ZAGREB, August 13, 2019 – At the end of April 2019, Croatia’s gross foreign debt totalled 39.9 billion euro, 1.1 billion or 2.9% more than at the end of 2018.
Raiffeisen Bank analysts have said that the increase in the gross foreign debt is due to the usual seasonal worsening of credit institutions’ international position (in the amount of 347.5 million euro, an increase of 8.5%) and an increase in the central bank’s foreign debt of 1.4 billion euros.
The central government’s foreign debt rose slightly, by 0.7%, while other domestic sectors reduced their gross obligations, the analysts said.
The statistics for April confirm a continued decline of the foreign debt that has been going on since the end of 2015, with sporadic exceptions in June 2018 and February 2019.
The biggest contribution to the year-on-year reduction of the foreign debt came from the public sector. At the end of April, the general government’s gross foreign debt totalled 13.8 billion euro, which was 458.8 million euro or 3.2% less than in the same month of 2018, the analysts say.
They note that the annual decrease in the gross debt was also owing to a continued deleveraging in other domestic sectors whose gross foreign debt at the end of April dropped to 13 billion euros (-3.4%), continuing deleveraging trends that have been going on since January 2016.
These trends were mostly owing to deleveraging in the private business sector, whose gross foreign debt at the end of April dropped to 9.4 billion euro, 2.4% less than in the same period of 2018. The share of the gross foreign debt of other domestic sectors in the total gross foreign debt dropped to 32.5% from 34.3% at the end of December 2018, which reflects a continued decline in foreign borrowing that has been replaced by kuna loans taken from domestic banks.
April saw a continuation in the growth of borrowing by domestic banks, whose gross debt at the end of that month amounted to 4.4 billion euro (+8.2% from April 2018 and +8.5% from the end of 2018).
The share of the financial sector’s gross debt in the total gross foreign debt rose from 10.5% in December 2018 to 11.2% at the end of April 2019.
Analysts attribute the increase in borrowing by the banking sector that started at the end of 2018 to a growing demand for loans, notably non-purpose cash loans.
They note that statistics for May and June could confirm a temporary increase in the central government’s obligations towards foreign creditors after the government in June issued 1.5 billion euro worth of ten-year euro bonds to repay an international bond issued in November in the amount of 1.5 billion US dollars.
As for the whole 2019, analysts expect continued improvement of debt statistics.
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