OREANDA-NEWS. December 17, 2009. The exports of goods and services have been outstripping imports throughout this year, as was also proved by the third-quarter balance of payments published last week. This means domestic savings have been larger than investment. As a result, there is no need to include foreign capital and it is possible to pay back external debt. Estonia's external debt was about 7% lower year-on-year at the end of September. Loans issued by Estonian residents have been paid back or deposits abroad brought back in nearly the same magnitude. These have mostly been cash flows within multinational corporations.

The total value of foreign capital invested in Estonia has decreased in the course of this year. The same is true for investment made from Estonia in foreign countries. In addition to the repayment of loans, the capital stock in Estonia has also been diminished by losses suffered during the crisis. These have mostly been provisions, i.e., reserves created in the banking sector to cover possible loan losses. At the same time, direct investment in Estonia increased in some sectors in the third quarter.

Because of the recession, the repayment of loans does not show in the indebtedness indicators measured as a ratio to GDP. Estonia's gross debt grew to 124% and net debt (the difference between borrowing and lending) accounted for 39% of the GDP of the past four quarters. The ratio of external debt to GDP will continue to increase until the resumption of growth and may, according to Eesti Pank's forecast, reach 130%.