Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

CROATIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: May 29, 1995.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Yes.
Other security restrictionsIn accordance with the relevant UN Security Council resolutions, restrictions are imposed on financial transactions with the Taliban and on transactions relating to known terrorist groups.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Croatia is the Croatian kuna.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate of the kuna is determined in the foreign exchange market. The Croatian National Bank (CNB) may set intervention exchange rates, which it applies in transactions with banks outside the interbank market to smooth undue fluctuations in the exchange rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Official cover of forward operationsThe CNB has provided, on occasion, swap facilities at par for banks in a limited forward market.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirements
Use of foreign exchange among residentsThis is allowed only in prescribed cases.
Payments arrangements
Bilateral payments arrangements
OperativeThere is an arrangement with Italy that applies only to certain Croatian districts.
Administration of controlThe CNB formulates and administers exchange rate policy and may issue foreign exchange regulations. Companies wishing to engage in foreign trade must register with the commercial courts.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On external tradeImports and exports of monetary and nonmonetary gold (including gold in unwrought, semimanufactured, or powder form, or plated with platinum; gold bars, rods, wires, and sections; gold plates; and gold sheets and strips exceeding 0.15 mm in thickness, excluding any backing) are subject to approval of the Ministry of Economy, Labor, and Entrepreneurship.
Controls on exports and imports of banknotesImports and exports of kunas and foreign exchange exceeding HRK 40,000 or its equivalent in cash and checks must be declared to customs to prevent money laundering.
On exports
Domestic currencyThe exportation of Croatian currency and kuna checks by residents is restricted to HRK 15,000 a person; however, larger amounts may be exported with CNB approval. Effective June 29, 2006, nonresidents may freely take out Croatian currency and kuna checks; however, restrictions apply in the case of residents.
Foreign currencyResident natural persons may take out the equivalent of €3,000 in foreign currency and checks; larger amounts require CNB approval.
Resident natural persons may take out bank and traveler’s checks up to the equivalent of €3,000 for the payment of goods and services abroad only.
Other residents may take out foreign currency and checks for the payment of goods or services imports up to the equivalent of €3,000; larger amounts require CNB approval. Effective June 29, 2006, nonresidents may freely take out foreign cash and checks.
On imports
Domestic currencyEffective June 29, 2006, residents may import Croatian currency and kuna checks up to HRK 15,000; larger amounts require CNB approval. Effective June 29, 2006, nonresidents may freely import Croatian currency and kuna checks; however, restrictions apply in the case of residents.
References to legal instruments and hyperlinksDecision Governing Taking in and out of the Country Cash, Checks and Materialized Securities (Official Gazette Narodne Novine, Nos. 111/2003, 69/2006, and 82/2006); Decision on Payments and Collections in Foreign Means of Payment in the Country (Official Gazette Narodne Novine, No. 111/2005); www.hnb.hr/propisi/devizni-poslovi/eng/eodluka-o-placanju-i-naplati-u-stranim-sredstvima-placanja-u-zemlji.pdf; Decision Governing the Conditions for and the Manner of Performing External Payment Operations (Official Gazette Narodne Novine, Nos. 88/2005 and 18/2006); www.hnb.hr/propisi/devizni-poslovi/eng/e-odluka-o-platnom-prometu-s-inozemstvom.pdf; Instruction for the Implementation of the Decision Governing the Conditions for and Manner of Performing External Payment Operations (Official Gazette Narodne Novine, Nos. 136/005, 143/2006, and 37/2006); www.nn.hr/clanci/sluzbeno/2005/2555.htm; Decision on the Manner and Conditions under Which Residents May Execute or Receive Payments Arising from Transactions with Nonresidents in Domestic Cash, Foreign Cash and Checks (Official Gazette Narodne Novine No. 54/2006); www.hnb.hr/propisi/devizni-poslovi/eng/eodlulka-o-uvjetima-rezidenti-izvrsiti-placanja-u-gotovini-ukunama-stranoj-54-06.pdf.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadResidents may, in principle, open and operate foreign exchange accounts only in Croatia. However, the CNB has the authority to allow residents (except banks) to open and maintain accounts abroad. These accounts may be opened for the following purposes: investment and research projects abroad; deposit guarantees; drawing of funds under foreign credits; insurance against interest rate, currency, and other market risks; purchases and sales of securities abroad; payments of the costs of representative offices abroad; payments of the costs of residents providing services in international goods and passenger traffic, and residents involved in insurance of property and persons; settlements of claims in nontransferable currencies; and some other purposes.
