Although most economists believe this foreign debt increase is a one-time occurrence, some analysts warn that foreign debt will continue to increase
Croatia’s foreign debt increased by EUR 1.7bn in the first 4 months of 2012, amounting to EUR 47.4bn in total. This is the result of the latest borrowing in the US market, where Finance Minister Slavko Linic sold USD 1.5bn worth of bonds in April, and the fact that the Government took on a part of foreign liabilities of three shipyards. Although most economists believe this foreign debt increase is a one-time occurrence, some analysts warn that foreign debt will continue to increase as the Government will need funding to start the announced investment cycle. Croatia has not had problems with servicing its foreign debt obligations so far, and it is expected it will remain so, but it is alarming that foreign debt exceeds Croatia’s exports several times as it confirms Croatian economy’s lack of competitiveness. Croatia’s foreign debt increased from EUR 13.6bn in 2001 to EUR 46.5bn in 2010, which is related to the economy’s fast growth, and the main debtors are now banks and companies, not the Government. But the demand has been weak in Croatia so the Government will have to take on the role of the main borrower to try to start up the economy with an inflow of foreign money.