Gross external debt declined by 0.3% q/q and reached EUR 18.9bn, according to data published by the central bank. As a result, it comprised 85.9% of GDP. The main contribution to the decline came from the short-term debt of the monetary institution, which went down by 10.5% q/q. Meanwhile, the external debt of other sectors dropped by 1.3% q/q likely due to lower borrowing of trade credits by domestic companies. On the other hand, intercompany lending went up by 5.5% y/y, supporting the economic activity. General government debt increased by 2.8% q/q with both long- and short-term external liabilities growing. Looking ahead, considering the pledges for some fiscal loosening by the government we expect general government external debt to rise somewhat in medium-term.
Estonia remained a net external creditor with net external debt coming at a negative EUR2.5bn, representing 11.6% of GDP. Looking at the yearly changes, gross external debt fell by 2.6% y/y with the only tangible increase being registered by intercompany lending.