Approval requiredYes.
Accounts in domestic currency held abroadThe regulations governing foreign exchange accounts held abroad apply.
Accounts in domestic currency convertible into foreign currencyResidents may convert domestic currency into foreign currency without limitation.
References to legal instruments and hyperlinksDecision Governing the Opening and Managing of Foreign Exchange Accounts and Foreign Exchange Savings Deposit Accounts of Residents with a Bank (Official Gazette Narodne Novine, Nos. 111/2003, 138/2003, 176/2004, and 122/2005); www.hnb.hr/propisi/devizniposlovi/eng/e-odluka-o-postupku-otvaranja-i-vodenju-deviznih-racuna.pdf; www.hnb.hr/propisi/devizni-poslovi/eng/e-odluka-o-postupku-otvaranja-i-vodenju-deviznihracuna-176-04.pdf; www.hnb.hr/propisi/devizni-poslovi/eng/e-odluka-o-postupkuotvaranja-i-vodenju-deviznih-racuna-122-05.pdf; Decision on the Conditions for Issuing Approvals for Opening Foreign Exchange Accounts Abroad (Official Gazette Narodne Novine Nos. 111/2003, 189/2004, and 124/06); www.hnb.hr/propisi/devizni-poslovi/eng/e-odluka-o-uvjetima-za-izdavanje-odobrenja-za-otvaranje-devitnog-racuna-uinozemstvu-111-03.pdf; www.hnb.hr/propisi/devizni-poslovi/eng/e-odluka-o-uvjetima-zaizdavanje-odobrenja-za-otvaranje-devitnog-racuna-u-inozemstvu-189-04.pdf; www.hnb.hr/propisi/devizni-poslovi/eng/e-odluka-o-uvjetima-za-izdavanje-odobrenja-zaotvaranje-devitnog-racuna-u-inozemstvu-124/06.pdf.
Nonresident Accounts
Foreign exchange accounts permittedNonresidents may open foreign exchange accounts with fully licensed banks in Croatia. A CNB decision sets forth the documentation required for opening foreign exchange and domestic currency accounts by nonresidents. Effective May 25, 2006, nonresidents may withdraw from their current or savings account foreign currency cash without any limit. Effective November 23, 2006, nonresidents may deposit foreign currency into their current or savings account without any limit. Previously, foreign currency cash deposits in excess of the prescribed amount required approval from the CNB.
Domestic currency accountsEffective May 25, 2006, nonresidents may withdraw from their current or savings account and deposit into their current or savings account kuna cash without any limit (previously, a limit of HRK 30,000 was applied for deposits and withdrawals).
Convertible into foreign currencyForeign exchange may be purchased with funds held in these accounts without limitation.
Blocked accountsNo.
References to legal instruments and hyperlinksDecision Governing the Conditions for and the Manner of Opening and Managing Nonresident Bank Accounts (Official Gazette Narodne Novine, Nos. 124/06 and 131/06); www.hnb.hr/proposi/devizni-poslovi/eng/e-o-uvjetima-i-nacinu-otvaranja-i-vodenjaracuna-nerezidenata-u-banci-124-06.pdf.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsAn invoice or agreement is required for transfers.
Import licenses and other nontariff measuresThere are no import quotas, although the trade law allows for such quotas in principle, under conditions envisaged by WTO rules. Effective November 30, 2006, all imports are free from licensing requirements, except for a list of products whose importation is controlled by international agreements for statistical and security reasons (such as arms, gold, rough diamonds, drugs, and narcotics), and a small number of other products (notably iron tubes and bars and fertilizers—except for those from WTO members). Imports are not limited on the basis of quantity or value, except as stated in relevant international conventions. Licenses, where required, are issued on a case-by-case basis.
Negative listYes.
Import taxes and/or tariffsImports of industrial products are subject to customs tariffs of up to 18%; the average customs tariff is 3.94%. For a number of agricultural and food products, compound duties (ad valorem plus specific customs duty) are applied. The maximum ad valorem duty is 55%, and, where compound duty is applied, the maximum ad valorem component is 15%.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirements
GuaranteesYes.
