OREANDA-NEWS. July 22, 2011. Compared to the end of 2010, corporate debt grew by 0.3% to 17 billion euros in the first quarter of 2011. The lending stock intermediated to non-financial companies by the domestic financial sector decreased by 11%, year-on-year, reported the press-centre of Eesti Pank.

At the same time, the borrowing from abroad went up by 20%, so the share of external loans in corporate debt liabilities increased to 27%. Against the backdrop of rapid economic growth, corporate indebtedness continued to shrink, making up 116% of GDP (84% excluding domestic debt between companies) by the end of the quarter. Corporate financial assets increased by 1% over the first quarter. This was supported by a hike in stock market yields and improved profitability, which helped offset the decline in deposits.

Like in previous quarters, the financial position of households was affected by growing deposits and shrinking debt. The quarterly growth rate of financial assets accelerated to 3%, whereas financial liabilities decreased by 1%. By the end of the quarter, household indebtedness receded to 52% of GDP.

Changes in the financial sector were mainly related to the decrease in the reserve requirement after the adoption of the euro. In addition, the balance sheet total was reduced by a shrinkage in the loan portfolio. As a result, the level of assets and liabilities declined by 6% and 5%, respectively, in the first quarter.

After two years, the Estonian economy as a whole was a net lender vis-a-vis the rest of the world. The net borrowing of the total economy was about 100 million euros in the first quarter. This was mostly due to an increase in the liabilities (most of all in the equity) of non-financial companies.