At the meeting held on Wednesday, July 4 2001, the Council of the Croatian National Bank, chaired by Governor dr. Zeljko Rohatinski, reviewed recent economic and monetary developments, 2000 Annual Report of the Institute for Domestic Payments and Annual Reports of the Agency for Deposit Insurance and Bank Rehabilitation for 1999 and 2000. Also, the CNB Council made a number of decisions acting in accordance with its authorities.

In the first quarter of this year, quarterly growth of GDP was realized for the sixth time in a row: it amounted to 4.2 percent. Since also more recent indicators of economic activity in the most significant sectors of the economy point at dynamic growth - industrial output rose by 8.2 percent in May and by 7.2 percent in the first five months of 2001 (compared with the same period last year), retail trade turnover grew in April by 13.3 percent and in the first four months of 2001 by 11.5 percent (compared with the same period last year), the number of tourist nights increased by 24 percent in the first five months of this year - it can be expected that the forecasted growth of GDP for 2001 will be attained.

According to the balance of payments data, exports have been growing considerably slower than imports, and the current account deficit is larger than last year. To a certain extent, such situation reflects the accelerated economic activity. If exports of other transport equipment (mostly ships, as an irregular component of exports) are excluded from the value of exports in kuna terms, in the first five months of this year exports were growing at a satisfactory rate of 11 percent.

Data on movements of prices in June are not available yet. Related to the exchange rate developments: after the central bank intervened on the foreign exchange market in April and May purchasing in total EUR 206 million, the accelerated growth of kuna against euro was curbed at the end of May. The satisfactory stability of the exchange rate was maintained in June without central bank interventions on the foreign exchange market.

At the Wednesday meeting, the CNB Council gave approval for keeping transaction accounts of business entities and performing payment transactions across these accounts to the following banks: Centar banka d.d. Zagreb, Međimurska banka d.d. Čakovec, Privredna banka Zagreb d.d. Zagreb, Raiffeisenbank Austria d.d. Zagreb, Riječka banka d.d. Rijeka, Sisačka banka d.d. Sisak, Varaždinska banka d.d. Varaždin, Volksbank d.d. Zagreb and Zagrebačka banka d.d. Zagreb. These commercial banks will start performing payment transactions for business entities as of October 15, 2001. The reason for setting the aforementioned start date is that the entry of banks in the payment system with new operations has to be coordinated with other changes in the system (enacting or amending by-laws, introduction of the Unified Register of the Accounts of Business Entities, etc.)

At the Wednesday meeting, the Council of the Croatian National Bank gave its approval to Hypo-Alpe-Adria-Bank AG for taking over up to 80.91 percent of voting shares in Slavonska banka d.d. Osijek. The increase of Hypo-Alpe-Adria-Bank's current share of 45.14 percent to 68.84 percent will be realized through recapitalization and the possible additional 21.25 percent will be acquired through purchase of shares from other shareholders (excluding EBRD). Bausparkasse Wüstenrot AG Salzburg and Wüstenrot Bank AG Ludwigsburg were approved acquiring 37.5 percent of voting shares in Wüstenrot stambena stedionica d.d. Zagreb each. This will lower the share of the currently only owner of this housing savings bank, Bank Austria Creditanstalt Croatia d.d. Zagreb, to 25 percent.