No 2 (225) 25 March 2002

ESTONIA'S INTERNATIONAL INVESTMENT POSITION AND EXTERNAL DEBT as of 31 December 2001

Favourable investment environment increased foreign investments made into Estonia in 2001 by nearly one sixth, bringing their total volume to 105.6 billion kroons by the end of the year (111% of the expected GDP).

53% of all foreign investments made into Estonia, or 55.8 billion kroons, were direct investments, most of which do not contribute to the external debt (see Table 1). The sectors to attract foreign investors the most were finance (24% of FDI), transport, storage and communication (23%), and manufacturing (20%; see Figure 1). The bulk of direct investment capital has come from Sweden (40%), Finland (25%) and the USA (10%; see Figure 2). A number of investors have increased their direct investments at the expense of portfolio investments, and thus Estonia's portfolio investment liabilities in equity securities decreased slightly against end-2000, despite the surge of security prices.

Estonian investments into foreign countries amounted to 51.4 billion kroons at the end of 2001. Nearly half of it was loans and deposits and over one quarter was made up of the gold and foreign currency reserves of the central bank. The share of direct investment capital is constantly increasing in Estonian investments abroad, rising from 10% to 15% over the past year. At the same time, the volume of direct investments abroad grew by 74%. The main economic sectors that attracted Estonian investors were finance (41% of all direct investments made abroad), real estate, leasing and business services (19%), manufacturing (18%) and transport, storage and communication (17%; see Figure 3). By countries, the biggest share of investments went into Lithuania (45%) and Latvia (34%; see Figure 4). Changes in the monetary policy operational framework reduced the gold and foreign currency reserves of the central bank abroad by one billion kroons.

Due to the dominance of external liabilities, Estonia's net investment position was negative by 54.2 billion kroons at the end of 2001 (56.9% of the expected GDP).

On 31 December, Estonia's gross external debt amounted to 58 billion kroons (60.8% of the expected GDP) and net external debt (debt-related external claims minus liabilities) stood at 9.2 billion kroons (less than 10% of the GDP). Over the past year, long-term debt liabilities of the other sector have increased the most (see Table 2). The net external debt of the government sector decreased by 0.5 billion kroons, to 1.3 billion kroons.

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Estonia's preliminary international investment position and external debt for the first quarter of 2002 will be published at the Eesti Pank Web site (http://www.eestipank.info) at noon on 25 June 2002.

International and Public Relations Department of Eesti Pank
PS Please acknowledge the source when publishing or citing.

Table 1. Estonia's international investment position (EEK m)(1)

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

Table 2. External debt (EEK m)

Figure 1. Direct investment position in Estonia by spheres of activity as of 31 December 2001

Figure 2. Direct investment position in Estonia by countries as of 31 December 2001

Figure 3. Estonia's direct investment position abroad by spheres of activity as of 31 December 2001

Figure 4. Estonia's direct investment position abroad by countries as of 31 December 2001