and services both formed one tenth of the investments made abroad, and Estonia's direct investments abroad – 12%. Figures 1 and 2 characterise Estonia's investment position abroad by countries and spheres of activities.

At the end of the first quarter, foreign investments made into Estonia exceeded Estonia's investments abroad more than twice and formed EEK 88.9 billion. In a quarter these investments increased by 8% due to balance of payments transactions, exchange rate and price changes. Almost half, ie EEK 43 billion of foreign investments made into Estonia, were direct investments. The most attractive sectors for direct investors were transport and communications (31%), industry (21%), finance (21%) and trade (16%). A significant part of direct investment capital invested into Estonia has come from Sweden (41%) and Finland (32%; see Figures 3 and 4). Besides direct investments, one fifth of foreign investments made into Estonia was made up of mainly long-term loan capital, and nearly 17% of stocks and debt instruments of Estonian businesses.

Due to the predominance of external liabilities over external claims, Estonia's net investment position at the end of the first quarter was negative by EEK 50.1 billion. Although within the first quarter more money flew out from the financial account of the balance of payments than came in, a rise in stock prices and appreciation of the US dollar against the euro increased the negative net investment position by EEK 6.8 billion compared to the end of 1999. By the end of the first quarter the negative net investment position (predominance of external liabilities over external claims) formed 65% against the expected GDP of last four quarters.

If only debts are included in external claims and liabilities, Estonia's gross external debt at the end of the first quarter was EEK 43.8 billion, ie 56% against the expected GDP. Compared to the end of 1999 this figure was somewhat smaller. At the same time, Estonia's net external debt was EEK 8.9 billion, ie 12% against the expected GDP. The gross external debt of the government sector stood at EEK 3.6 billion (4.7% against GDP) and net external debt at EEK 1.8 billion (2.3% against GDP). The dynamics of Estonia's external debt reflects Figure 5.

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Estonia's international investment position as of end of the second quarter of 2000 will be published at the Eesti Pank web site at 12.00 on 25 September 2000.

Public Relations Department of Eesti Pank

PS Please acknowledge the source when publishing or quoting.
Ants Kaasik
Executive Editor

Table 1. Estonia's international investment position and external debt (EEK mn)⁽¹⁾

⁽¹⁾ After additional information is received, data of the earlier period has been updated accordingly.

Figure 1. Estonia's direct investment position abroad by countries as of 31 March 2000

Figure 2. Estonia's direct investment position abroad by spheres of activities as of 31 March 2000

Figure 3. Direct investment position in Estonia by countries as of 31 March 2000

Figure 4. Direct investment position in Estonia by spheres of activities as of 31 March 2000

Figure 5. Estonia's gross and net external debt (EEK mn)

Source: Eesti Pank