Journal Issue
Share
Article

Staff Report for the 2011 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund
Published Date:
July 2011
Share
  • ShareShare
Show Summary Details
Annex I. Croatia: Fund Relations

(as of April 30, 2011)

I. Membership Status: Joined: December 14, 1992; Article VIII

II. General Resources Account:

SDR Million%Quota
Quota365.10100.00
Fund holdings of currency (Exchange Rate)364.9499.96
Reserve Tranche Position0.160.04

III. SDR Department:

SDR Million%Allocation
Net cumulative allocation347.34100.00
Holdings303.2587.31

IV. Outstanding Purchases and Loans: None

V. Latest Financial Arrangements:

TypeDate of

Arrangement
Expiration

Date
Amount Approved

(SDR Million)
Amount Drawn

(SDR Million)
Stand-ByAug 04, 2004Nov 15, 200699.000.00
Stand-ByFeb 03, 2003Apr 02, 2004105.880.00
Stand-ByMar 19, 2001May 18, 2002200.000.00

VI. Projected Payments to Fund1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20112012201320142015
Principal
Charges/Interest0.170.240.240.240.24
Total0.170.240.240.240.24

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

VII. Exchange Rate Arrangement:

In December 1991, Croatia left the Yugoslav dinar area and adopted the Croatian dinar as its sole legal tender. The Croatian dinar was replaced by the Croatian kuna on May 30, 1994. The exchange rate of the kuna is determined by supply and demand in the interbank market, with tight management by the CNB. Croatia’s de facto exchange rate arrangement is classified as “crawl like arrangement” from April 30, 2011. The CNB transacts only in euros, U.S. dollars, and SDRs. On May 23, 2011 the official exchange rate was kuna 7.41564 per euro (middle rate).

VIII. Exchange Restrictions:

Croatia has accepted the obligations of Article VIII, Section 2-4 and maintains an exchange system that is free of restrictions on payments and transfers for current international transactions, except for restrictions that Croatia maintains solely for the preservation of national or international security that have been notified to the Fund pursuant to Executive Board Decision 144 (52/51).

IX. Article IV Consultation:

The previous Article IV consultation with Croatia was concluded on June 21, 2010 (IMF Country Report No. 10/143 available at: http://www.imf.org/external/country/hrv/index.htm). Croatia is on the 12-month consultation cycle.

X. FSAP:

An FSAP Update mission took place in October-November 2007. The FSSA Update was published (IMF Country Report No. 160 available http://www.imf.org/external/country/hrv/index.htm).

The original FSAP was concluded with the completion of the 2002 Article IV consultation on August 5, 2002 on the basis of missions that took place in April 2001 and September 2001. The FSSA was published (IMF Country Report No. 02/180).

XI. Technical Assistance 2000–10:1

DepartmentTimingPurpose
FADApril 2000Implementation of Single Treasury Account
May 2000Tax Policy
September 2001Fiscal Decentralization
March 2002Fiscal Management (with STA)
September 2003–March 2004A Resident Advisor on Fiscal Reporting
February 2004Public Debt Management Program (with World Bank)
May 2004Public Expenditure Management
May 2004Fiscal ROSC
April 2005Review of Indirect Tax Performance and Tax Administration
June 2006Regional Public Financial Management (PFM) Advisor
February-March 2007, July 2008, February-March 2009Revenue Administration (with World Bank)
April 2007Public-Private Partnerships
May 2007Tax Policy (with World Bank)
January-February 2008Short-Term Expenditure Rationalization
February 2010PFM (long-term advisor visit)
October 2010Regional expert participation on seminar on Croatian budget management and fiscal policy
March 2011Short-term expert visit on Tax
June 2011Administration Reform
Short-term expert participation at OECD meeting
STAMarch 2000Quarterly National Accounts
September 2000Balance of Payments
October 2000Real Sector Statistics
April 2001Monetary and Banking Statistics
March 2002Accounting and Budgetary Classification
October 2002,(FAD)
June 2004Government Finance Statistics
September 2006Monetary and Financial Statistics
December 2007LTE: Government Finance Statistics
MCMMay-June 2000Coordination between CNB and the Ministry of Finance, Central Bank Law, Banking
Law, and Money and Securities Markets
March-April 2001Central Bank Accounting
December 2001Monetary Policy Instruments
April 2003Stress Testing and Foreign Exchange Reserve Management
February 2004Monetary Policy Instruments
January 2007-Macro-Financial Modeling and Forecasting
continuingMacro-Financial Modeling and Forecasting
May 2007Modeling and Forecasting
June 2007Modeling and Forecasting
September 2007FSAP Update
October 2007Modeling and Forecasting
November 2007Modeling and Forecasting
March 2008Macro-Financial Modeling and Forecasting
August 2008Macro-Financial Modeling and Forecasting
February 2009Modeling
July 2009Monetary Policy and Modeling
May 2010Modeling
March 2011
LEGApril 2010AML/CFT
August 2010AML/CFT
February 2011AML/CFT
May 2011AML/CFT

XII. Resident Representative: The post closed in June 2007.

Annex II. Croatia: Statistical Issues

1. Data provision is broadly adequate for effective surveillance, though some improvements would be desirable. While remedial action has been taken to improve data coverage and reliability in most cases, progress in some instances has been impeded by insufficient resources and issues regarding coordination among government agencies. Croatia subscribes to the Special Data Dissemination Standard.

