ZAGREB, Jan 19 (Hina) - Croatia's foreign debt at the end of October 2002 was US$13.67 billion, which was $2.4 billion more than at the end of 2001. The sectors incurring new debts are primarily banks and the state.
ZAGREB, Jan 19 (Hina) - Croatia's foreign debt at the end of October
2002 was US$13.67 billion, which was $2.4 billion more than at the
end of 2001. The sectors incurring new debts are primarily banks and
the state. #L#
Reviewing the movement of the foreign debt, one must bear in mind
the influence exerted by the U.S. dollar-euro exchange rate.
According to Croatian National Bank (HNB) data, statistically the
foreign debt in last year's first nine months increased by almost
$850 million. Approximately two thirds of Croatia's foreign debt is
expressed in euros.
The increase in banks' indebtedness is not dangerous at present
because domestic banks generally have a good credit rating and work
towards expanding their credit policy. The growth in the state
debt, however, is a serious issue, HNB analysts say in the central
bank's latest bulletin.
According to HNB experts, to cut the state debt, which accounts for
some 43 percent of the entire foreign debt, and keep Croatia among
countries with medium indebtedness, one should focus on cutting the
state budget deficit.
HNB experts estimate the deficit of the consolidated state budget,
including extra-budgetary companies like Croatian Roads and
Croatian Highways, in 2002 will stand at 5.5 of gross domestic
product, which is a decline from the six percent recorded the
previous year.
For this year the government has set the consolidated state budget
deficit at five percent, with the International Monetary Fund's
consent, and said it intends to increase indebtedness on the
domestic financial market.
This, according to HNB analysts, would have a two-fold positive
effect -- it would reduce indebtedness abroad and expand the offer
of quality government securities on the domestic market.
The state's indebtedness accounted for the biggest share in the
increase of the foreign debt in last year's first nine months -- by
some $740 million, which is an increase of 14.8 percent, to $5.75
billion at the end of September and $5.82 billion a month later.
The biggest figures were recorded in the issuance of government
bonds, in amounts of 500 million euros and 25 million yen, on
account of which, despite reduced obligations according to the
Paris and London Clubs, the government retains the biggest share in
the foreign debt -- 43 percent.
Banks' indebtedness increased by 27.2 percent ($600 million),
mainly due to the higher foreign standings of the currency and bank
deposits -- a 115.5 percent increase ($800 million). This increased
the banks' share in the total foreign debt to 22 percent at the end
of September, when it stood at $2.93 billion, and to $3.17 billion a
month later.
Other sectors, such as firms and non-financial companies,
increased their indebtedness by 18.3 percent ($570 million),
mainly to purchase investing equipment. Their share in the total
foreign debt remained 28 percent, amounting to $3.7 billion at the
end of September and $3.71 billion a month later.
Direct foreign investments -- credit lines from foreign companies
to branches in Croatia -- in last year's first nine months grew by
some $240 million, which increased their share in Croatia's foreign
debt to 6.6 percent.
(hina) ha