In September 2018 Croatia's gross foreign debt totalled €38.7 billion, down by 2.5 percent or €977 million year-on-year, with the foreign debt-to-GDP ratio dropping to 76.2 percent of GDP, a report released by the central bank said on Thursday.

Analysts at Raiffeisenbank Austria (RBA) said in their comment on the latest figures that the drop in the debt-to-GDP ratio was mainly due to Croatia’s economic growth in Q3 2018.

The ratio, now at 76.2 percent, is down from 79.8 percent in the previous quarter of 2018, and from 81.8 percent twelve months ago in Q3 2017.

The reduction in foreign debt was also helped by a 13.1 percent drop in the debt of the banking sector, to €3.2 billion, a 5.1 percent drop in the foreign debt of other sectors of the economy to €13.5 billion, and a 2.8 percent drop in the central bank’s foreign debt, to €2 billion.

On the other hand, the general government’s gross foreign debt, which accounts for 35.3 percent of the country’s total foreign debt, remained unchanged at €13.7 billion at the end of September 2018, after posting year-on-year growth for four months in a row.

RBA analysts said they expect the trend of foreign debt de-leveraging to continue, encouraged by record high levels of liquidity on the local financial market, which was helped by central bank’s recent interventions in the money market.

In December 2018, the central bank purchased nearly €1.1 billion from commercial banks, injecting about 8 billion kuna into the local money market.

(€1 = 7.41 kuna)

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