OREANDA-NEWS. October 21, 2010. Financial positions continued to gain in strength in the second quarter of 2010, in line with general improvement in the economic environment. As a result of economic transactions, financial assets increased 2.8 billion kroons more than financial liabilities and Estonia's financial borrowing decreased to 174.7 billion kroons by the end of the second quarter, reported the press-centre of Eesti Pank.

Financial assets grew the most in non-financial corporations. Their financial assets have increased by 3% year-on-year and amounted to 420.7 billion kroons by the end of the quarter. The financial assets of non-financial corporations expanded the most due to growing liquid assets and receivables. Corporate financial liabilities in the real sector have increased as well, posting an annual growth of 4.5%. The latter was primarily due to increasing payables and other liabilities. The trend of real-sector companies reducing domestic borrowing and expanding borrowing from abroad continued as well. The share of external debt obligations in the total debt obligations of real-sector companies increased to 26%.

Households' financial assets increased by one billion kroons in the second quarter as a result of deposit growth, acquisition of securities, and pension contributions. Households' financial assets have increased 9.2% year-on-year, but since the price of securities declined in the second quarter, the value of households' financial assets decreased somewhat compared to the previous quarter, irrespective of the investment made. Despite signs of recovery in the economy, households' credit demand has remained modest and their loan stock continues to shrink.

Different from the private sector, the general government sector reduced its financial assets by 0.3 billion kroons. The decrease took place on account of domestic savings, which were also used to obtain securities and debt claims. Changes in the general government's debt obligations were relatively small in the second quarter, which means the usage of liquid assets made the government sector the only net borrower. This mostly reflects financing of the central government's deficit, since the financial position of local governments and social security funds even improved over the second quarter.