October 12, 2022 - With net financial assets of EUR 14,400 per capita, Croatia is currently in 35^th place on the list of the world's wealthiest countries, which is led by the US, according to the the13^th edition of the Allianz Global Wealth Report published on Wednesday.

Poslovni writes, as pointed out in the analysis, that last year was the third year in which global financial assets recorded double-digit growth and reached 233,000 billion euros. But 2022 marks a turning point, with the war in Ukraine halting the post-Covid-19 pandemic recovery and "turning the world upside down." Allianz wrote that inflation has taken off, there is a shortage of energy and food, and the tightened monetary policy is "suffocating" the economy and the market, adding that the wealth of households will feel the consequences.

"Global financial assets will fall by more than two percent this year, the first significant decline since the so-called great financial crisis of 2008. In reality, households will lose a tenth of their wealth. However, unlike the major financial crisis, which was followed by a relatively quick turnaround, the medium-term forecasts are quite pessimistic this time. Namely, it is expected that the average nominal growth of financial assets will amount to 4.6 percent until 2025, compared to 10.4 percent in the previous three years", says the Allianz forecast.

Allianz Chief Economist Ludovic Subran said that 2021 marked the end of an era. "The past three years have been exceptional, and for most depositors, they represented a period of prosperity. But this year and the coming years will be different. The cost of living crisis will test the concept of the social contract. Policymakers face the enormous challenge of mastering the energy crisis, implementing a green transformation, and stimulating growth while simultaneously curbing monetary policy. There is no more room for any mistakes in policies. The key to success lies in innovative and targeted measures at the national level, as well as in European unity at the supranational level", read Subran's statement, reported in the publication.

"A real danger of a debt crisis"

Allianz also expressed concern about the level of global household debt, which at the end of 2021 amounted to 52,000 billion euros, with high annual growth of 7.6 percent. At the same time, an increasing share of this debt is held by emerging economies, primarily Asia, with the exception of Japan.

"We are concerned about the sudden debt growth at the beginning of the global recession. Over the past decade, household debt in emerging markets has grown at double-digit rates, five times faster than growth in advanced economies. Still, overall debt levels appear manageable. However, given the unfavourable structural conditions faced by the aforementioned markets, there is a real danger of a debt crisis," said Patricia Pelayo Romero, co-author of the Allianz report.

The gross financial assets of Croatian households jumped by 10.9 percent last year.

The gross financial assets of Croatian households amounted to EUR 79 billion last year, with an annual jump of 10.9 percent, the highest growth in the past ten years.

"This outstanding performance was based on all three major asset classes and was driven by dynamic equity markets combined with massive savings efforts," Allianz wrote. After two strong years, they stated, total net inflows last year reached 7.2 billion euros, almost three times more than the long-term average. Nearly half of the new savings were converted into bank deposits, representing the most popular form of savings in Croatia, i.e., 49 percent of total assets. Thus, this category of assets achieved a growth of as much as 9.5 percent, despite "no" interest rates, Allianz said.

Furthermore, savings in the form of investments in shares, investment funds, and other securities recorded the highest growth rate of all asset categories, by 12.7 percent. "However, given its share in the portfolio of only 21 percent, it is clear that Croatian households still invest only a small part of their savings in capital market products, even significantly less than the average in Eastern Europe, which is 34 percent," they noted.

Among other things, insurance and pension products recorded a strong growth of 11.1 percent, whereby savers in Croatia invest 27 percent of their financial wealth in this asset category, which is almost ten percentage points more than they invested at the beginning the previous decade. On the other hand, there was a significant increase in debt last year, by four percent, much higher than the long-term average of 0.8 percent. In the same period, the debt ratio (liabilities as a percentage of GDP) fell by about six percentage points to 36 percent. Net financial assets, however, amounted to 58 billion euros, achieving a growth of 13.7 percent, according to data from the report.

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July the 14th, 2021 - Around 60 percent of Croatian households have no debt to speak of, which is not only surprising but is also below the Eurozone's current average.

As Jadranka Dozan/Poslovni Dnevnik writes, with the continuation of moderate growth rates of total bank loans to the private sector, the latest published data for the month of May confirmed the gradual recovery of household demand for cash loans and a slight slowdown in what was relatively high growth rates of housing loans.

