SABOR COMMITTEES ENDORSE CENTRAL BANK'S ANNUAL REPORT

ZAGREB, June 11 (Hina) - The Sabor's Committee on Finances on Tuesday endorsed the annual report by the Croatian National Bank (HNB) for 2001, obliging the central bank to submit, within 30 days, a full report on the activities of the HNB's sector for supervision and control. #L# Even though HNB representatives claimed that the Croatian banking system had never been so stable, the Committee warned about the excessive deposits and low revenues from foreign currency reserves as well as about the HNB's poor monitoring over other banks. Committee chairman Jadranko Mijalic claimed that the HNB was responsible for the Rijecka Banka affair which caused a loss of almost $US100 million. HNB vice-governor Cedo Maletic responded that the Rijecka Banka affair was an exceptional case of forged documentation which HNB's auditors could not detect. Another vice-governor, Relja Martic, highlighted that last year saw a continued trend of bank consolidation and higher efficiency. There was a fall in interest rates and foreign currency reserves reached a record level of $US4.75 billion, he said, adding that the trend of growth of foreign currency reserves had continued into 2002. A low inflation rate was maintained, retail prices increased by a mere 2.6 per cent, and the monetary policy was not restrictive in the process. Loan and economic activities increased as well, Martic added. The Committee members, however, questioned whether the high reserves were worthwhile considering the low revenue and requested a comparative study of the revenues in neighbouring countries. The Committee also endorsed an agreement on an EBRD loan worth 90 million euros for the construction of the Zagreb-Split highway. The HNB report was today also endorsed by the Committee on Economy. (hina) sp rml