Finance ministry to draw up public debt management strategy soon

The Croatian government will need HRK 26.8 billion to service liabilities due this year and to cover the budget gap in 2011, according to the finance ministry, which on Wednesday announced its plan to draw up a public debt management strategy.
 

In March, bonds in the amount of EUR 750 million will be due and the government should take on new borrowing, but the exact amount of the new borrowing will depend on loan models, as there are plans to take part of the loans on the domestic market and a part on foreign markets.

According to the ministry, Croatia's public debt totalled HRK 133.9 billion at the end of September 2010, accounting for 40.7 percent of the projected GDP for 2010. The debt is likely to rise to HRK 137 billion, that is to 41.6 percent of GDP, at the end of 2010.

The potential debt also refers to state guarantees, including the debt of the Croatian Bank for Reconstruction and Development (HBOR) of HRK 13.7 billion, and state guarantees given to the HAC motorway operator, the HC road operator, the Croatian Railways company (HZ) and to state-run shipyards, in the total amount of HRK 43.4 billion.

State guarantees granted to the shipbuilding industry are some HRK 12 billion, but it remains to be seen how much of that amount will be paid from the state budget after the completion of the ongoing privatisation of docks.

The ministry said the public debt management strategy would aim at stabilising debt growth through the reduction of the budget gap and through fiscal restrictions.

The ministry will try to keep Croatia in the category of low-indebted economies in Europe.