The council, which held a session last Wednesday under the chairmanship of the HNB Deputy Governor Boris Vujcic, considered economic and monetary movements in the last months and adopted a projection for the monetary policy by the end of this year, the central bank said in a press release.
The council said that last summer's measures aimed at curbing the foreign debt produced results in the banking sector, as banks' loans taken abroad started to reduce gradually after their implementation. The entire foreign debt, however, is still rising, although this rise is slower in comparison to the first half of this year, or to 2003 and 2002.
In accordance to efforts to stabilise the foreign debt at the level it has already reached, the HNB council last Wednesday also decided to cut the mandatory reserves of banks from 19 to 18 percent, which would results in the reduction of the entire amount of mandatory reserves by some 1.8 billion kuna (1.1 billion in the kuna, and 0.7 billion kuna in foreign currencies holdings).
In this way, the central bank facilitates the realisation of prepared issuance of state bonds on the domestic market which the Finance Ministry is intending to use to substitute a part of the foreign debt. The reduction in the reserves also leads to a satisfactory level of the liquidity in the banking sector for the purpose of the said operation.
The decision is also in compliance with the central bank's long-term policy aimed at the gradual reduction of mandatory reserves, and it will be applied after the next calculation of the reserves on 8 November 2004.
The council also okayed a plan for the issuance of the commemorative coins and coin completions for 2005.