ZAGREB, Sept 13 (Hina) - The level of Croatia's external debt does not pose an immediate threat, but it should be monitored closely, the head of the International Monetary Fund's mission to Croatia, Hans Flickenschild, said after a
meeting with Croatian President Stjepan Mesic in Zagreb on Saturday.
ZAGREB, Sept 13 (Hina) - The level of Croatia's external debt does
not pose an immediate threat, but it should be monitored closely,
the head of the International Monetary Fund's mission to Croatia,
Hans Flickenschild, said after a meeting with Croatian President
Stjepan Mesic in Zagreb on Saturday. #L#
The Croatian National Bank (HNB) as well as the government should do
their utmost to keep lid on external debt growth and reduce the
current account deficit. The current account deficit is not
necessarily an additional debt, because direct foreign investment
and reinvested profit can finance it without increasing the debt,
Flickenschild said.
HNB governor Zeljko Rohatinski stated this week that the external
debt, which now totals US$19 billion, could by the end of this year,
together with the current account deficit of seven percent of GDP,
reach the amount of almost $21 billion, which would increase its
share in GDP to over 70 percent.
The head of the IMF mission said that apart from the external debt
and the current account deficit, the talks with President Mesic
also addressed the mission's impressions of their visit to Croatia
so far.
He stressed that economic growth was higher than expected, that
inflation was lower than planned and that the fiscal situation was
better than expected. The talks, he added, also addressed the HNB's
forecasts and plans to curb credit growth and reduce imports, thus
decreasing the current account deficit.
Flickenschild recalled that the central bank in January introduced
measures to restrain credit growth and that in early September it
passed a decision increasing banks' compulsory foreign currency
reserves.
The HNB believes that these measures are sufficient to reduce
imports and improve the situation with the current account deficit
in the second half of the year. The IMF hopes this will happen, but
cannot be certain about it, Flickenschild said, adding that the
mission was considering the HNB's judgement.
The mission will continue discussing this matter in the
continuation of its visit, and will be able to say more at a news
conference on September 17, he said.
The question of another stand-by arrangement was not discussed at
the talks with Mesic. Parliamentary elections are scheduled for
November and that issue will be for the new government to decide,
said the IMF mission head.
The mission arrived in Croatia in the middle of this week for a
second review of the process of implementation of a stand-by
arrangement the IMF granted Croatia in February.
The delegation is expected to pay another visit at the end of the
year.
(hina) rml