ZAGREB, May 23 (Hina) - The head of the International Monetary Fund (IMF) Mission, Hans Flickenschield, said on Friday the IMF board of executive directors would consider a new Croatian letter of intent based on the country's current
stand-by deal with the Fund on August 1.
ZAGREB, May 23 (Hina) - The head of the International Monetary Fund
(IMF) Mission, Hans Flickenschield, said on Friday the IMF board of
executive directors would consider a new Croatian letter of intent
based on the country's current stand-by deal with the Fund on August
1. #L#
Croatia's macroeconomic indicators continue to be good, inflation
might fall below 2.5 percent, the exchange rate is stable,
privatisation revenue is expected to grow, the central bank's
foreign reserves are at a record high, cover five months of imports
and are 200 percent higher than debt servicing requirements,
Flickenschield told a news conference.
The main concern is the rising foreign debt, from 58 to 68 percent of
Gross Domestic Product, and the growth of current accounts' deficit
to 6.9 percent of the GDP, he said. This year, said deficit might
drop to about 5.5 percent of the GDP, which is still high, but for
the IMF it is acceptable if in the middle term it comes to about 4.5
percent, he said.
Asked about the foreign debt, which has reached US$16.5 billion,
Flickenschield said last year's growth of foreign loans had a
threefold effect -- because of debts incurred by commercial banks
to cover the demand for loans, and because of direct debts companies
incurred abroad, of which a large portion referred to leasing and
was in effect a substitute for bank loans. The government's
indebtedness abroad affected the growth of foreign loans the
least.
Flickenschield said the 10-percent growth in one year was a lot, but
stressed only half the figure were new debts, while the other half
were the result of the exchange rate and the depreciation of the
U.S. dollar. What nominal figures are saying is not serious but the
problem is financing and servicing, he said.
The measures the central bank introduced in January have started
yielding results, and the loan growth in this year's first quarter
is five percent.
Over the past two weeks, an IMF delegation held a series of talks at
the central bank, with representatives of the government, the
ministries of economy, finance, health, labour, and tourism, the
Health Insurance Bureau, the Croatian Bank for Reconstruction and
Development, several commercial banks, unions, and other
institutions.
(hina) ha sb