Macroeconomic Forecast Croatia

December 2005 | Macroeconomic Forecasts

Despite increasing the unremunerated marginal reserve requirement for the foreign borrowing of commercial banks, the Croatia National Bank has struggled to stabilise gross external debt below last year’s level of 82.1% of GDP. Indeed, latest data show a relatively large increase in foreign debt since the start of 2005, and we expect the end-year figure to reach closer to 79.3% of GDP. Although public debt now originates mainly from domestic sources, reining in borrowing of foreign-owned banks is proving harder to control, leaving the economy vulnerable to external shocks

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