Croatia’s Public Debt Decreased by 1.1% in October 2018

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ZAGREB, February 4, 2019 – Croatia’s public debt at the end of October 2018 was 280.3 billion kuna, which is 3.1 billion or 1.1 percent less than at the same time in the previous year, and could stay below 75 percent at the end of 2018, Raiffeisenbank Austria (RBA) said in an analysis of central bank data on Monday.

Compared with September 2018, public debt shrank by 1.5 billion kuna or 0.5 percent, figures from the Croatian National Bank (HNB) showed.

The annual decrease was due to a fall in both the external and the internal component of public debt. At the end of October 2018, compared with October 2017, the external component declined by 1.9 billion kuna or 1.8 percent to 103.2 billion kuna, while the internal component dropped by 1.1 billion kuna or 0.6 percent to 177.1 billion kuna.

General government guarantees issued on the domestic market reached 6.4 million kuna, of which 2 billion kuna accounted for guarantees for loans issued by the Croatian Bank for Reconstruction and Development (HBOR), while general government guarantees issued on foreign markets stood at 5.3 billion kuna.

On the last day of 2018, enforced state guarantees in the amount of 2.5 billion kuna were paid for Uljanik, which will result in the deterioration of the general government budget balance and affect public debt dynamics, RBA analysts said.

Ultimately, the amount of guarantees settled will be higher given that only a portion of the principal has been paid so far, while interest is yet to be paid. However, trends in fiscal statistics will remain relatively favourable, RBA said.

RBA predicts the public debt to GDP ratio will stay below 75 percent at the end of 2018, down about nine percentage points from its highest level recorded at the end of 2013.

At the end of September 2018, Croatia’s public debt amounted to 281.8 billion kuna or 74.5 percent of GDP.

More news on the Croatian economy can be found in the Business section.

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