Croatia's gross foreign debt at the end of February 2021 amounted to €42 billion, or 1 percent up from the previous month and 0.2 percent down year-on-year, according to data released by the central bank HNB on Wednesday.

Commenting on the data, analysts of Raiffeisenbank Austria (RBA) said the central government saw an 11.3 percent year-on-year increase in its foreign debt, while the central bank, other monetary financial institutions and other domestic sectors (companies) saw a drop in their foreign debt, which in the business sector had been declining constantly since October 2019.

Compared to the end of 2020, the gross foreign debt at the end of February was up 2.8 percent.

RBA analysts note that in 2020 the decline in foreign debt slowed down significantly compared to the year before, mostly as a result of a drop in foreign liabilities of other domestic sectors (companies), which in the conditions of the pandemic discontinued investments and new borrowing while the government’s foreign debt rose.

With the debt’s absolute amount almost stagnating, at the end of 2020 the relative indicator of the gross foreign debt rose by 7.3 percentage points from the end of 2019, to 82.7 percent of GDP, due to a drop in the nominal GDP.

The analysts expect the economic recovery forecast for this year to contribute to a reduction in the share of the gross foreign debt in GDP and they expect the gross foreign debt to continue rising in absolute amounts due to the economy picking up and new borrowing on foreign markets, both by the private and the public sector.

“We expect that Croatia, supported by continued expansionary monetary policies by leading central banks, will continue meeting its foreign obligations under favorable financing conditions,” the analysts say.