However, this means that for ''cash'', which was the main engine of growth in the volume of loans to Croatia's residents until the outbreak of the pandemic, the annual decline continued to melt, while the growth rate of housing loans slowed to a still high 8.7 percent back in May, which is partly attributed to this year’s first subsidy programme.

The dynamics of credit growth in the household sector, measured by transactions in various loans, accelerated in May to 3.5 percent on an annual basis, from 3.1 percent in April, analysts from Croatian banks note.

In addition to these indicators, which provide a picture of current trends and trends from month to month, the Croatian National Bank gave a somewhat broader picture of the finances of Croatian households and consumption in its annual report for 2020. That report claims that almost 60 percent of Croatian households don't have any debt hanging over their heads. Overall, their level of indebtedness across Croatia is relatively (and quite surprisingly) low and below the Eurozone's current average.

The representation of mortgage debt in Croatia is four times less than the representation of non-mortgage debt on credit lines, overdrafts, credit cards, etc. The gross income of Croatian households, whose median is estimated at 8,400 euros, is also significantly below the Eurozone average, by about a third. Considering the sources that generate income in Croatia, employment income is the most strongly represented.

According to the CNB's survey-based data, 53 percent of Croatian households earn an income from work, approximately one in eight Croatian households (12.7 percent) have income from financial investments, and property rental income is, again also quite surprisingly, the least represented. Survey findings say that only 6.2 percent of Croatian households have this type of income, at least on record.

The CNB also cites some features of the structure of total consumption according to three main categories: for goods and services, for utilities and for food indoors and outdoors.

"According to the assessment of the value of the medial household and the assessment of the arithmetic mean, the consumption of goods and services is about twice as high as the consumption of food, and about three times higher than the consumption of utilities," it states. The median estimates of all three components of spending are lower, they say, than those for the Eurozone, ranging from 60 percent being spent on food at home and outside the home, to 75 percent of estimated spending being for utilities at the Eurozone level.

At the same time, in Croatia, as many as 94 percent of Croatian households have some form of property, while slightly more than four-fifths also have financial assets. However, real assets are very strongly predominant in the total assets of the household sector; with financial assets not even occupying five percent.

While financial assets are dominated by deposits here in Croatia, which account for more than two thirds, the average household in the Eurozone holds 43.7 percent of financial assets in deposits and allocates more to other types of savings and/or investments.

Comparisons with the average of EU member states also show that the inequality in the distribution of net assets among Croatian households is moderate, with a slight increase in financial assets.

However, the CNB warns that it should be borne in mind that the value of non-financial assets is based on the subjective assessment of the respondents, which may differ significantly from the actual market value. The phenomenon of underestimation of both real and financial assets is common, and Croatia is no exception to that.

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ZAGREB, 14 April, 2021 - Health Minister Vili Beroš said on Wednesday that the government and representatives of drug wholesalers had reached agreement on a debt settlement scheme.

The issue of the debt made the wholesalers restrict and defer the deliveries of medicines to hospitals in late March.

"Today's meeting is one more step towards the debt settlement," Minister Beroš said adding that only together the two sides could solve this decades-long issue which became exacerbated during the COVID-19 pandemic.

Finance Minister Zdravko Marić outlined the elements of the scheme.

In the next three months we will transfer some funds to the Croatian Agency for Health Insurance (HZZO), and the Health Ministry so as to enable the cash flow in those institutions and enable them to pay liabilities towards wholesalers and providers, Marić said adding that those funds would be ensured through the redirection and reallocation of outlays in the state budget.

The monthly allocation for hospitals will be HRK 600 million and an additional 300 million for pharmacies.

In June, the government is likely to conduct a budget revision whereby an additional cash inflow for hospitals and pharmacies will be ensured so that debt deferment period lasts no longer than 180 days for hospitals and 120 days for pharmacies.

In June alone, 135 million kuna will be directed to pharmacies and HRK 760 million to hospitals, with the plan to respect the deferment periods in the remainder of the year.

Marić hopes that this scheme will remove any need for any new meeting with wholesalers on the debt.

The finance minister also expects reform efforts in preventing any  further accumulation of liabilities and in this context he mentioned the plan to cut the deferment period to 60 days.

