Eesti Pank - Bank of Estonia

The financial accounts of the national accounts system reflect the financial assets and liabilities and respective transactions and other changes in assets of the economy as a whole.

Balance sheet points out the positions of financial assets and liabilities of institutional sectors at the beginning and end of a period in market prices.

The transaction account displays the transactions performed with financial assets and liabilities during the period under review. Transactions are conducted between institutional units or within a unit according to mutual agreements. The value of assets and liabilities in the transaction account is indicated in the transaction price. Other changes in assets are changes that do not result from transactions. These are, for instance, changes in value arising from price or currency exchange rate fluctuations, and reclassifications or changes in the value of assets or liabilities resulting from extraordinary events.

Net lending (+) / net borrowing (-) is the balancing indicator of the transactions account, being the difference between transactions conducted with financial assets and liabilities during the period under review. If a sector's indicator is positive, the institutional sector has financed other sectors' operations during the monitored period; if negative, the sector has received funds from other sectors. The net lending (+) / net borrowing (-) of the total economy shows whether the country as a whole has involved external funds or allocated them abroad.

Net financial assets are the balancing indicator of the balance sheet, constituting the difference between the total of financial assets and liabilities. If a sector's respective indicator is positive, its financial assets exceed liabilities; if negative, liabilities exceed assets. If the net financial assets of the total economy are positive, external claims exceed external liabilities and the rest of the world has a net debt to the country. A negative position of the net financial assets of the total economy, however, indicates the country's debt to the rest of the world.

Quarterly financial accounts are compiled pursuant to the methodical guidelines of the European System of Accounts "ESA 95".

Companies providing goods and non-financial services.

Central bank (S.121) - Eesti Pank as the central bank of Estonia.

Other monetary financial institutions (S.122) - NB! includes credit institutions and all other financing institutions that take on deposits and other similar instruments from the general public and provide loans or investment opportunities into securities from their own account. This group encompasses credit institutions, savings and loan associations and such money market funds that comply with the definition of a monetary financial institution.

Other financial intermediaries (S.123) - includes investment funds (excluding the money market funds mentioned above), leasing companies and other companies that intermediate financial resources to third parties.

Financial auxiliaries (S.124) - encompasses enterprises that do not directly intermediate financial resources to third parties but provide various financial auxiliary services. For instance, operators of the regulated securities' market (Tallinn Stock Exchange, Guarantee Fund), brokerage firms (incl. insurance brokers), financial consultation companies, etc.

Insurance companies and pension funds (S.125)
Insurance companies - business corporations whose primary insurance operations involve non-life insurance, life insurance or reinsurance pursuant to Insurance Activities Act § 8 (2).
Pension funds - investment funds pursuant to Funded Pensions Act § 4 (1).

The general government is divided into central government, local governments and social security funds.
The list of units belonging to the general government sector is available on the web site of Statistics Estonia www.stat.ee/17211.

Central government (S.1311) comprises the state governing and national defence organs administered by the central government. This includes national and county government, ministries, agencies and inspections, but also scientific, research, healthcare, social welfare, education, culture and sports establishments financed from the state budget.

Local governments (S.1313) are local government bodies and scientific, research, healthcare, social welfare, education, culture and sports establishments financed from the budgets of local governments.

Social security funds (S.1314) are units which belong to the national system of health and unemployment insurance. This includes the Estonian Unemployment Insurance Fund and the Estonian Health Insurance Fund.

Includes individuals or groups of individuals (e.g. family) who live together, have shared incomes and consume certain goods and services collectively (mostly residential spaces and food). Households also include individual workers and producers for their own use.

This sector involves non-profit institutions that serve households and do not produce for markets. The primary income sources for such institutions are voluntary contributions by households (individuals) (both monetary and non-monetary), state subsidies, property income, membership fees, etc). Non-profit institutions provide goods and services to households free of charge or at financially insignificant prices.

All non-resident institutional units.

Financial instruments are divided into seven main categories according to their liquidity and economic nature.

1. Monetary gold and SDRs
Monetary gold - reserve assets held in gold.
SDRs (special drawing rights) are the settlement units of the International Monetary Fund, their value being based on a basket of four currencies (USD, EUR, JPY and GBP). An SDR account is generated for every IMF Member State and it is used for conducting loan transactions and several other related operations between a Member State and IMF.

2. Currency and deposits
Includes currency, transferable deposits and other deposits.

Currency - banknotes and coins in circulation (issued by Estonia as well as other countries) used as legal tender.

Transferable deposits - deposits that are directly convertible into currency by cheques, transfers, debit cards or the like without a substantial penalty or restriction. For instance, this includes demand deposits with credit institutions and savings and loan associations, but also demand deposits of credit institutions with the central bank and the central bank's deposits in other countries.

Other deposits - encompasses all other deposits, excluding transferable deposits. This includes time and savings deposits, for example.

3. Securities (other than shares) (debt securities)
A debt security is the security that verifies a borrower's (usually a legal person) debt, establishing the borrower's obligation to repay the loan to the lender at the agreed due date and also pay interests. A debt security does not give its holder ownership rights pertaining to the issuing institution. Bonds are classified into two categories based on their maturities: short-term (agreed maturity up to 1 year) and long-term (agreed maturity over 1 year).

Debt securities include bonds issued by companies providing goods and non-financial services, credit institutions and other financial intermediaries, bonds of the State Treasury, loan certificates, commercial papers and other securities.

Financial derivatives are pointed out separately among debt securities. Financial derivatives are securities which are based on or derived from different underlying instruments. The underlying instrument is usually some other financial asset but it may also be a commodity or an index. The most common financial derivatives are options, forwards, futures and swaps.

Includes loans between institutional units. They are divided into short-term and long-term loans. Also leasing and repurchase agreements are regarded as loans.

F.5. Shares and other equity

Shares and other equity are securities representing right of ownership in a company and entitling their holder to receive a share of the company's profit and its net assets in case the company is liquidated. The subdivisions of shares and other equity are as follows: quoted shares, unquoted shares, other equity and mutual fund shares. Quoted shares include shares listed on public stock markets (e.g. the Tallinn Stock Exchange). Unquoted shares comprise the remainder. Other equity include other holdings, excluding the aforementioned (e.g. holdings in limited partnerships, general partnerships, etc.). Other equity also include the central bank's capital and the general government's investments to the capital of international organisations. Mutual fund shares express the unit-holder's holding in the assets of a contractual fund (excluding pension fund and money market funds).

F.6. Insurance technical reserves

Includes technical provisions of insurance companies and pension funds against policy holders and beneficiaries. Insurance technical reserves are divided into the net equity of households in life insurance reserves and in pension fund reserves and prepayments of insurance premiums and reserves for outstanding claims.

The net equity of households in life insurance reserves and in pension fund reserves includes technical life insurance reserves, technical reserves for unit-linked life insurance, provisions for bonuses and other technical reserves as well as the net equity of the second and third pillar of pension funds.

Prepayments of insurance premiums and reserves for outstanding claims includes provisions for outstanding life insurance claims and all technical non-life insurance reserves.

F.7. Other accounts receivable/payable

The category "other accounts receivable/payable" includes all financial claims/liabilities that arise from timing differences between transactions and payments. This category is divided into trade credits and advances and other accounts receivable/payable.

Trade credits and advances include the outstanding sums for sold or purchased goods and services, and prepayments which are reflected on accrual basis.

Other accounts receivable/payable include other outstanding sums deriving from economic calculation on accrual basis, and also other claims and liabilities that are not related to the rest of the items.

Concepts and definitions