ZAGREB, April 24 (Hina) - The deficit of the balance of payments current account with a high 6.9 percent of Gross Domestic Product and an increase in foreign debt which exceeded 68% of GDP at the end of 2002, are two issues about
which a wider discussion should be held in Croatia, officials of the Croatian National Bank (HNB) believe.
ZAGREB, April 24 (Hina) - The deficit of the balance of payments
current account with a high 6.9 percent of Gross Domestic Product
and an increase in foreign debt which exceeded 68% of GDP at the end
of 2002, are two issues about which a wider discussion should be
held in Croatia, officials of the Croatian National Bank (HNB)
believe. #L#
The discussion should provide answers to questions about whether
the trends in the balance of payments and the degree of the
country's indebtedness are still tolerable or additional steps
need to be taken to decrease their share in GDP.
The bank's officials say that these are questions in which the
actions of the government and the HNB should become more
harmonised, HNB governor Zeljko Rohatinski and associates told
reporters.
Croatia's overall debt at the end of last year slightly exceeded
US$15.2 billion and its share in GDP rose to 68.1% in 2002, while at
the end of February, foreign debt was as much as $16.5 billion.
HNB officials assess that foreign debt this year would nominally
grow by more than three billion dollars. A third of this amount will
be the result of the exchange rates between the euro and the dollar,
while two thirds will be a true increase in debt. The HNB estimates
that this year, foreign debt will stay at around 68% of GDP.
The deficit of the balance of payments current account, which in
2002 exceeded 1.5 billion dollars, i.e. 6.9 percent of GDP -- as
opposed to 3.7% in 2001 and 2.5% in 2000 -- could drop this year.
However, its share in GDP will still be high, around 5.8 percent,
which is tough to maintain long-term, HNB officials warn.
Considering growth rates, which are in the best case scenario on the
level of interest rates, the share of savings in GDP and the
permanent deficit of current transactions, in conditions currently
in Croatia it is difficult to allow either an increase of foreign
debt or its staying at the same level long-term, i.e. around 68% of
GDP, without this having any negative implications, said
Rohatinski.
At the beginning of this year, the HNB took steps to limit the
rocketing number of bank loans based on foreign indebtedness. Now,
it is also prepared to undertake measures in its discretion
regarding foreign debt, should it feel it is necessary to do so.
These measures, however, can hardly be sufficient, so the bank
estimates that a higher degree of agreement should be reached
between the government and the HNB regarding these issues.
(hina) lml sb