The wholesalers' representative Diana Percač thanked the ministers for efforts to provide funds to cover the debt.

She also pledged the continuation of the delivery of drugs to pharmacies until the end of this year.

(€1 = HRK 7.571658)

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ZAGREB, 6 April, 2021 - Health Minister Vili Beroš said on Tuesday that today's meeting with drug wholesalers was a clear sign that the government wanted to solve the debt problem, while Finance Minister Zdravko Marić said additional payments might be made so that drug supply ran smoothly.

"Today's meeting is a clear signal that we wish to solve this problem through joint effort. The meeting was constructive and Minister Marić left open the possibility of additional funds to make sure that drug wholesalers supply the health system regularly," Beroš told the press, reiterating that increasing health contributions was not being considered.

The meeting focused on short-term solutions and the debt repayment schedule, but the government is discussing healthcare reforms that will lead to long-term solutions, Beroš said.

"We presented to drug wholesalers our determination to embark on reforms and our willingness to settle the debt," he said, but added that the Croatian Health Insurance Fund had to redirect HRK 2.5 billion for the treatment of COVID-19 patients instead of regular healthcare.

"This government will do everything so that not one citizen remains without the medicines they need. Last week we found a way through direct payment for medicines necessary for life-threatening conditions, including for cancer patients."

The HRK 900 million ensured for drug wholesalers last week is part of the search for a solution, Beroš said.

(€1 = HRK 7.5)

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ZAGREB, 1 April, 2021 - Croatia's general government debt reached HRK 329.7 billion at the end of 2020, an increase of 12.6% compared with the end of 2019, with the general government debt to GDP ratio rising to 89.1%, the latest Croatian National Bank (HNB) data shows.

At the end of December 2020, the general government debt increased by HRK 526 million (+0.16%) from the previous month and by 36.8 billion (+12.6%) from December 2019.

At the end of last year the total debt amounted to 89.1% of the annual GDP, compared to 72.8% at the end of 2019.

The general government debt to GDP ratio had been falling since 2014, when it stood at about 85% of GDP. After decreasing to 72.8% of GDP in 2019, the needs for financing the measures to combat the coronavirus outbreak and the GDP decline led to the general government debt to GDP ratio increasing to 89.1% in 2020.

The general government debt includes the domestic and external debt components of central government, social security funds and local government.

HNB analysts noted that the debt increase was mostly due to a rise in the domestic debt component, which had gone up by HRK 4.1 billion (+1.9%) since November 2020 and by HRK 26.0 billion (+13.2%) since December 2019.

At the end of December 2020, the general government debt totalled 223.7 billion on the domestic market, while the external debt component amounted to nearly HRK 106 billion. The external debt component fell by HRK 3.6 billion (+3.3%) month on month and increased by HRK 10.8 billion (+11.3%) year on year.

The general government debt structure is dominated by long-term debt instruments. At the end of December 2020, the debt comprised bonds (64.4%), long-term loans (29.1%), and short-term loans and securities (6.5%). Compared with December 2019, the short-term debt rose by HRK 8.4 billion (+63.1%), while the long-term debt increased by HRK 30.5 billion (+10,9%).

(€1 = HRK 7.5)

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ZAGREB, 21 March 2021 - At the end of February this year, 233,736 consumers in Croatia were subjected to debt enforcement proceedings for HRK 16.9 billion owed, as were 15,504 business operators owing HRK 15 billion, according to the data from the Financial Agency (FINA).

The number of consumers in debt fell by 6,151 or 2.6% compared with February 2020, while their debt principal increased by HRK 100 million or 0.9% to HRK 16.9 billion.

The majority of consumers, or 103,050, owed less than HRK 10,000, while 100,904 consumers owed amounts ranging between HRK 10,000 and 100,000. On the other hand, the smallest number of consumers, i.e. 1,537, owed more than HRK 1 million, and their share in the total debt was 38.48%.

The bulk of consumers' debt, HRK 5.1 billion without interest, accounted for debt to banks as creditors, while debt to all financial institutions totalled HRK 5.9 billion.

The number of business operators in debt declined by 2,619 or 14.5% compared with February 2020. Their debt principal amounted to HRK 5 billion, down by HRK 730.9 million or 12.7%.

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