Croatia's public debt amounted to 281.6 billion kuna (€38 billion) at the end of July 2018, down by 2.5 billion kuna (€337 million), or 0.9 percent, from the month before.

In their comment on these figures, Raiffeisenbank Austria (RBA) analysts said they expect the debt to continue falling, despite risks posed by the possible activation of state guarantees which the state had given for the projects of the ailing Uljanik shipbuilding group.

Broken down by components, the foreign debt increased by 2.2 billion kuna (€296 million) or 2.1 percent year-on-year to reach 105.1 billion kuna (€14.1 billion). Internal debt was reduced by 2 billion kuna (€269 million) or 1.1 percent to 176.5 billion kuna.

“Although we expect the positive trends of the reduction of public debt rate to continue until the end of this year, and the debt-to-GDP ratio to stand at about 78 percent at the end of 2018, the downside is the risk to public finances related to the developments at the Uljanik Group,” RBA analysts said in their report released on Monday.

According to the government, the state budget is exposed to up to 4.3 billion kuna (€579 million) in possible liabilities related to the cancelled projects of the failing Uljanik Group, which is about 1 percent of the country’s GDP.

By the end of this year, some 2.3 billion kuna (€310 million) in state-issued bank guarantees, including interest and fees, are likely to be activated and collected over the Pula-based company’s inability to deliver ordered ships.

(€1 = 7.42 kuna)

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