A. National Accounts

2. The national accounts have undergone substantial improvements in the last few years. The Central Bureau of Statistics (CBS) publishes constant and current price data compiled in accordance with the 1995 ESA. Quarterly GDP estimates are disseminated at current prices and at constant (2000) prices for the main categories of expenditure and main industry groupings. Nonetheless, shortcomings remain. Significant discrepancies exist between expenditure-based and value-added-based GDP data, stemming from: (i) problems of coordination between the CBS and the Croatian National Bank (CNB) in reconciling tourism receipts estimates; (ii) incomplete coverage of unincorporated businesses and the self-employed (farmers, traders, and craftsmen); (iii) inadequate data for measuring changes in inventories; (iv) incomplete coverage of the informal sector; and (v) a lack of quarterly data for the seasonally volatile agricultural sector.

B. Prices

3. The CBS produces a monthly consumer price index, with expenditure weights (updated every five years) derived from a 2005 Household Budget Survey. Between rebasing, the weights are price-updated annually to December of the previous year. Data are collected at different time periods in the month for different product groups but in all cases between the thirteenth and the twenty-first day of each month. The indices are released around the fifteenth day of the following month. The price collection is confined to nine towns, but the weights are based on a sample of households in the whole country. A harmonized index of consumer prices (HICP) is also calculated in line with Eurostat methodology, but is not released for the time being to avoid confusion. A core CPI is also calculated based on a methodology developed by the CNB. The CBS also releases a monthly producer price index (PPI), usually on the eighth day of the following month. The weighting system of the PPI is based on the 2000 Annual Report of Industry and is changed every five years, while weights are partially corrected every year.

C. Wages and Employment

4. The CBS produces data on average net and gross earnings per person and employment by sector. Earning data include bonuses, sick pay, and meal allowances, and are based on monthly surveys covering 70 percent of workers in permanent employment in each industrial category. They do not cover a significant part of the working population, including persons employed in trade and crafts, contract workers, farmers, and the military and police.

5. The number of registered unemployed overstates the actual level of unemployment. A preliminary Labor Force Survey, which meets ILO standards, was conducted for the first time in 1996 on 7,200 households. The sample was subsequently expanded and the survey is now being conducted on a regular basis. The CBS released semi-annual results from 1998, and began releasing quarterly results in 2007 with a lag of about four months.

D. Government Finance Statistics

6. The authorities have started presenting budget plans based on the ESA 95 framework, but government finance statistics produced on a monthly basis on the GFSM framework (GFS) have been available in the Monthly Statistical Review of the Ministry of Finance (MoF). Data normally come with a lag of about one quarter. Revenue data are reliable, and expenditure data on a cash basis are available according to GFS classifications (economic and functional) for the central budget and the budgetary funds. The data on central government financing in the MoF reports are not reconciled with those in the CNB’s monetary survey and balance of payments data, with substantial discrepancies owing partly to different methodologies and definitions of government. Following the recommendations of the October 2002 GFS mission, a task force, comprising staff from the MoF, CNB, and CBS was formed to reconcile central government financing data produced by these institutions.

7. The detailed data on domestic public bonds published in the Monthly Statistical Review are now augmented by a central government debt table in the CNB Monthly Bulletin, which also reports stocks of central government guaranteed debt. The MoF prepared a database with government guarantees in July 2003 that has been used to monitor developments in the stock and flows of guarantees.

8. Data on the operations of local governments and consolidated general government are available on a quarterly basis. Local government data are partial as they include the operations of the 53 largest municipalities.

E. Monetary Data

9. Compilation of monetary statistics published by the CNB is consistent with the recommendations of the IMF’s 2000 Monetary and Financial Statistics Manual (MFSM). Data on the monetary survey, including separate records for deposit money banks and the balance sheet of the CNB, are published monthly with four- and two-week lags, respectively. The CNB is planning to extend its statistical framework to balance sheet information of investment funds and insurance companies. In March 2002, the CNB started collecting financial information (balance sheets and investment structure) from investment and pension funds; the data are not yet published, but used for internal purposes. According to the CNB, the inclusion of other financial corporations in monetary statistics depends on the harmonization process of the monetary statistics with the statistical reporting requirements of the European Central Bank. In November 2006, the CNB reported monetary data in the format of Standardized Report Forms for December 2001 to the present. These data accord with the concepts and definitions in MFSM and were published, along with the corresponding metadata, in IFS and the IFS Supplement on Monetary and Financial Statistics.

