Croatia's general government debt at the end of May was close to 344 billion kuna (€45.8 billion), or 1.7 percent up from May 2021, state agency Hina said on Monday citing publicly available data released by the central bank HNB.

Both internal and foreign debt components posted increases, with the internal debt increasing by 4.5 billion kuna or 2 percent, to 223 billion kuna, while the foreign debt component increased by 1.4 billion kuna or 1.2 percent to 121 billion kuna.

Analysts at Raiffeisenbank (RBA) cited by Hina said they expected the debt to continue growing “due to growing needs for financing.”

The general government debt was reduced by 12.1 billion kuna month-on-month, which is attributed to the re-financing of a eurobond that matured on 30 May, with a total nominal amount of €1.25 billion.

Year-on-year however they expect the general government debt to continue increasing, primarily due to unions demanding wage increases in the environment of pronounced inflation pressures, but also as a consequence of a series of fiscal measures such as subsidies to mitigate rising cost of living.

“Nonetheless, the continuation of economic recovery will keep the debt-to-GDP ratio moving downward this year and in the years ahead. Even though fiscal risks are increasing, we expect the general government deficit to remain at 3 percent of GDP,” they said.

The government projected this year’s public-debt-to-GDP to drop to 76.2 percent, which would be 3.6 percentage points down from 2021.

(€1 = 7.51 kuna)