Gross external debt increased slightly and amounted to EUR19.0bn at end-Q4, according to data published by the central bank on Thursday. As a result it amounted to 91.0% of GDP, our calculations show. External debt of NFC rose by 2.1% q/q due to rising short-term liabilities, which went up by 5.3% q/q likely boosted by the higher trade turnover. Moreover, central bank’s external debt went up by 1.3% q/q. On the other hand, external debt of the general government declined by 2.6% q/q, supported by government’s fiscal prudence. Intercompany lending fell by 2.6% q/q, because investments continued to contract. Considering that the investment activity is projected to recover in the coming months, we expect to see an increase of both corporate and intercompany lending. Still, we do not expected to see significant changes in the gross external debt level.
Looking at the year-on-year changes, gross external debt dropped by 0.9% mostly due to the 2.7% decline of corporate lending. Estonia remained net external creditor with net external debt standing at a negative EUR2.5bn, representing 11.7% of GDP.