At the end of January 2019, Croatia's gross foreign debt stood at €39.6 billion, down 1.5 percent or €585 million compared to January last year, reflecting the continuation of deleveraging which began at the end of 2015, Raiffeisenbank Austria (RBA) said on Tuesday in an analysis of figures released by the central bank.

On the month, foreign debt went up by 2.1 percent, or €800 million.

All the categories contributed to the annual decrease of the gross foreign debt except the central and other banks, which recorded increases of 20.4 percent and 7.6 percent respectively, RBA said.

In January 2019, the gross foreign debt of other domestic sectors dropped 2.6 percent on the year, to €13.1 billion. The general government’s gross foreign debt was €13.7 billion, down 3 percent from January 2018.

Thanks to positive economic trends and the further deleveraging of all key sectors, RBA analysts expect the gross foreign debt-to-GDP ratio to continue to decrease this year. At the end of 2018, that ratio was 75.1 percent, down seven percentage points on the year.

RBA analysts said the continuation of the European Central Bank’s expansionary monetary policy will keep the costs of foreign borrowing low.

The recent upgrade of Croatia’s credit rating to investment level will contribute to better financing terms, but if Croatia’s progress in structural reforms remains modest, it will lead to a higher risk perception and, consequently, a higher country risk premium, RBA analysts said.

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