Estonian companies’ profits double in Q1

In the first quarter of this year the total profit of the Estonian business sector amounted to 4.8 billion kroons (EUR 0.3 b), doubling in comparison with the same period a year ago but staying on the same level as in the final quarter of last year, data of the national statistics office show. Compared to the first quarter of 2009, total profit increased the most in manufacturing.
Construction, transportation and storage as well as accommodation and public catering activities were running at a loss.
Net sales of the business sector totalled 118 billion kroons. Compared to the previous quarter, seasonally adjusted net sales grew for the first time after a decline of two years, increasing by 3%. Year on year, first-quarter net sales showed a drop of 2%.
Enterprises invested 5.1 billion kroons in the three months, half less than during the same period of last year. Investments were mainly made in equipment and machinery and in the construction and alteration of buildings.
The major investors were energy, transportation and storage, and manufacturing enterprises which accounted for about half of the total. Only investments in machinery and equipment increased.

Source: Estonian Review

Estonia’s balance of payments Q1, 2010

• Slow global economic growth and continuously low domestic demand affected Estonia’s current account also in the first quarter of 2010. Consequently, the current account was almost in balance, as the surplus declined considerably to 0.2 billion kroons or 0.4% of the first-quarter GDP (see Table 1 and Figure 1). The current account surplus for the last four quarters was 4.6% of the GDP for the same period.1

• The current account surplus primarily resulted from a rapid decrease in trade deficit but also a decline in the net outflow of income.

• The net outflow of income increased, whereas trade deficit decreased from the first quarter of 2009.

• The income account reflected signs of easing of the economic downturn, as the net outflow of investment income grew around 60%.

• Estonia made active use of grants from the EU budget, and the surplus on current and capital transfers totalled 2.5 billion kroons, which is almost three times more than in the first quarter of 2009.

• The gold and foreign exchange reserves contracted by 1.7 billion kroons. 

A small surplus on the current account

The deficit on the goods account declined by around a third year-on-year, and stood at 2.1 billion kroons, or 4.3% of the first-quarter GDP. Goods exports grew 17% and imports gained 11%, largely owing to processed goods (in particular mineral products). Excluding processed goods, the exports of goods (timber and timber products, furniture, and machinery and equipment) increased 9%, while imports (timber and timber products, and transport vehicles) grew 5%.

The surplus on the services account declined somewhat from the first quarter of 2009 to 3.5 billion kroons. The lower surplus resulted primarily from slightly stronger growth in imports (6%) compared to exports (2%). Four types of services – transport, travel and other business services, and computer and information services – accounted for 94% of the surplus. The surplus declined mainly on account of other services (merchanting and operational lease).

The net outflow of labour and capital income grew by two times from the first quarter of 2009 and totalled 1.7 billion kroons. The surplus on labour income remained more or less unchanged from the first quarter of 2009 at 0.5 billion kroons. The majority of the income account consisted of capital income: non-residents’ income on investment in Estonia was 2.2 billion kroons bigger than residents’ income on investment abroad; i.e. 60% more than in the first quarter of 2009. The net outflow of investment income increased primarily owing to a more than three-fold growth in non-residents’ reinvested earnings for income on direct investment in Estonia.

The intense use of EU subsidies, which started in the second half of 2009, continued also in the first quarter of 2010. The majority of the subsidies consisted in capital transfers. The total surplus on current and capital transfers grew by around three times year-on-year and stood at 2.5 billion kroons. EU Member States accounted for 80% of both the credit and the debit turnovers of the current account.

Estonia still a net external borrower The net outflow of capital on the financial account, which started in the first quarter of 2009, continued also in the first quarter of 2010, totalling 5.2 billion kroons. The net outflow consisted of other investment, whereas the inflows of direct and portfolio investment exceeded outflows.

Direct investment inflow was 2.1 billion kroons bigger than outflow. Direct investment in Estonia grew by 3.8 billion kroons, while Estonian residents’ direct investment abroad increased by 1.6 billion kroons. Reinvested earnings accounted for 78% of the direct investment in Estonia and for around 60% of Estonia’s direct investment abroad.

Portfolio investment liabilities did not change from the fourth quarter of 2009, whereas assets shrank by 0.4 billion kroons. This was largely due to a drop in general government’s money market instrument assets. The inflow and outflow of financial derivatives were almost in balance.

Net capital outflow in the form of other investment (trade credit, loans, currency and deposits) amounted to 7.9 billion kroons. Growth in long-term assets of other investment was offset by a fall in short-term assets, meaning that assets remained at the level of the fourth quarter of 2009. The net outflow of other investment capital occurred largely as a result of a decline in liabilities, and was almost fully related to a decrease in the currency and deposit liabilities of credit institutions. 

The gold and foreign exchange reserves contracted by 1.7 billion kroons from the fourth quarter of 2009.


The balance of payments for the second quarter of 2010 will be published on the website of Eesti Pank ( on 8 September 2010 at noon. 

Source: International and Public Relations Department of Eesti Pank
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Chancellor hampering water company profit

Estonia’s Law Chancellor Indrek Teder has turned to the Supreme Court to challenge the Tallinn City Government’s decree that established water and sewerage tariffs in Tallinn from 1 January 2010.

The Law Chancellor has asked the Supreme Court to declare the decree legally null and void due to it being in his opinion in violation of the public water and sewerage services act and the constitution. The Chancellor has stated that the Tallinn City Government has not implemented the Law Chancellor’s proposal from 24 March to bring the decree into accordance with the aforementioned acts and is therefore challenging the matter in Supreme Court.

Tallinna Vesi, the main water and wastewater service supplier in Tallinn in which the City of Tallinn owns a 34% stake said in comment that the Services Agreement between the City of Tallinn and Tallinna Vesi explicitly states that the tariff mechanism is in accordance with the Public Water and Wastewater Act.

Read more from BBN
Read also: Tallinn Water profit margin at 60%!