Bank of Estonia: Emergency situation did not worsen financial positions

The Bank of Estonia building in Tallinn
The Bank of Estonia building in Tallinn Source: Siim Lõvi /ERR

The emergency situation did not make the financial position of households and companies in Estonia worse overall, it appears from financial account statistics for the second quarter published by the Bank of Estonia (Eesti Pank) on Monday.

Net lending by the Estonian economy as a whole totaled €454 million. The Estonian economy has been a provider of finance to the rest of the world for a long time by now, yet the general government sector was a net borrower in the second quarter.

The total debt of Estonian households grew by 0.4 percent during the quarter to €10.7 billion. Compared to the same period a year ago, the rate of growth was 4.6 percent.

Households' debt equals 39 percent of the gross domestic product (GDP) for the previous four quarters. Households continued to be net lenders in the second quarter of this year with a positive balance of €467 million.

General government debt stood at €5.3 billion, marking an increase of 94.8 percent over the previous quarter and of 96.5 percent over the same time the year before. Net borrowing by the government totaled €447 million.

The central government issued more than a billion euros in bonds, mainly to foreign investors. The consolidated debt of the general government doubled in the second quarter to reach 18.6 percent of the GDP for the previous four quarters.

There were no significant changes during the quarter in the financial assets or liabilities of non-financial companies. Although the indebtedness of companies remained at the same level as three months earlier, it was 2.2 percent smaller than a year earlier and stood at 71 percent of the GDP for the previous four quarters.

Non-listed corporate equity did not decline in total in the second quarter despite the emergency situation. The market value of listed companies was 93 percent of what it was a year earlier. Liquid assets increased slightly as a share of total financial assets to 31 percent.

Financial institutions were net lenders in the second quarter by €174 million. The financial assets and liabilities of financial institutions increased by 11 percent, or by more than €6 billion in absolute terms. The increase was driven by large-scale bond issues and by the bond investments and monetary policy loans to credit institutions of the central bank. The reduction in consumption in the non-financial sector also had an impact.

The resources of the financial sector were 1.8 times the GDP of the past four quarters. The financial sector's loan portfolio has contracted by 0.8 percent over the year.


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Editor: Kristjan Kallaste

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