Gross external debt rose by 0.6% q/q to EUR19.8bn in Q4, according to figures of the Bank of Estonia, published on Tuesday, and accounted for 77.3% of GDP in 2018, according to our estimations. The quarterly increase was attributed to long-term debt, which grew by 1.1% q/q to EUR9.8bn, while on the other hand short-term debt dropped notably by 5.1% q/q to EUR5.5bn. Looking closer at the breakdown, the rise in long-term debt was predominantly driven by monetary financial institutions, whose long-term debt rose by 8.1% q/q to EUR3.9bn, likely due to an increase in financing from Nordic parent banks. The long-term debt of the central bank also rose marginally, while that of the general government and other sectors dropped. Intercompany lending grew by 7.0% q/q o EUR4.6bn.
In annual terms, gross external debt rose by 1.7% y/y, once again driven by long-term debt, which grew by 21.4% y/y, while on the other hand short-term debt dropped by 26.7% y/y. Net external debt remained negative at EUR4.6bn. Overall, the net external position of Estonia remained stable in Q4.