"The IMF is only a moderator. We make decisions on our own and in that sense the IMF has never been an obstacle for our plans to decide, define and implement measures for the growth and development on a sound basis, But if we do not often succeed in it, it is our problem," Governor Zeljko Rohatinski said at a forum called "Countries in Transition: IMF and the World Bank - Factors of Development and Stagnation," in Zagreb on Tuesday.
He recalled that the coalition government led by SDP chief Ivica Racan concluded a stand-by deal in 2000, after attempts to conclude stand-by arrangements in the 1990s failed due to political reasons. According to the HNB governor, the IMF then also wanted to play a political role and made the drawing of funds from the IMF conditional on the extradition of Bosnian Croat indictees to the Hague-based UN war crimes tribunal, but the then authorities in Croatia dismissed that condition.
Two years later, the Racan government concluded a new stand-by arrangement, vowing before the deal was made that it would not draw funds.
The arrangement was made in a bid to improve the country's credibility, which should be looked against the backdrop of what happened in Croatia and the fact that the country's credibility was low, according to Rohatinski's explanation.
He went on say that it would be naive to believe that five years later, when it started entry talks with the EU, Croatia did not need a new arrangement with the IMF.
According to his information, in 2004 the current government led by HDZ chief Ivo Sanader was not inclined to conclude an arrangement with the IMF. However, after the European Commission told Croatia that it would be given a positive opinion on its membership candidacy application in June, provided that it concluded a stand-by deal with the Fund, Croatian negotiators quickly travelled to Washington to negotiate the arrangement.
The EC has never explicitly stated that the arrangement with the IMF was one of the conditions for the avis or for the opening of the membership talks, but all of us who have been involved in that matter know that it has been hinted.
According to him, after the current deal expires in April 2006, Brussels expects its extension to the end of 2006.
"We have concluded arrangements with the IMF since our credibility is low and stand-by arrangements help improve our credibility," the governor said.
Responding to some objections that the fiscal and monetary policies, carried out in the last five years within those arrangements, were restrictive, he said that the polices were expansive.
To corroborate his claim, Rohatinski said that in the 2001-2003 period, the fiscal deficit was about six percent at the an annual level, and that loans approved by banks rose from their share of 52 percent in the Gross Domestic Product to 74 percent, with a rise in the foreign debt from 61 to 82 percent of GDP.
When in 2003 it became clear what was going on, the Croatian central bank began putting brakes on such trends at its own initiative, the governor said, adding that the IMF criticised those moves.
In 2004, when it was evident what was happening, the IMF changed its policy and sent a new mission and a new permanent representative to Croatia, with an emphasis that the new stand-by deal focus on the country's foreign debt and external vulnerability of the system, Rohatinski said.
Only recently a shift was made in the economic policy from an expansive one to a moderately restrictive one, but this policy is still flexible enough to allow a four-percent rate in GDP growth, he said.