Croatia's gross foreign debt was €40.6 billion at the end of the first quarter of 2018, down by €3.2 billion or 7.4 percent from the same period in 2017, with its foreign debt-to-GDP ratio likely to fall below 80 percent by the end of the year, according to data released by the central bank.

At the end of Q1 2018 the debt-to-GDP ratio was 82.1 percent.

Although Croatia’s foreign debt at the end of the first quarter was considerably lower than in the same period the year before, it still increased by €558 million or 1.4 percent from the end of 2017.

A considerable contribution to this growth came from an increase in the central bank’s short-term loan liabilities which at the end of March had increased by 21 percent to €1.9 billion, Raiffeisenbank Austria (RBA) analysts said on Thursday in their analysis.

On the other hand, March data confirmed a trend of increased deleveraging of other domestic sectors towards foreign creditors, as private non-financial companies, non-profit institutions serving households and households all recorded a fall in foreign debt since the end of last year.

General government gross foreign debt was €14.1 billion at the end of March 2018, down by €1.5 billion or 9.5 percent year-on-year.

The proportion of general government gross foreign debt in the total foreign debt remained around 35 percent, RBA analysts said, and added that a year-on-year drop by 11.9 percent was also recorded by other banks, whose gross liabilities towards foreign creditors reached €4 billion at the end of March.

“High year-on-year decrease rates in terms of foreign liabilities of banks have been recorded for many months now. Banks have been deleveraging because of relatively cheaper domestic deposits, high liquidity, and the still modest demand for loans,” the analysts said.

They said they expect a further decline in Croatia’s total gross foreign debt throughout 2018, owing to a deleveraging in all key sectors.

“With the projected economic growth, we expect that the foreign debt-to-GDP ratio could drop below 80 percent by the end of the year,” RBA analysts said.

Follow N1 via mobile apps for Android | iPhone/iPad | Windows| and social media on Twitter | Facebook.