The central bank claims that the standard methods assessing the balance of the real effective exchange rate is yielding results which undoubtedly suggests the existence of equilibrium, namely an assessment under which the exchange rate would be classified as "broadly in line with fundamentals".
The HNB notes that in general it agrees with the findings and recommendations made during regular consultations between the Fund and member states in June.
The HNB, however, believes that the IMF's assessment of the real effective exchange rate is debatable and not convincing for three reasons: The IMF assesses countries with similar results regarding the exchange balance as being in line with the fundamentals; the method on which the IMF based its assessment of the overevaluated real effective exchange rate is not standard practice and is not used for other countries; the comparison the IMF makes to base its assessment on is completely arbitrary and inappropriate, the HNB said.
The IMF's interpretation for Croatia should be consistent with those made for other countries, in line with the principle of equal treatment for all IMF member states. The IMF has assessed other countries with similar or greater deviations in the real effective exchange rate as mostly in line with the fundamentals yet only in the case of Croatia has it assessed it as modestly overevaluated, the HNB said.