Gross external debt rose by 3.4% q/q to EUR20.5bn in Q1, according to figures of the central bank, published on Tuesday, and accounted for 78% of GDP, based on our estimations. The quarterly increase was attributed to short-term debt, which grew by 22.4% q/q to EUR6.7bn, while on the other hand long-term debt dropped by 8.0% q/q to EUR8.9bn. Looking closer at the breakdown, the increase in short-term debt was predominantly driven by monetary financial institutions, where short-term debt rose by 65.7% q/q to EUR2.5bn. The short-term debt of the central bank also contributed – higher by 16.2% q/q, while that of other sectors rose marginally by 0.6% q/q. Meanwhile, intercompany lending increased by 4.6% q/q to EUR4.8bn.
In annual terms, gross external debt increased by 4.7% y/y, once again driven by short-term debt which went up by 4.9% y/y, while long-term debt dropped by 0.9% y/y. Net external debt remained negative at EUR4.9bn. Overall, despite the slight increase in gross external debt, Estonia’s net external position remained stable in Q1.