Export licensesEffective November 30, 2006, exports are free from licensing requirements, except for certain products for which permits must be obtained (e.g., weapons, drugs, rough diamonds, dual-use items, and art objects).
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsCapital transactions must be reported to the CNB for statistical purposes. Effective January 1, 2007, amendments and supplements to the Securities Market Act went into effect.
Repatriation requirementsNo.
Controls on capital and money market instrumentsEffective December 14, 2006, portfolio investments are fully liberalized. Investments in capital and money market securities must be reported to the CNB for statistical purposes.
On capital market securities
Shares or other securities of a participating natureSecurities transactions must be conducted in accordance with the regulations governing the securities market.
Purchase abroad by residentsEffective December 14, 2006, resident natural persons may freely purchase securities abroad.
Sale or issue abroad by residentsResidents are allowed to sell or issue securities abroad, although prior notification to the Croatian Financial Services Supervisory Agency (CFSSA), operating as of January 1, 2006, is required.
Bonds or other debt securitiesThe regulations governing shares and other securities of a participating nature apply.
Purchase abroad by residentsEffective December 14, 2006, resident natural persons may purchase bonds and other debt securities abroad.
Sale or issue abroad by residentsResidents are allowed to sell or issue securities abroad, although prior notification to the CFSSA is required.
On money market instruments
Purchase locally by nonresidentsEffective December 14, 2006, nonresidents may purchase money market instruments locally. Previously, nonresidents were not allowed to purchase CNB bills nor MOF treasury bills.
Purchase abroad by residentsThe regulations governing bonds or other debt securities apply.
Sale or issue abroad by residentsResidents are allowed to sell or issue securities abroad; however, prior notification to the CFSSA is required.
On collective investment securities
Sale or issue locally by nonresidentsEffective April 29, 2006, reciprocity requirements no longer apply.
Purchase abroad by residentsEffective April 29, 2006, reciprocity requirements no longer apply. Effective December 14, 2006, residents may purchase securities abroad directly without going through domestic brokerage houses.
Sale or issue abroad by residentsInvestment fund management companies will be allowed to operate abroad (e.g., to sell or issue) after Croatia becomes a full member of the EU.
Controls on derivatives and other instruments
Purchase abroad by residentsPurchases for the purpose of hedging against risk are permitted.
Sale or issue abroad by residentsSales or issues for the purpose of hedging against risk are permitted.
Controls on credit operationsForeign credit operations must be reported to the CNB.
Commercial creditsFor statistical purposes only, commercial credits with a maturity of more than one year must be reported to the CNB. If the company is chosen for the statistical sample, it must report to the CNB its commercial credits with a maturity of less than one year. Although these credits are not subject to CNB approval, commercial banks are not allowed to execute the transactions without proof from the residents that these transactions have been reported to the CNB.
Financial creditsFinancial credit operations must be reported to the CNB. The registration constitutes a capital control because commercial banks are not allowed to execute these transactions without receipt from residents indicating that these credits have been reported to the CNB.
By residents to nonresidentsThe extension of financial loans with a maturity of less than one year to nonresidents is prohibited, except when made by banks or direct investors in foreign companies.
To residents from nonresidentsResidents are obliged to transfer funds from financial loans granted abroad to an account with a bank headquartered in Croatia.
Guarantees, sureties, and financial backup facilitiesControls apply to all these transactions.
Controls on direct investmentInvestments must be reported to the CNB for statistical purposes.
Controls on liquidation of direct investmentProceeds may be transferred after settlement of legal obligations, including tax.
Controls on real estate transactions
Purchase abroad by residentsResidents are allowed to purchase real estate abroad, provided all legally prescribed obligations have been settled.
Purchase locally by nonresidentsEffective July 25, 2006, nonresidents may acquire real estate in Croatia under the condition of reciprocity, subject to permission from the minister of justice in accordance with the law on property and other property rights. Previously, the acquisition was subject to the approval of the minister of foreign affairs.
Controls on personal capital transactions
Loans
By residents to nonresidentsThe extension of financial loans with maturity of less than one year to nonresidents is prohibited. This prohibition does not apply to residents extending financial loans to immediate relatives.
