NATIONAL BANK OF CROATIA: ECONOMIC ACTIVITIES INCREASING ( Editorial: --> 8443 )

( Editorial: --> 8443 ) ZAGREB, 5 Nov (Hina) - The Croatian National Bank (NBH) advisory board on Wednesday held a meeting in order to consider financial and economic developments as well as the future basic tasks in the development of a stable and efficient banking system in Croatia and to adopt several decisions. The meeting was chaired by the NBH Governor Marko Skreb, said a statement from the NBH. Numerous indicators bear witness to the revival of economic activities in the country. Industrial production at the end of the nine-month period has reached a growth rate of 5.3%, with upward tendencies announcing even more favourable annual results. Construction activities are on the ascending line. Retail trade in the nine-month period has increased by some 5.6%, wholesale trade even more. The main tourist season was much better than in 1996, the statement said. The revival of economy did not have any negative effects on the stability of prices or the exchange rate, and it does not call for any changes in the monetary policy. Last month, retail prices were 0.2% higher than in September and 3.3% higher than in October last year. In the ten-month period, retail prices were 3.6% higher than in the same period last year. There are no large oscillations in the kuna exchange rate. Interest rates on bank assets have stabilised at some 14%, but still worrying is a big difference between active and passive interest rates. The financial reorganisation of the banking system and the strengthening of competition in 1996 have resulted in considerable improvement of liquidity, solvency and general stability, and even in the increased loan offer as well as in a decrease in interest rates. Profitability is on the ascending line and the share of non- operative loans is decreasing. There are several groups of banks within this general picture, which differ not only in size or growth rate, but in the quality of business. The growing pressure of market conditions and competition will increase those differences, demanding timely adoption of legal regulations and strengthened bank supervision, so that banks whose business is poor could be removed from the market before they cause system problems. This means that the way of informing the public about the financial situation of banks should be adapted to the current standards of the European Union. Members of the NBH advisory board agreed that it was time to prepare a new law on banks and a law on the NBH. The advisory board also agreed that the fourth Dubrovnik conference of countries in transition should be held from 24 to 26 June next year and dedicated to the question of central banking and monetary policy in transition, the NBH statement said. (hina) rm 051959 MET nov 97