The structure of the
balance of payments for the first three months of 1998 has
considerably been changed compared to the earlier balances of
payments. The 1.83 billion kroon deficit of the current
account is approximately of the same size as the deficit in
the first quarter of 1997, but 40% smaller than the deficit
in the last quarter of 1997. Current account deficit against
the GDP has not essentially improved compared to the end of
1997 and still exceeds the 11% threshold. Surplus of the
financial account has decreased manifold compared to previous
quarters and is nearly half of that in the first quarter of
1997 (see Table).
The current account
deficit was mostly influenced by the foreign trade deficit,
the absolute amount of which, compared to that of the
beginning of last year, has somewhat increased. In 1995 and
1996 the import of goods increased faster than export, while
the more rapid increase in exports that commenced in 1997,
continued also at the beginning of 1998. In the first quarter
the export of goods increased 10 percentage points faster
compared to the same period of last year. The nearly 41%
increase in the export of goods shows the international
competitiveness of Estonia. The main export articles were
machinery and equipment, foodstuffs and clothes. The main
import articles were machinery and equipment, products of
chemical industry and foodstuffs. The most important foreign
trade partner was still Finland, followed by Sweden, Russia
and Germany.
Nearly half of the
foreign trade deficit was covered by services balance
surplus that reached nearly 1.5 billion kroons. Similarly
to trend from 1997, the import of services increased more
rapidly than their export and that in case of construction,
transport and tourism services above all. The rapid increase
in travel services import is caused by both the increase in
the purchasing power of Estonian citizens and the visa-free
regime established with the Scandinavian countries.
The nearly 350 million
kroon deficit of the income balance is first and
foremost caused by the accounting reinvestment of the current
year profits by the businesses having direct foreign
investments.
The financial account
reflects the approximately 1 billion kroon capital net inflow
both for direct and portfolio investments. The outflow of
other capital, however, exceeded the inflow by more than one
billion kroons.
Foreign direct
investments made into Estonia (679 million kroons) were
smaller than those in the first quarter of 1997 but greater
than in the fourth quarter. Estonian direct investments
abroad had a nearly 300 million kroon positive balance, for
some large businesses significantly decreased their claims to
their foreign subsidiaries (according to the balance of
payments compilation method, a plus sign usually denotes the
inflow of capital, in this case the decrease in
non-residents' liabilities to Estonian residents). As to
economic sectors, the direct investments into Estonia were
preferably made to the processing industry and trade. The
main investors came from Scandinavia, as in previous years.
Regarding portfolio
investments, the amount of equity and debt securities
owned by non-residents increased by nearly 1.1 billion
kroons. At the same time, the portfolio investments of
Estonian residents made abroad, somewhat decreased. More
active investors and investment mediators were still banks
and leasing companies associated with banks.
Contrary to 1996 and
1997, there was a capital net outflow regarding other
investments, first and foremost in the form of short-term
loan capital. The biggest influence came from the banking
sector and financial institutions associated with banks, as
well as from certain peculiarities of their liquidity
management in the first quarter. At the beginning of the year
also the government sector strengthened its financial
position, mostly due to the amounts transferred to the
stabilisation fund.
Balance of payments reserves
decreased by more than 1.1 billion kroons in the first
quarter of 1998. Thus, the overall balance was negative.
Adjustments to the 1996
and 1997 balances of payments
Due to more precise data
on foreign trade, the balances of payments for 1996 and 1997
have been adjusted, first and foremost the current accounts.
First, the Statistical Office and Customs Board adjusted the
foreign trade figures for 1997 as a result of which import
increased by nearly 2 billion kroons and export by 700
million kroons. Second, export increased due to the re-
assessment made by Eesti Pank in the course of which price
transformations occurring for goods exported through customs
warehouses and not reflected in the foreign trade statistics
were accounted for. In 1996 these transformations formed more
than 300 million kroons and in 1997 approximately 2.1 billion
kroons (see also
Eesti Pank press release 'Making
export statistics more precise', 7 June 1998).
Adjustments have also
been made in some of the financial account figures. Such
later adjustments are known to be made in the statistics of
all countries, especially big are they in the balance of
payments figures of small countries. According to the
adjusted current account and GDP data, the current account
deficit against the GDP formed 9.1% in 1996 and 12% in 1997.
The adjusted balance of
payments for the first quarter of 1998 and the preliminary
balance of payments for the second quarter of 1998 shall be
published on 21 September 1998 at 12.00.