To residents from nonresidentsResident natural persons are required to use foreign financial credits through authorized domestic banks.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsGifts and endowments greater than the equivalent of €3,000 (if made in foreign exchange) or HRK 15,000 (if made in kunas) must be approved by the CNB if the donor is an individual. Resident legal persons, branches of foreign companies, and sole traders may make cashless transfers abroad of gifts and grants, provided all tax and other legally prescribed obligations have been met in the Republic of Croatia.
Transfer of assets
Transfer abroad by emigrantsCNB approval is required for the physical cross-border movement of cash exceeding HRK 15,000 or the equivalent of €3,000 in foreign exchange, for declaration to the customs authority.
References to legal instruments and hyperlinksDecision Amending the Decision on the Manner and the Conditions for Investment of Residents in Foreign Securities and Shares in Foreign Investment Funds (Official Gazette Narodne Novine, No. 44/2006); www.hnb.hr/propisi/devizni-poslovi/eng/e-izmjenaodluke-o-nacinu-i-uvjetima-pod-kojima-rezidenti-ulazu-u-strane.44-06.pdf; Decision on the Conditions for Issuing Approvals for Personal Transfers Abroad of Assets Relating to Gifts and Grants (Official Gazette Narodne Novine, No. 111/2003); www.hnb.hr/propisi/devizni-poslovi/eng/e-prijenos-imovine-u-inozemstvo-s-osnove-pomoci-ipoklona.111.03.pdf; Law on Property and Other Property Rights (Official Gazette Narodne Novine, Nos. 91/96, 73/2000, 114/2001, and 79/2006); Decision Governing Taking in and out of the Country Cash, Checks, and Materialized Securities (Official Gazette Narodne Novine, Nos.111/2003, 69/06, and 82/06); www.hnb.hr/propisi/devizni-poslovi/eng/e-o-unosenju-iiznosenju-gotovine-111.03.pdf; www.hnb.hr/propisi/devizni-poslovi/eng/e-o-unosenju-iiznosenju-gotovine-69/06.pdf; Securities Market Act (I) (Official Gazette Narodne Novine, No. 84/02); Securities Market Act (II) (Official Gazette Narodne Novine, No. 138/06); Act on Croatian Financial Securities Supervisory Agency (Official Gazette Narodne Novine, No. 140/05); Investment Funds Act (Official Gazette Narodne Novine, No. 150/05); Foreign Exchange Act (Official Gazette Narodne Novine, Nos. 96/03, 140/05, and 132/06); www.hnb.hr/propisi/zakoni-htm-pdf/e-zakon-o-deviznom-poslovanju-06-2003.htm; www.hnb.hr/propisi/zakoni-htm-pdf/e-zakon-o-izmjena-zakona-o-deviznomposlovanju-12-2006.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsEffective January 1, 2006, the CFSSA started operating.
Borrowing abroadAn unremunerated reserve requirement of 55% (40% and 15% subcomponents) applies to increases in banks’ foreign liabilities. The net increase in sources of funds received from nonresidents or legal persons in a special relationship with a bank over their level of June 2004 is subject to the unremunerated marginal reserve requirement of 40%. Banks are required to deposit the 40% reserve requirement in an unremunerated foreign exchange account of the CNB. Effective January 11, 2006, a second-tier marginal reserve requirement of 15% is applied to the increase in nonresidents’ funds over their level of November 2005; a third-tier marginal reserve requirement of 55% is applied to the increase in guarantees and warranties for the accounts of foreign persons, in kuna and foreign currency, serving as a basis for the foreign borrowing of domestic persons. Effective July 12, 2006, a fourth-tier marginal reserve requirement of 55% is applied to the net increase in funds received from nonresidents that are used to provide financing in the form of syndicated loans to domestic natural and legal persons or that domestic banks extend to domestic natural and legal persons in the name and for the account of the mandator (mandated operations). Effective March 8, 2006, an unremunerated reserve requirement of 55% on the net increase in liabilities arising from issued debt securities over their January 2006 level was introduced. Effective January 1, 2007, banks that expand credit above certain “permissible” rates compared to end-2006 (1 percentage point each month in 2007, cumulative) were required to purchase nontransferable CNB bills (360-day maturity) at a rate of 50% of the difference between actual and permissible credits.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsEffective January 11, 2006, deposits denominated in domestic and foreign exchange are subject to a reserve requirement of 17% (previously, 18%). The calculation period follows the calendar month. The maintenance period lasts from the second Wednesday of a month to the day preceding the second Wednesday of the following month. Kuna and foreign exchange components of the calculation are determined separately. Fifty percent of the calculated foreign reserve requirement is included in the calculated kuna reserve requirement. Seventy percent of reserve requirements are allocated to the kuna component. The percentage for allocating the foreign exchange component of reserve requirements calculated on the basis of foreign exchange funds of nonresidents and foreign exchange funds received from legal persons in a special relationship with a bank is 100%; the percentage for allocating the remaining portion of the foreign exchange component of reserve requirements is 60%.
