Minister Šuker: Croatia not considering stand-by deal with IMF

Croatia has earned good marks from the International Monetary Fund for its revised budget and for its fiscal and monetary policy, and the country is not considering a stand-by arrangement with the IMF at the moment, Croatian Finance Minister Ivan Suker said in Washington on Friday after talks with IMF and World Bank officials.

"An IMF mission was in Croatia a few weeks ago and they gave very good marks for the revision of the budget, for our fiscal and monetary policy and for the state of affairs in public finances. Therefore, at the moment we are not thinking about a stand-by arrangement with the IMF," Suker said after meeting IMF Executive Director Age Bakker, IMF Resident Representative in Croatia Athanasios Vamvakidis and IMF Europe Office Director Marek Belk.

Addressing Croatian reporters covering Croatia's delegation led by Minister Suker and National Bank (HNB) governor Zeljko Rohatinski at a 25-26 April spring conference of the IMF and the World Bank in Washington, Suker said that Croatia had so far been relatively successful in fending off the impact of the global economic crisis thanks to "its stable banking and financial sector" and it had already overcome some challenges. "However, Croatia is also sharing the destiny of the others," he added.

"In the times to come we must be very cautious so as to count on new funds which will be offered on the global market by institutional banks", the Croatian minister said commenting on IMF projections about the start of global economic recovery in the first half of 2010.

Asked whether Croatia could apply for a new flexible credit line from the IMF, intended for sound economies, which has so far been used by Mexico, Poland and Columbia, Suker answered in the affirmative.

It is the so-called credit line of precaution. Croatia is now in such a position that it doesn't need assistance with the imposition of conditions. We hold that we have carried out enough structural changes and a good revision of the budget to be able, like others who are not in big trouble, to ask for funds, Suker said.

He refuted a report by the USA News & World Report magazine which this week put Croatia into a category of top 10 countries with the highest economic problems.

"That report is unfounded and ill-intentioned," the minister said.

His remarks were corroborated by a statement by World Bank Vice President for Europe and Central Asia Region, Shigeo Katsu, who said that the Croatian financial system was very firm and well-managed.

Therefore, until recently Croatia handled the crisis well, however its economy has been shrinking as the country is strongly linked with others who are also exposed to the impact of the crisis, Katsu said.

He commended the Croatian government for having adopted the revised budget and urged it to continue cutting public spending and use the crisis as a possibility for the continuation of structural reforms.

Asked to comment on claims that the Croatian government was shunning a stand-by deal with the IMF due to the forthcoming local elections, Katsu said that in this financial crisis every financial assistance was welcome and that the IMF demanded discipline when granting funds.

Commenting on the IMF's forecast of a 3.5 percent contraction of the Croatian economy in 2009, Suker said that Croatia was sticking to its projections of a 2-percent downturn this year, but that clearer projections for this year would be possible in one or two months' time.

 

(HINA)

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