Foreign Debt Continues to Decline

Total Croatia News

ZAGREB, March 4, 2018 – In November 2017, Croatia’s gross foreign debt was 41 billion euro, down 6.4% on the year and decreasing for the 24th month year-on-year, according to a Chamber of Commerce (HGK) analysis.

Monthly, the foreign debt went up 998 million euro, mainly due to the issue of a 1.275 billion euro bond.

The annual decrease of the foreign debt for 24 months in a row was a result of deleveraging of the general government, monetary financial institutions and other domestic sectors. The biggest annual decrease rate was recorded in the gross foreign debt of monetary financial institutions, which has been decreasing since May 2012.

The foreign debt of other domestic sectors (companies) has been decreasing for the past 23 months, a result of companies’ financing on the domestic market, where interest rates are decreasing.

In November 2017, the general government debt decreased 2% annually, the central bank’s debt dropped 24.2%, while the direct investment debt went up 6.8%.

HGK analysts expect the foreign debt to continue to decline in the period ahead thanks to the government’s reduced need to borrow and favourable domestic financing conditions for companies.

We expect the gross foreign debt to GDP ratio to continue to decrease, which will have a positive impact on risk reduction, notably the foreign exchange risk, and contribute to the possibility of a sovereign credit rating upgrade, says Zvonimir Savić, director of the HGK economic analyses sector.


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