No 8 (215) 27 December 2000

Estonia's International Investment Position and External Debt
as of 30 September 2000

Estonian economic agents' investments into foreign countries reached 43 billion kroons, ie 53% of the expected gross domestic product (GDP) of the last four quarters, which is 6.3% more than at the end of the second quarter (see Table 1).

Of capital invested abroad, 43% was made up of deposits, loans and trade credit and 8% debt securities issued and money market instruments. Estonia's direct investments abroad at the end of the third quarter formed 6.5 billion kroons, ie 15% of total investments made abroad. More than half Estonia's direct investments were made by the financial sector. Estonian investors' target countries were mainly Latvia (51% of all direct investments) and Lithuania (30%).

48% of foreign investments made into Estonia were direct investments. The increase in share of the latter in the total investments, compared to the second quarter, was as big as the decrease in the share of portfolio investments in the form of equity securities. This testifies to the increase in the reliability of the situation in the Estonian economy. A significant part of direct investments came from Sweden (39%) and Finland (31%); the most attractive sectors with equal 23% were finance, industry and transport, storage and communication.

In addition to direct investments, long-term loan capital has significant position among investments made into Estonia. A slightly smaller importance have debt securities issued and other investments in the form of trade credit or deposits of non-residents at banks in Estonia.

Due to the predominance of external liabilities, Estonia's net investment position at the end of the third quarter was negative by 44.9 billion kroons, which makes 55% of the expected GDP of the last four quarters.

If only debts are included in external claims and liabilities, Estonia's gross external debt at the end of the third quarter was 49.3 billion kroons, ie ca 60% of the expected GDP (see Table 2). The ratio of Estonia's external debt to the GDP has been very stable since 1998 (see Figure 1). Within a quarter the gross debt increased by 2.1 billion kroons, which increased the share of debt liabilities in residents' all external liabilities to 56%. Credit institutions' debt formed 35% of total external debt, while the debt of the government sector was relatively small - 7%.

On 30 September Estonia's net external debt (claims minus debt liabilities) was by 270 million kroons smaller than at the end of the second quarter and formed 7.7 billion kroons.

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Estonia's international investment position as of end of 2000 will be published at the Eesti Pank web site on 26 March 2001 at noon.

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 (EEK mn)(1)

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

Table 2. External debt (EEK mn)

Figure 1. Estonia's gross and net external debt