At its meeting today, chaired by Governor Dr. Rohatinski and attended by Finance Minister Šuker, the CNB Council reviewed a report on recent economic and monetary developments and a report on the banking system condition in the last quarter of 2005. The Council also gave approval for some ownership changes and for new appointments to several banks' management boards.
The real sector of the economy has seen continued growth of industrial production, with previous data indicating a higher than expected rate of overall economic growth in 2005. Primarily affected by the oil price increase, consumer prices rose in 2005 at a higher rate than in the previous three years, recording an increase of 3.6% in December over the year before and of another 0.6% in January 2006 over December. This was to a large extent due to energy prices and administratively increased prices in the service sector. However, expectations are that prices will slow down further in the year and that this year's inflation rate will again fall below 3%.
Price growth pressures would have been even stronger had it not been for the stabilising effect of the exchange rate. Under appreciation pressures in all the recent months, the exchange rate appreciated by 0.8% in the last quarter of 2005 and by an additional 0.9% in the first two months of 2006. The CNB repeatedly intervened in the foreign exchange market late last year and early this year, aiming to prevent further strengthening of the kuna.
Despite strong growth of bank placements both in 2005 and in January 2006, largely generated by foreign sources of funds, data confirm a considerable slowdown in foreign borrowing compared with the previous years, resulting from measures implemented by the central bank.
Also at this meeting, several companies within Agram Concern (Euroherc osiguranje, Agram životno osiguranje, Sunce osiguranje and Jadransko osiguranje) were granted approval for the acquisition of a more than 20% share in Nava banka d.d., Zagreb. Trajektna luka Split was granted approval to increase its share in the equity capital of Imex banka d.d. Split to over 33%.
The CNB Council consented to the proposal of the Imex banka d.d. Split Supervisory Board for appointing Ružica Šarić as member of the Management Board, and to the proposal of the Supervisory Board of Primorska banka d.d. Rijeka for appointing Duško Miculinić as chairman and Anto Pekić and Željka Pavić as members of the Management Board.