Croatia's gross foreign debt at the end of December 2015 was EUR 45.5 billion or 103.7% of GDP, which was 4.7 percentage points less than the year before, according to the latest figures from the Croatian National Bank (HNB).

It was the first time since 2014 that gross foreign debt had dropped annually, by EUR 1.1 billion or 2.4%, which was primarily the result of marked deleveraging of credit institutions which significantly intensified in the second half of 2015, Raiffeisenbank Austria (RBA) said in a study on Tuesday.

At the end of 2015, the gross foreign debt of other monetary financial institutions was EUR 6.1 billion, which was EUR 2 billion less than in December 2014 and represented an annual decrease of nearly 25%.

At the same time, the reduction of the foreign debt of credit institutions by EUR 817 million or 11.8%, compared with November 2015, most significantly contributed to the reduction of gross foreign debt on the monthly level, by EUR 1.7 billion or 3.5%.

On the other hand, the central bank increased its foreign obligations by EUR 1.2 billion annually.

The foreign debt of the general government sector reached EUR 15.9 billion at the end of 2015, accounting for nearly 35% of the total gross foreign debt.

While recording a monthly decrease of EUR 204 million or 1.3% compared with the end of 2014, the gross foreign debt of general government increased by EUR 498 million or 3.2%, RBA analysts said.

At the end of 2015, the total gross foreign debt of the public sector, which includes the foreign debt of public non-financial companies, totalled EUR 19.5 billion, accounting for nearly 43% of the country's total gross foreign debt. Thus the foreign debt of the public sector last year recorded a strong increase of EUR 1.7 billion or 9.7%.

On the other hand, the debt of the private sector at the end of 2015 decreased to EUR 25.9 billion, which was a monthly decrease of EUR 1.2 billion or 4.4%, mostly due to financial sector deleveraging. That's why the public sector debt recorded a significant decline of EUR 2.9 billion or 10.1% annually.

However, the foreign debt of private non-financial companies continued to rise in 2015, reaching EUR 11.7 billion, an increase of 4.7% annually.

Given the abundant foreign liquidity and favourable financing terms, further encouraged by the European Central Bank's monetary easing policy, in 2016 we expect continued borrowing by domestic companies with a higher credit rating on foreign financial markets, RBA analysts said.

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