At its first working session, the new Croatian National Bank Council today reviewed recent economic and monetary developments, as well as an international reserve management report for the first half of 2006 and a banking system condition report for the second quarter of 2006. The Council also enacted several decisions within its jurisdiction.
Attention was in particular directed to external borrowing decreasing, according to the latest indicators, for the second consecutive month: external debt totalled EUR 26.79bn at end-August, dropping by EUR 392m from end-July and by EUR 666m from its record high at end-June.
Of this, EUR 6.57bn went to government external debt, holding steady around this figure for the last two months. Bank debt dropped from EUR 10.29bn to EUR 8.97bn, the level reached at the end of last year, while other sectors' debt rose from EUR 7.99bn to EUR 8.53bn. Direct investments classified as borrowings advanced from EUR 2.60bn to EUR 2.71bn.
Government debt fell by 5.1% from August last year to August this year, bank debt rose by 11.7% and that of other sectors by 25.7%, with direct investments classified as borrowings increasing by 15.6%.
Council members were also briefed on a new monetary policy measure within the Governor's authority, providing for the inclusion of foreign currency indexed kuna deposits in the base for calculating the required 32% coverage of banks' foreign exchange liabilities by liquid foreign exchange claims. It was these deposits, kuna denominated and in fact mainly representing liabilities towards foreign exchange depositors from abroad, that banks used in an attempt to sidestep the above requirement.
Also at this session, the CNB Council approved of the proposal of the supervisory board of OTP banka Hrvatska d.d. Zadar that Mr. Balasz Pal Bekeffy be appointed as the Bank's management board member.