ZAGREB, May 7 (Hina) - Between September 1998 and February 1999 the Croatian state and its funds became indebted with business and central banks to the amount of US$571 million. This increased the banks' claims to even US$1.8 billion,
which is a terribly high figure, Croatian National Bank (HNB) Governor Marko Skreb said on Friday at a meeting of the Croatian Economists' Association on banking. The banks' claims were decreased by US$143 million in March and April, he added. "There is no doubt that the economy in Croatia is in recession", Skreb said. The HNB estimates that this year's deficit in the balance of payments will increase by US$400 million due to the crisis, which, among other factors, is also caused by the NATO action in neighbouring Yugoslavia. Since a deficit of 5 - 5.5 per cent of the Gross Domestic Product (GDP) was expected, this increase will cause a decrease in the balan
ZAGREB, May 7 (Hina) - Between September 1998 and February 1999 the
Croatian state and its funds became indebted with business and
central banks to the amount of US$571 million. This increased the
banks' claims to even US$1.8 billion, which is a terribly high
figure, Croatian National Bank (HNB) Governor Marko Skreb said on
Friday at a meeting of the Croatian Economists' Association on
banking.
The banks' claims were decreased by US$143 million in March and
April, he added.
"There is no doubt that the economy in Croatia is in recession",
Skreb said. The HNB estimates that this year's deficit in the
balance of payments will increase by US$400 million due to the
crisis, which, among other factors, is also caused by the NATO
action in neighbouring Yugoslavia. Since a deficit of 5 - 5.5 per
cent of the Gross Domestic Product (GDP) was expected, this
increase will cause a decrease in the balance of payments amounting
to 7.5 per cent of the GDP, Skreb explained.
Skreb believes that financial adjustment and the solution of
deficits in the pension and health funds are of crucial importance.
The exchange rate of the Croatian national currency (kuna) has
registered "accelerated depreciation", the total depreciation
rate amounting to about 10 per cent.
Adding that last year the GDP in Croatia increased by 2.7 per cent,
Skreb said this year a one per cent fall could be expected, on the
condition that the economy recuperated in the second half of this
year. According to data from the International Monetary Fund (IMF),
world economy will increase by 2.3 per cent this year, and in the
year 2000 it will rise by 3.4 per cent.
One should not expect that the solution of the unemployment problem
will start this year, Skreb said, adding the inflation rate would
remain at 3 to 4 per cent "if there are no major external shocks".
Speaking about the banking system, current problems and their
solutions, the HNB Governor criticised bankers "for not having
accumulated sufficient reserves for the 'lean years'". A process of
serious consolidation of banks is underway, which means that those
banks which cannot survive must face bankruptcy, Skreb was
explicit.
He stressed the importance of financial discipline because "the
state is not willing to rectify the banks' and bankers' bad moves".
(hina) jn rml