F. External Sector Statistics

10. Quarterly balance of payments data are compiled broadly in accordance with the fifth edition of the IMF’s Balance of Payments Manual. Data are generally available with a lag of three months and are subject to substantial revisions in subsequent releases; trade data are available with a lag of one month and data on international reserves are available the next day on request. Travel survey methodologies were modified in 2002, 2004, and again in 2005, while the method for estimating the cost of insurance and freight was modified in early 2004. Net errors and omissions have ranged from 2% to 3% percent of GDP since 2003, and are negative. The coverage and quality of portfolio investment data are reasonably complete and accurate.

11. A large part of external debt was contracted prior to the dissolution of the former Socialist Federal Republic of Yugoslavia and Croatia’s share was agreed with Paris and London Club creditors in 1995 and 1998, respectively. The CNB compiles external debt data according to the requirements of External Debt Statistics: Guide for Compilers and Users, 2003, and began disseminating external debt data in the second quarter of 2003. The inclusion of hybrid and subordinated debt instruments, repos, late interest, and interest accruals and arrears has caused an upward adjustment in the external debt series compared to previously released data. Quarterly data on the international investment position are available on the CNB website up to 2010:Q4.

Croatia: Table of Common Indicators Required for Surveillance(as of May 20, 2010)
Date of latest

observation
Date

received
Frequency of data 6/Frequency

of

reporting 6/
Frequency

of publication

6/
Exchange Rates5/19/105/19/10D and MD and MD and M
International Reserve Assets and Reserve Liabilities of the Monetary Authorities 1/Mar 20104/15/10MMM
Reserve/Base MoneyMar 20104/30/10MMM
Broad MoneyMar 20104/30/10MMM
Central Bank Balance SheetMar 20104/30/10MMM
Consolidated Balance Sheet of the Banking SystemMar 20104/30/10MMM
Interest Rates 2/Mar 20104/30/10MMM
Consumer Price IndexMar 20104/30/10MMM
Revenue, Expenditure, Balance and Composition of Financing 3/—General Government 4/2010:Q43/31/10QQQ
Revenue, Expenditure, Balance and Composition of Financing 3/- Central GovernmentJan 20104/30/10MMM
Stocks of Central Government and Central Government-Guaranteed Debt 5/Dec 20105/15/10MMM
External Current Account Balance2010:Q44/23/10QQQ
Exports and Imports of Goods and ServicesMar 20104/30/10QQQ
GDP/GNP2010:Q43/29/10QQQ
Gross External DebtJan 20103/31/10MMM
International Investment Position2010:Q43/31/10QQQ

Reserve assets that are pledged of otherwise encumbered are specified separately. Data comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

Reserve assets that are pledged of otherwise encumbered are specified separately. Data comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

Annex III. Croatia: World Bank Relations

1. The World Bank’s Board endorsed the Country Partnership Strategy (CPS) for Croatia for FY09-12 in September 2008, just before the full onset of the global financial crisis. The goal of the CPS is to support the completion of Croatia’s EU accession process, the rapid convergence of its income level with that of current EU member states in a fiscally, socially and environmentally sustainable fashion. This overarching goal is in line with the Government’s priorities expressed in various government programs. In pursuing this goal, the Bank Group program aims at contributing in the following four areas:

  • sustaining macroeconomic stability;
  • strengthening private sector-led growth and accelerating convergence with the EU;
  • improving the quality and efficiency in the social sectors; and
  • increasing the sustainability of long-term development.

2. The EU accession agenda remains a cross-cutting theme in the design and implementation of the Bank Group program. In the selection and design of operations, primary consideration is given to the assessment of proposed projects’ support of Croatia’s EU accession agenda. In the case of social sectors not covered under the EU acquis, consideration is also given to how projects complement the EU accession efforts. Project components that enhance Croatia’s capacity to absorb EU funds, especially following the accession, have high priority.

3. The CPS envisages an indicative base-case lending envelope of about US$1.0-1.4 billion for investment operations over the four-year period. The CPS also includes an upside scenario, with possible development policy lending amounting to some US$1.4-1.8 billion. The lending program will be based on and complemented by analytical work, particularly in the areas of public expenditure reform, governance, investment climate, and climate change.

4. In FY10, the Bank’s Board has approved three loans amounting to US$475 million, to help mitigate the impact of the global economic crisis and provide funding for the private sector, through a credit line of about EUR100 million for exporters, and through a Fiscal, Social and Financial Sector Development Policy Loan of EUR200 million. In addition, an investment operation for judicial sector has been approved. In FY11, the Bank’s Board approved two loans amounting to USD242 million: (i) an Economic Recovery Development Policy Loan of EUR150 million to support the authorities in implementing Economic Recovery Program from April 2010 aiming to address the vulnerabilities and competitiveness issues of the economy; and (ii) investment loan EU Natura 2000 Integration to support adjustment to EU Species and Habitats Directives.

5. Currently, the World Bank finances 15 operations in a wide range of sectors with a net commitment of about US$1.3 billion. IFC’s portfolio amounts to about US$279 million, and MIGA guarantees gross exposure amounts to US$649 million in the financial sector.

1Technical assistance during 1992-99 is listed in Annex I of IMF Country Report No. 03/27.

Other Resources Citing This Publication