Photograph: HINA/ Damir SENČAR /ds

Croatia's gross foreign debt was EUR 45.4 billion at the end of January 2016, down for the second consecutive month year on year, according to the latest figures released by the Croatian National Bank (HNB).

Compared with January 2015, gross foreign debt decreased by EUR 1.3 billion or 2.3%. Analysts at Raiffeisenbank Austria (RBA) say that the decrease was primarily driven by a fall in the debt of commercial banks as a direct result of bank deleveraging.

The Croatian Chamber of Commerce (HGK) says that the fall was somewhat more pronounced than in December 2015, adding that bank deleveraging has been continuously recorded in the last 45 months.

The HGK notes that the pace of the annual drop in the foreign debt of commercial banks increased from 8.4% in September 2015 to 27.3% in January 2016.

Commercial banks' gross foreign debt fell to EUR 6.1 billion in January 2016, which was a fall of nearly 2.3 billion compared with January 2015. The decline rate of 27.3% is the strongest annual decline yet, RBA says.

Other domestic sectors have also continued deleveraging. Their foreign debt dropped to EUR 16 million at the end of January 2016, down by 196 million or 1.2% compared with January 2015.

At the same time, general government foreign debt stood at EUR 15.7 billion, accounting for nearly 35% of the total gross foreign debt. Although it recorded a fall for two consecutive months month-on-month, government foreign debt continued to grow year-on-year, increasing by EUR 549 million or 3.6%, RBA analysts underscored.

Gross public sector foreign debt, which includes the foreign debt of public non-financial companies, totalled EUR 19.6 billion at the end of January 2016, increasing by EUR 1.9 billion or 11% compared with January 2015.

RBA analysts expect further growth of government debt, citing an expected new bond issue on the foreign market. However, given the projected lower fiscal deficit in 2016 and planned financing on the domestic financial market as well, annual government foreign debt growth might slow down, they concluded.

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