Speaking at a round table discussion held by the Croatian Academy of Arts and Sciences (HAZU) in Zagreb on Tuesday, the governor said that so far the central bank had forecast this year's GDP drop between 4 and 4.5 percent, however, the decline was likely to be higher.
There are estimates that the consolidated state's fiscal deficit would go around HRK 14 billion, but it is also likely to increase.
In order to finance the debt and to re-finance the previous debts in the amount of HRK 28 billion, the government would have to borrow HRK 42 billion, Rohatinski said.
In response to proposals given by other participants in the discussion that the HNB should opt for printing more money, Rohatinski said that the central bank would not print more new money and that the HNB could not handle this crisis by printing fresh money as it did in 1999.
He explained that the situation had considerably altered over the past 10 years when, for instance, the country's foreign debt increased from 55 percent to 83 percent of GDP.
Rohatinski said that the HNB had done all it could by injecting into the financial system about EUR 5 billion as an additional liquidity safeguard, which was at the level of 10 percent of GDP.
He said that the point was not to increase the deficit and carry out an expansive monetary and fiscal policy, but to cut the deficit regardless of the fact that this could deepen the ongoing recession under the present conditions.
He said that Croatia was not faced with a credit crunch, because this year's credit growth rate was as in previous years.
In this context he said that the structure of loans has been changed with loan placements to the state having been doubled, while other placements are mainly stagnating.
Commenting on a rise in interest rates, he said that interest rates are rising despite the relaxation of the monetary policy and the 20-percent cut in banks' regulatory costs. The reason for rising interest rates lies with Croatia's deteriorating credit rating in more expensive sources for financing and in the limits of savings at home.
The current crisis in Croatia should not be regarded as a spill-over of the global crisis. All that is happening around us has only triggered the escalation of long-standing problems in Croatia, according to Rohatinski.
He said that one of the important problems was the type of economic growth based on domestic demand.