ZAGREB, June 13 (Hina) - Croatia's National Bank (HNB) tried to work in a professional and fair manner, but the personal interests, petty politicking and all possible sorts of pressure made it more difficult for the bank to function,
the central bank's governor Zeljko Rohatinski, said presenting the HNB's 2001 annual report to the parliament on Thursday.
ZAGREB, June 13 (Hina) - Croatia's National Bank (HNB) tried to work
in a professional and fair manner, but the personal interests,
petty politicking and all possible sorts of pressure made it more
difficult for the bank to function, the central bank's governor
Zeljko Rohatinski, said presenting the HNB's 2001 annual report to
the parliament on Thursday. #L#
Last year the bank fulfilled its basic goals in large part,
Rohatinski said.
A low inflation was achieved, the stability of kuna's rate
maintained and the economic activities were revived to a certain
extent, the governor said.
From the start of 2000 until now the stability and liquidity of the
banking system was accomplished, and liquid assets rose by 50
billion kuna (6.85 billion euro) in that period. This reflects the
better confidence in the national banking system, he asserted.
In the said period interest rates dropped from 14 to low two (2)
percent on the money market, whereas loans to non-banking system
increased by 26 billion kuna (EUR3.5 billion).
This was accomplished with decreasing inflation, and the inflation
rate in 2001 was 2.6 percent, while it fell to low 1.8 percent in the
first five months of 2002. This is the absolutely lowest inflation
rate compared to other transition countries and is near to the
situation in the European Union, Rohatinski said.
Because of a budgetary deficit and debts, amounting to 10 percent of
the Gross Domestic Product, which the Croatian government incurred
abroad, there was a surplus in the supply as against the demand for
foreign currencies and the pressure was exerted on the kuna to
appreciate, he added.
Therefore the HNB was forced to intervene in the domestic market,
and as a result, foreign exchange reserves rose by over two billion
US dollars, Rohatinski said.
Describing the banking system as increasingly stable and
successful, he admitted that the system was not perfect and
therefore the problems with the Rijecka Bank could happen.
Responding to complaints that there was a too low income from the
foreign exchange reserves, the governor said the central bank
preferred stability to profitability of crediting.
(hina) ms