The rate of remuneration for the deposited kuna component of required reserves is 0.75%. The remuneration of the foreign exchange component is 50% of the U.S. federal funds target rate for funds allocated in dollars and 50% of the ECB minimum bid refinance rate for funds allocated in euros.
Liquid asset requirementsThirty-two percent of foreign exchange liabilities (minimum required amount of foreign currency claims) must be covered by short-term foreign exchange assets with a maturity of less than three months. Effective October 2, 2006, in addition to foreign-exchange-denominated instruments, liabilities include foreign-exchange-indexed instruments (liabilities in kuna with a one- or two-way currency clause).
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsAn unremunerated reserve requirement of 55% (40% and 15% subcomponents) applies to increases in banks’ foreign liabilities. The net increase in sources of funds received from nonresidents or legal persons in a special relationship with a bank over their level of June 2004 is subject to the unremunerated marginal reserve requirement of 40%. Banks are required to deposit the 40% reserve requirement in an unremunerated foreign exchange account of the CNB. Effective January 11, 2006, a second-tier marginal reserve requirement of 15% is applied to the increase in nonresidents’ funds over their level of November 2005; a third-tier marginal reserve requirement of 55% is applied to the increase in guarantees and warranties for the account of foreign persons, in kuna and foreign currency, serving as a basis for the foreign borrowing of domestic persons. Effective July 12, 2006, a fourth-tier marginal reserve requirement of 55% is applied to the net increase in funds received from nonresidents that are used to provide financing in the form of syndicated loans to domestic natural and legal persons or that domestic banks extend to domestic natural and legal persons in the name and for the account of the mandator (mandated operations).
Open foreign exchange position limitsThe limit on open positions in foreign exchange is 20% of a bank’s regulatory capital.
Provisions specific to institutional investorsThe Act on Mandatory and Voluntary Pension Funds, the Insurance Act, and the Investment Funds Act are in effect.
Insurance companiesInsurance companies are regulated by the Insurance Act (Official Gazette No. 151/05).
Limits (max.) on investment portfolio held abroadEffective January 1, 2006, the CFSSA started operations, replacing the former Croatian Securities Commission, Insurance Companies Supervisory Authority, and Agency for Supervision of Pension Funds and Insurance and commencing work as their legal successor. In accordance with Article 296 (6 and 7) of the Insurance Act, beginning on the date the Republic of Croatia becomes a full member of the EU, insurance undertakings may invest the assets covering technical provisions in EU member states and OECD member states, and such investments may be in the types of investment referred to in Article 115 (1) of the Insurance Act subject to the restrictions on the assets covering technical provisions under Articles 116 (1) and (2) of the Insurance Act; Articles Nos. 115 (2) and 116 (3) of the Insurance Act will therefore be repealed. Effective on the date the Republic of Croatia becomes a full member of the EU, insurance undertakings may invest the assets covering mathematical provisions in EU member states and OECD member states, and such investments may be in the types of investment referred to in Article 122 (1) of the Insurance Act, subject to the restrictions on the assets covering technical provision under Articles 123 (1) and (2) of the Insurance Act, and the provisions of Articles Nos. 122 (2) and 123 (3) of the Insurance Act will therefore be repealed.
Limits (min.) on investment portfolio held locallyIn accordance with Article 123 (2) of the Insurance Act, at least 50% of total assets for the coverage of mathematical provisions must be invested in securities issued by the government of the Republic of Croatia, CNB, or the Croatian Bank for Reconstruction and Development, as well as in bonds and other debt securities guaranteed by the government of the Republic of Croatia.
