Government adopts decision to accept IMF`s general , special SDR allocation

The Croatian government on Thursday adopted a decision to accept a general and special allocation of International Monetary Fund Special Drawing Rights worth a total US$ 450 million.

Finance Minister Ivan Suker said that based on an IMF decision on a general SDR allocation to member-countries, Croatia had the possibility to use 74.15 per cent of its quota in the IMF, or 271 million worth of SDRs.

Based on other IMF decisions on a special SDR allocation, Croatia is entitled to another 32 million in SDRs, which totals 303 million SDRs, an equivalent of about $450 million.

The funds will be allocated into the central depository account at the Croatian National Bank (HNB). If they are to be used, the government will have to adopt another decision.

The general and special SDR allocation is a global anti-recession measure increasing economic system liquidity, and does not constitute a new borrowing or a new stand-by arrangement with the IMF, Suker said, adding the funds would be used only as a last resort.

He stressed that all payments due from the state budget in August were made on time and that "regardless of the difficulties and the environment, we are meeting our financial obligations".

Suker said that given Croatia's position on the international financial market and the conditions under which the state bonds issued in late May were being traded, he expected Croatia to finance all its needs by the end of the year without a problem, namely refinance due obligations and finance the deficit and everything being paid from the state budget, as well as to be able to provide funds for the refinancing of the high external loans due in the first two months of 2010.

Croatia is showing that it can lead its financial and economic policy as well as refinance and finance its obligations alone, and will therefore have a more favourable interest rate on borrowing abroad than would be the case if the IMF allocation funds were used, said the minister.