Croatia's gross external debt fell 0.7% m/m to €48.9bn at end-June, following a 0.9% monthly increase in May, preliminary central bank data showed. The decrease in June was driven by a decline in the central bank debt, the debt of commercial banks and the debt stemming from direct investments.
Despite the decrease, gross foreign debt will remain high this year as the country is just recovering from a long and severe recession. Croatia is expected to post economic growth for the first time after six years of decline. The approaching elections will weigh on the fiscal prospects and no meaningful consolidation of the finances is expected in the short term. Moreover, the investments which have shown signs of recovery this year are likely to increase domestic and external indebtedness.
The central bank debt dropped to €1.27bn from €1.37bn in May, while the debt of the commercial banks declined 2.9% to €8.15bn. The foreign debt stemming from direct investments fell 1.2% to €6.7bn.
In contrast, government liabilities inched up 0.2% on the month to €16.3bn, while the debt of other domestic sectors increased 0.3% to €16.4bn.
On an annual basis, the country's gross foreign debt rose 5.4% as of end-June.
|GROSS FOREIGN DEBT|
|EUR mn||end--June 15||end--May-15||end-June-14|
|GROSS FOREIGN DEBT - TOTAL||48,913.10||49,257.50||46,390.20|
|--short term debt||24.1||35.9||162.3|
|--long term debt||16,305.80||16,259.80||14,146.40|
|--short term debt||892.20||991.40||24.6|
|--long term debt||384.1||384.7||343.3|
|--short term debt||1,995.80||2,198.90||2,200.20|
|--long term debt||6,155.30||6,193.30||6,710.60|
|--short term debt||584.2||576.5||805.90|
|--long term debt||15,853.60||15,816.00||15,981.50|
|Source: National Bank of Croatia|
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