CNB Council:

Encouraging economic development indicators

Published: 5/12/2001

At its meeting held on Wednesday, December 5, 2001, the Council of the Croatian National Bank, chaired by the Governor, Dr Zeljko Rohatinski, reviewed monetary and economic developments in the past three months and reached several decisions in accordance with its authority.

The available economic development indicators showed the continued GDP growth in the third quarter this year: industrial production grew by 6 percent, tourist nights by 7.8 percent, and retail trade increased by 8.2 percent compared to the third quarter last year. The productivity growth indicator is also encouraging, increasing at a rate higher than 4 percent over the last two quarters. The Labor Force Survey unemployment rate fell from 17 percent in the second semester last year to 15.3 percent in the first semester this year.

Moderate wage increases, along with a stable exchange rate and weakening fuel prices, have helped keep inflation low - at the end of the third quarter the year-on-year inflation rate amounted to 3.8 percent (3.2 percent in October). Core inflation also decelerated substantially from 4.4 percent at the end of the second quarter to only 2.3 percent at the end of the third quarter, at the annual level. Since core inflation is considered to be a good indicator of future inflation developments, it is reasonable to see low core inflation rates as harbingers of lower inflation in the immediate future.

As regards foreign exchange market developments in the third quarter this year, the volatility of the kuna exchange rate was somewhat more pronounced, which was partly the result of the liberalization of foreign exchange system allowing companies to freely dispose of foreign exchange deposits. The CNB interventions successfully mitigated the exchange rate fluctuations, and the central bank will continue, if necessary, to be active in this area in the forthcoming period in order to protect the satisfactory exchange rate stability.

The Council of the Croatian National Bank gave its approval for keeping legal persons' accounts and conducting payment transactions across these accounts to the following banks: Croatia banka d.d. Zagreb, Hrvatska poštanska banka d.d. Zagreb, Hypo-Alpe-Adria-Bank d.d. Zagreb, Jadranska banka d.d. Šibenik, Partner banka d.d. Zagreb, Podravska banka d.d. Koprivnica, and Slavonska banka d.d. Osijek. The number of banks authorized for keeping legal persons' accounts and conducting payment transactions thus increased to 26.

At this meeting, the CNB Council also reached several decisions related to the savings banks' obligation to increase their minimum amount of equity capital to 20 million kuna in order to act as banks: the approval was given to Međimurska štedionica d.d. Čakovec to merge with Gospodarska štedionica d.d. Vrbovec, to Varaždinska štedionica Kovanica d.d. Varaždin to merge with Štedionica More d.d. Zagreb, and to Štedionica Splitsko-dalmatinska d.d. Split to merge with Banica Credo štedionica d.d. Split. The savings bank Sonic d.d. Zagreb was granted the operating license to act as a bank, according to Article 35 of the Banking Law (limited authorization).

At the meeting, the CNB Council accepted the proposal of the Supervisory Board of HVB Bank Croatia d.d. Zagreb to appoint Goran Gazivoda MSc chairman of the management board, and the proposal of Varaždinska štedionica Kovanica d.d. Varaždin to appoint Katarina Kuhanec member of the management board.

Boris Barać was given a prior approval for the acquisition of 21.39 percent of voting shares in Credo banka d.d. Split, and Jurica Buljubašić was given a prior approval to acquire additional 14.68 percent of voting shares in Štedionica Splitsko-dalmatinska d.d. Split, which increased his share to 88.02 percent of voting shares.