Currency-matching regulations on assets/liabilities compositionIn accordance with Article 117 of the Insurance Act, insurance undertakings must appropriately match their investment of assets covering technical provisions, including mathematical provisions, that are exposed to risks of possible losses due to changes in interest rates, exchange rates, and other market risks, with their liabilities under the insurance contracts that are subject to the same changes. An insurance undertaking must match not less than 80% of the assets covering technical provisions, including mathematical provisions, with its liabilities under the insurance contracts that depend on changes in exchange rates. When investing the assets covering technical provisions, including mathematical provisions, an insurance undertaking shall take into account the maturity of the liabilities under individual insurance contracts.
Pension fundsPension fund companies are regulated by the Act on Mandatory and Voluntary Pension Funds.
Limits (max.) on securities issued by nonresidentsMandatory pension funds may not invest more than 15% of the value of the fund in securities issued by nonresidents. Voluntary pension funds may not invest more than 20% of the value of the fund in the mentioned securities.
Limits (max.) on investment portfolio held abroadAn investment portfolio held abroad may not exceed 15% of the value of the fund for mandatory pension funds and 20% for voluntary pension funds.
Limits (min.) on investment portfolio held locallyAt least 50% of the value of mandatory pension funds must be invested in long-term bonds and other long-term debt securities issued by the Republic of Croatia and the CNB.
Currency-matching regulations on assets/liabilities compositionn.r.
Investment firms and collective investment fundsThe Investment Funds Act envisages liberalization after Croatia becomes a full member of the EU. The Investment Funds Act distinguishes among several types of investment funds and deals accordingly with the limits on investments for each type separately.



A closed-end investment fund with a public offering may not invest more than 15% of its net asset value in securities of any single issuing body. Under certain conditions, detailed in the Act, the limitation does not apply to investment in securities or money market instruments issued or guaranteed by the Republic of Croatia or units of local and regional self-governments of the Republic of Croatia; or EU member states, local government units of member states, nonmember states, or public international bodies of which one or more member states are members.



An open-end investment fund with a public offering may not invest more than 10% of its net asset value in transferable securities and money market instruments of any single issuing body. Under certain conditions, detailed in the Act, the limitation does not apply to investment in securities or money market instruments issued or guaranteed by the Republic of Croatia or units of local and regional self-government of the Republic of Croatia; or EU member states, local government units of member states, nonmember states, or public international bodies of which one or more member states are members.



Assets of an open-end investment fund with a private offering must consist of not less than six different securities, units, or shares in investment funds or money market instruments; the three that account for the largest share of the fund’s assets must not exceed 60% of the fund’s asset value. Securities, units, or shares in investment funds of a single issuer or deposits with a single deposit institution must not exceed 20% of the value of all securities, units, or shares in investment funds or deposits in a fund. The 60% and 20% limitations do not apply to securities or money market instruments issued or guaranteed by the Republic of Croatia or units of local and regional self-government of the Republic of Croatia; or EU member states, local government units of member states, nonmember states, or international public organizations of which one or more member states are members.



An open-end venture capital investment fund with a private offering, within five years from the date of its establishment, must not make fewer than five investments into different units or shares subject to a condition that units or shares of a single issuer must not exceed 33% of the fund’s assets.
Limits (max.) on securities issued by nonresidentsThe prospectus of the fund must clearly indicate the states, units of local government, and public international bodies in whose securities and money market instruments more than 35% of the fund’s net asset value may be invested.
Limits (max.) on investment portfolio held abroadA closed-end investment fund with a public offering for investment in real estate may acquire real estate abroad based on reciprocity.
Limits (min.) on investment portfolio held locallyAccording to Article 80 of the Investment Funds Act, at least 50% of net value of the closed-ended investment fund with a public offering for investment in real estate must be accounted for by real estate located in the Republic of Croatia, except in the case of investments in units or shares of companies involved exclusively or predominantly in the acquisition and sale, rent, and lease of real estate and real estate management, in units or shares of another fund for investment in real estate.
Currency-matching regulations on assets/liabilities compositionA maximum of 20% of the investment fund’s net asset value may be placed as a deposit with any single bank.
