IMF Mission completes its visit to Croatia

Published: 12/2/1999

A final meeting with officials of the Croatian National Bank and the Ministry of Finance on Friday marked the end of a one-week stay of a Mission of the International Monetary Fund in Croatia, during which members of the Mission, headed by Mr. Hans Flickenschild, new chief of the Mission for Croatia, met with representatives of the Croatian central bank, several commercial banks, the State Agency for Deposit Insurance and Bank Rehabilitation, the Croatian Parliament, the Finance Ministry, the Health and Pension Funds, as well as with representatives of leading Croatian public enterprises to be privatised in the coming period.

In the meetings, special attention was paid to the possibilities for Croatia to preserve macroeconomic stability and enhance sound economic growth (after the recently recorded slow-down of economic activity) in an unfavorable international environment and taking into account significant changes in the global economy and on international financial markets.

The IMF Mission believes that the realization of the above mentioned goals will depend considerably on further reduction of the current account deficit (already reduced significantly in 1998). It is also important, according to the IMF Mission, that inflation should remain at the level recorded in the past few years. This goal can be achieved on condition that the government budget is balanced, wage growth is restricted and the soundness of the financial system enhanced. In addition, attention should be paid to the further maintenance of the stability of the exchange rate with fluctuations within a narrow band, so that no inflationary expectations are enhanced and considerable changes in the exchange rate avoided.