Croatia's gross foreign debt at the end of February 2018 was €39.7 billion, inching down by 0.6 percent compared to January, and by €2.3 billion or 5.5 percent down from the same month in 2017, continuing the falling trend which started at the end of 2015, Raiffeisenbank Austria (RBA) analysts said on Tuesday.
The year-on-year decrease in foreign debt is due to the continued deleveraging of domestic sectors, whose gross foreign debt was reduced by 10.6 percent, or €13.5 billion.
“These figures come as a result of deleveraging of private-owned businesses, whose gross foreign debt dropped to 9.7 billion at the end of February, or 7.9 percent down from the same period in 2017,” RBA analysts said. The general government’s gross foreign debt was also cut by €785 million or by 5.3 percent year-on-year, to about €14 billion at the end of February 2018.
“The fiscal indicators which were better than expected have caused the government’s foreign debt to decrease, as it turned to the domestic market for financing,” analysts said. They added that deleveraging of the banking sector also continued, with their foreign debt dropping to €3.9 billion, and attributed this to high liquidity and lower demand for loans.
VEZANE VIJESTI
The trend of falling foreign debt is expected to continue during the rest of the year, thanks to continued deleveraging of all key sectors of the economy.
“Considering the plentiful liquidity and low interest rates, businesses are likely to continue refinancing their foreign debts in the domestic market,” they said.
They also said that in early July €750 million of euro-denominated bonds issued in 2022 are due to mature, and that the government announced it would issue a new bond in the foreign market in Q2 2018, worth 5.7 billion kuna (€772 million).
“The current conditions in the international financial markets indicate more favourable terms for financing, which will further improve the indicators of foreign debt. Having in mind the projected economic growth by the end of this year, we expect the foreign debt-to-GDP ratio to drop below 80 percent by the end of 2018,” RBA analysts said.
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