References to legal instruments and hyperlinksDecision on Reserve Requirement; Decision on the Amendments to Decision on Reserve Requirement (1); Decision on the Amendments to Decision on Reserve Requirement (2); Decision on the Amendments to Decision on Reserve Requirement (3); Decision on the Amendments to Decision on Reserve Requirement (4); Decision on the Amendments to Decision on Reserve Requirement (5); Decision on the Special Reserve Requirement on Net Increase in Liabilities Arising from Issued Debt Securities; Insurance Act (Official Gazette Narodne Novine, No. 151/05); Insurance Undertakings (Official Gazette Narodne Novine, No. 78/06); Act on Mandatory and Voluntary Pension Funds (I) (Official Gazette Narodne Novine, No. 49/99); Act on Mandatory and Voluntary Pension Funds (II) (Official Gazette Narodne Novine, No. 63/00); Act on Mandatory and Voluntary Pension Funds (III) (Official Gazette Narodne Novine, No. 103/03); Act on Mandatory and Voluntary Pension Funds (IV) (Official Gazette Narodne Novine, No. 177/04); Investment Funds Act (Official Gazette Narodne Novine, No. 150/05); Act on Croatian Financial Supervisory Agency (Official Gazette Narodne Novine, No. 140/2005).
Changes during 2006
Arrangements for payments and receiptsJune 29. Nonresidents were allowed to export foreign currency cash and checks without limitation.
June 29. Residents were allowed to import kuna checks up to HRK 15,000.
June 29. Nonresidents were allowed to export and import kuna currency and checks without limitation.
Nonresident accountsMay 25. Nonresidents were allowed to withdraw foreign currency and kuna cash and deposit kuna cash into their accounts without limitation.
November 23. Nonresidents were allowed to deposit foreign currency into their current or savings accounts without limitation.
Imports and import paymentsNovember 30. All imports became free from licensing requirements, except for a list of products whose importation is controlled by international agreements for statistical and security reasons (such as arms, gold, rough diamonds, drugs, and narcotics).
Exports and export proceedsNovember 30. Exports became free from licensing requirements, except for certain products for which permits must be obtained (e.g., weapons, drugs, rough diamonds, dual-use items, and art objects).
Capital transactions
Controls on capital and money market instrumentsJanuary 1. Residents were allowed to sell or issue securities abroad, although prior notification to the new CFSSA is required.
April 29. Reciprocity requirements for the sale or issue of securities by nonresidents in Croatia no longer apply.
December 14. Portfolio investments were fully liberalized. Residents could freely purchase securities abroad, and nonresidents could freely make investments in money market instruments locally.
Controls on real estate transactionsJuly 25. Nonresidents were allowed to acquire real estate in Croatia under the condition of reciprocity, subject to the permission of the minister of justice in accordance with the law on property and other property rights.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsJanuary 1. The CFSSA started operating.
January 11. A second-tier marginal reserve requirement of 15% and a third-tier marginal reserve requirement of 55% were introduced.
January 11. The reserve requirement on deposits denominated in domestic and foreign currency was reduced to 17% from 18%.
March 8. A special unremunerated reserve requirement of 55% on the net increase in liabilities arising from issued debt securities over their level of January 2006 was introduced.
July 12. A fourth-tier marginal reserve requirement of 55% on the net increase in funds received from nonresidents and legal persons in a special relationship with a bank that are used to provide financing in the form of syndicated loans to domestic natural and legal persons or that domestic banks extend to domestic natural and legal persons in the name and for the account of the mandator (mandated operations) was introduced.
October 2. In the Decision on the Minimum Required Amount of Foreign Currency Claims, according to which 32% of foreign exchange liabilities must be covered by short-term foreign exchange assets with a maturity of less than three months, foreign exchange liabilities were expanded in order to include liabilities in kuna with a currency clause (one-or two-way currency clause).
Changes during 2007
Capital transactionsJanuary 1. Amendments and supplements to the Securities Market Act went into effect.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsJanuary 1. Banks that expand credit above certain “permissible” rates compared to end-2006 (1 percentage point each month in 2007, cumulative) were required to purchase nontransferable CNB bills (360-day maturity) at a rate of 50% of the difference between actual and permissible credits.

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