The year-on-year increase in the general government debt is due to an increase in both domestic and foreign debt, with domestic debt going up by HRK 7.6 billion or 3.5% compared to the end of April 2021 to HRK 225.9 billion, while foreign debt increased by HRK 10.4 billion or 8.7% to HRK 130.1 billion.
Foreign debt growth was due to a euro bond issue on the international financial market in April, in the total nominal amount of €1.25 billion.
The general government debt consequently rose also month-on-month, by HRK 13.55 billion.
RBA analysts say that considering that the euro bond issue was used to refinance a euro bond due on 30 May 2022, a decrease was expected already in data for May.
Year-on-year, however, they expect the general government debt to continue growing due to growing needs for financing, primarily due to trade unions’ demands for higher pay in the context of growing inflation, as well as due to fiscal measures designed to alleviate the impact of rising prices on consumers and the business sector.
“Nonetheless, the continuation of economic recovery will keep the debt-to-GDP ratio moving downward this year and in the years ahead. Even though fiscal risks are growing, we expect the general government deficit to stay at 3% of GDP,” the analysts said.
The Croatian government expects the share of public debt in GDP this year to be at 76.2%, which is 3.6 percentage points less than in 2021.
(€1 = HRK 7.513581)
