The debt now stands at “only” 285 billion kuna.
According to the Croatian National Bank (HNB), Croatia’s public debt at the end of May this year amounted to 285 billion kuna, which is 84.1 million kuna less than in April and 4.8 billion kuna less than in May last year. The Croatian Chamber of Economy (HGK) points out that the reduction of the level of public debt on a monthly basis has continued for four consecutive months, while year-on-year reduction has continued for three consecutive months, reports Novi List on September 2, 2016.
“More favourable economic conditions, followed by the growth of GDP and budget revenues, enabled improvement in fiscal situation, especially since the temporary funding regime and the fact that the government is in a caretaker operations mode have limited the growth of budget spending”, say HGK.
The deficit of the state budget in the first five months of this year was 3.6 billion kuna lower than in the same period last year, so lower financing needs had a favourable impact on public debt. In the first five months of this year, the level of public debt decreased by 4.6 billion kuna, with domestic debt increasing by 2.7 billion kuna, and the level of foreign debt decreasing by 7.3 billion kuna. The greater reliance on domestic sources of funding is partly the result of the decision not to issue foreign bonds due to high interest rates, explain HGK.
They note that in the last three months the public debt has been reducing at the average annual rate of about 1.7 percent. “Such trends, in the context of a somewhat more rapid economic growth than expected, favourable budgetary developments and the expected continuation of the fiscal consolidation process, suggest the possibility of stabilizing the public debt to GDP ratio at the end of this year, at a level near last year’s rate. That would be a good foundation for its reduction in the coming years towards meeting the Maastricht criterion of 60 percent of GDP”, say HGK.
At the end of May this year, the gross external debt of the country stood at 44 billion euros, which is 341 million euros less than in April, and 5.1 billion euros or 10.4 percent less than in May last year. In the first five months of the year, total gross external debt was reduced by 1.5 billion euros. “The continuation of such trends in the gross external debt, with a slightly better economic growth than planned and with export growth, will result with more favourable debt indicators at the end of the year”, point out HGK.
