Ten-day stay of the IMF Mission in Croatia started with today's meeting with the highest management of the Croatian National Bank. As explained by Mr Dimitri Demekas, the head of the Mission, the Mission did not come to Croatia to review formally the realization of the first stage of the stand-by arrangement - the first review is scheduled for December, but to acquire insight in current economic and financial developments, including the drafting of the 2005 government budget, and in frame projections of economic and fiscal policies for the coming three-year period. Thus, the IMF Mission expressed special interest in the latest balance of payments developments and external debt data. It was also interested in effects of the introduced monetary policy measures and further central bank moves aiming at maintenance of low inflation and general macroeconomic stability.
Governor Rohatinski informed the esteemed guests that, according to indicators, the 2004 inflation rate will be about 2 percent. In spite of the stagnation of services revenues, but due to improved export results, as suggested by available data, the 2004 current account deficit will probably amount to about 5.8 percent of GDP (in euro terms), which is less than last year. At the end of September external debt was about EUR 100 million lower than at the end of August (it was actually on the July level), reflecting also the effects of central bank measures introduced this summer. Until the end of the year no significant rise of external borrowing is expected. This presumed, it is assessed that the external debt could amount to 78.6 percent of GDP at the end of December - it will be about three percentage points higher compared with the May level, but with stagnation tendency.
Monetary policy projection for the next year has not been completed yet, but it can already be announced that the projection will be marked with the beginning of open market operations and further liberalization in the area of capital transactions.