OREANDA-NEWS. January 28, 2014. Corporate debt was 0.7% larger at the end of the third quarter than it was a year earlier. However, it was 1% lower than in the second quarter.

The stock of loans taken from domestic banks increased during the quarter by around 150 million euros, but the stock of loans taken from abroad shrank as the trade sector paid back some 300 million euros in short-term loans. As corporate equity increased relatively quickly at the same time on the back of reinvested income, the financial leverage of companies declined and brought their debt-to-equity ratio to the lowest level in the last ten years. There was also an improvement in corporate liquidity, which showed an increase of 10% in a year in the cash and deposits held by companies.

The financial position of households improved as well. The growth of the financial savings of households, which are their deposits and cash held in hand, has slowed somewhat in recent quarters, though the annual growth in savings was still around 7% at the end of the third quarter of 2013. Household debts have started to increase gradually and were 29 million euros larger in the third quarter than in the previous quarter, but they were still lower than a year earlier.

The total debt burden of households and non-financial companies together, measured as the ratio of debt to GDP, fell to 129% by the end of the third quarter. This means that the debt has fallen by 37 percentage points from its peak three years ago and has returned to its level of mid-2006.

Modest lending activity meant that the Estonian economy as a whole was a net lender in the third quarter of 2013, as in the first half of the year. This means that more funds were invested abroad or returned there than were taken in from abroad.