At the end of Q2 2018, Croatia's total gross foreign debt amounted to €40.1 billion, or 80 percent of the country's GDP, with analysts expecting the debt-to-GDP ratio co drop below that level by the end of the year.

Compared to Q2 2017, the nation’s foreign debt dropped by 0.2 percent or 97 million. This is attributed mainly to the deleveraging of financial institutions by 4.7 percent year-on-year, to €4.1 billion, as well as other sectors, which lowered their debt by 7 percent, to €13.5 billion, data released by the central bank on Wednesday showed.

This continues the deleveraging trend which has been going on since January 2016. The central bank’s debt also fell year-on-year by 14.4 percent, to €1.3 billion.

On the other hand, the general government accounted for 36 percent of the total gross foreign debt, and totalled €14.4 billion, up by 3.8 percent year-on-year, or €531.3 million.

Compared to Q1 2018, the gross foreign debt dropped by €500 million.

“Looking at 2018 as a whole, we expect the trend of falling gross external debt to continue… The lower debt should come as a result of deleveraging in all key sectors. Combined with the projected GDP growth, we expect the debt-to-GDP ratio to drop below 80 percent by the end of 2018,” analysts of the Raiffeisenbank Austria said.

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