Rohatinski believes that this approach does not pay enough attention to negative consequences of the fast credit growth for the balance sheet, external debt and prices of real estate in the country.
Commenting on media reports that the IMF does not back the latest measures of the central bank on curbing the growth in the allocation of loans, including the limit up to a 12 percent-rise annually, Rohatinski said there was now an interesting situation.
"On the one hand, owing to fear of inflation, the European Central Bank is increasing interest rates to slow down the credit growth in the euro zone, which was 10 percent last year. On the other hand, Croatia is being asked to tolerate the growth rate of 20 percent and above. It can be concluded that one should ensure the flow of a liquid surplus from the euro zone to other markets, and mostly to the benefit of European banks and exporters," Rohatinski said.
That is why the HNB will not jettison the said measures which are an addition to prudential measures from the risk management guidelines rather than an alternative to those measures, the governor said.
The IMF permanent representative to Croatia, Athanasios Vamvakidis, sent a statement to Hina saying that the Fund "fully shares the HNB's concerns on Croatia's deteriorating external imbalances. We also welcome the HNB's efforts in recent years to slow down the fast credit growth and strengthen bank sector supervision."
"After all, this is the job of a Central Bank. However, it is well known that the IMF is skeptical about administrative credit controls and generally prefers prudential measures. The later includes the measures that the HNB has introduced in recent years and more recently the guidelines issued to the commercial banks," he said
"The reason is that the banks tend to find ways around administrative credit controls, often by lending through less transparent and less supervised channels, or by helping their clients to borrow directly abroad," Vamvakidis said.
"Although this can also be a problem with prudential measures, and indeed banks have been very innovative in avoiding the HNB's marginal reserve requirement, prudential measures improve the quality of credit, make the financial sector stronger in dealing with potential economic shocks and, indirectly, also slow-down credit growth."
"We hope that our skepticism will be proven wrong, but past experience has shown that in a small open economy like Croatia there is little that the Central Bank can do to directly control credit growth. More generally, the measures that the HNB has been taking in recent years could only buy time until fiscal consolidation and structural reforms progress further. And this is another issue on which we are in full agreement with the HNB," the IMF official said..