At the meeting held on Wednesday, December 13 2000 at the Croatian National Bank, a Mission of the International Monetary Fund, headed by Mr. Hans Flickenschild, continued discussions with Croatian authorities on recent and expected economic and financial developments in Croatia. The fact that, after the visit of the Mission in October, final version of the state budget was prepared and also discussed in the House of Representatives of the Croatian Parliament, makes it possible for the Mission to acquire a more complete picture of government's policies and goals, thus enabling more concrete agreements on future cooperation between the IMF and Croatia. The Mission will be in Zagreb one week.
Governor of the Croatian National Bank dr. Zeljko Rohatinski informed the Mission that the international trade deficit for the first three quarters of 2000 is about USD 500 million lower than the deficit for the same period last year. Improvements were observed especially in tourism. According to most recent data, current account recorded a surplus in the third quarter, thus neutralizing the deficit observed in the first half of the year. Consequently, it can be expected that the current account deficit for 2000 will not exceed 5 percent of the Croatian GDP. According to estimates, the GDP growth for 2000 could be higher than 3 percent in spite of unfavorable indicators of industrial production developments in October and November.
Inflation movements slowed down since the Mission's last visit: retail prices and cost of living grew by 0.2 percent in November. International liquidity of Croatia is satisfactory, international reserves are still trending upwards. Lately, the exchange rate of the kuna depreciated moderately. These changes, however, presently do not call for any interventions of the central bank. Due to the implementation of the September decision on reduction of reserve requirements, HRK 500 million were set free last week. According to central bank assessments, this amount will be absorbed by the system without causing disturbances and calling for special sterilization measures.
Related to the new monetary and financial regulations, the IMF Mission was informed that the Croatian Government completed its discussion on the Central Bank Bill and submitted it to the Parliament. Foreign Exchange Law is to follow the same procedure and the work on the New Banking Law will soon begin. In early February 2001, the National Clearing System will start operating, thus enabling improvements in domestic payment system functioning.