Republic of Croatia: Selected Issues and Statistical Appendix
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International Monetary Fund
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Publication Date:
12 Aug 2002
eISBN:
9781451817355
Language:
English
Keywords:
ISCR; CR; Croatia; export; country; expenditure; EU trade; exports goods; EU market; free trade agreement; WTO accession agreement; Trade policy; Service exports; Trade agreements
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This Selected Issues paper and Statistical Appendix examines the revenue and expenditure trends of the Croatia from a cross-country perspective and illustrates the medium-term fiscal outlook under two scenarios: one assumes gradual fiscal adjustment and structural reforms; the other assumes stronger fiscal adjustment and a more aggressive approach to structural reforms. The paper analyzes Croatia’s revenue structure to provide a perspective for the medium-term revenue policy. It also identifies the expenditure items that could be streamlined over the medium term, and presents alternative medium-term fiscal frameworks.

Abstract

This Selected Issues paper and Statistical Appendix examines the revenue and expenditure trends of the Croatia from a cross-country perspective and illustrates the medium-term fiscal outlook under two scenarios: one assumes gradual fiscal adjustment and structural reforms; the other assumes stronger fiscal adjustment and a more aggressive approach to structural reforms. The paper analyzes Croatia’s revenue structure to provide a perspective for the medium-term revenue policy. It also identifies the expenditure items that could be streamlined over the medium term, and presents alternative medium-term fiscal frameworks.

III. Selected Aspects Of Export Performance, Competitiveness and Trade Policy1

A. Introduction

1. Croatian export performance in recent years has been mixed. While exports of goods have been lagging compared to most Central and Eastern European countries (CEECs), exports of services, in particular in transportation and tourism, have grown vigorously expanded. This chapter attempts to explain these developments by assessing trends in Croatia’s competitiveness, indices of trade restrictiveness, and obstacles in access to foreign markets. It also reports on Croatia’s progress in implementing obligations assumed under WTO membership, and on progress towards joining other regional trade agreements.

B. Recent Export Performance

2. To facilitate economic integration with regional and broader European markets, and with the perspective of eventually joining the European Union (EU), CEECs undertook deep reforms of their trade and investment regimes. A number of them became candidates for EU accession. The result of these developments was dramatic improvements of export performance, mainly to the EU market (Table 1). Cumulative growth rates of exports of goods and nonfactor services in 1997-2001 exceed 35 percent in several CEECs, including the Czech Republic, Estonia, Hungary, and Romania. Compared to these countries, Croatia’s export performance has been lagging, with exports of goods and nonfactor services increasing by only 16.9 percent during the same period.

Table 1.

Croatia: Central and Eastern European Countries: Export Performance Indicators

(In percent unless otherwise indicated)

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Sources: World Economic Outlook; Direction of Trade Statistics (DOTS); and Trade Analysis and Reporting System (TARS) databases, Croatian Authoties and Staff estimates.

Exports are expressed in US dollars.

Data for Croatia may differ slightly from those presented in other tables of the Statistical Appendix, but they have been taken from the same source as for the other CEECs in order to ensure comparability.

3. More insight can be gained by looking at exports of goods and nonfactor services separately. Countries with the highest growth rates of total exports experienced proportionally higher growth rates of exports of goods and proportionally lower growth rates of exports of nonfactor services. In addition, these countries reoriented their exports of goods even more strongly towards the EU. For example, in 1997–2001 the Czech Republic’s exports of goods grew by 41.4 percent, exports of goods to the EU—by 51.9 percent, exports of services—by 16.2 percent. For Hungary the respective growth rates were 42.4, 62.3, and 12.4 percent, for Estonia—44.8, 57.2, and 23.3 percent. By contrast, Croatia’s goods exports increased by 12.9 percent, the share of exports goods to the EU in total goods exports declined, but exports of nonfactor services grew proportionally faster at 21.0 percent. Figure 1 (showing shares of exports to the EU, other CEECs, and the former SFRY) and Figure 2 (showing indices of CEECs’ shares in the total exports of goods to the (EU) confirm these findings.

Figure 1.
Figure 1.

Croatia: Exports of Goods, 1995-2001

(Market Share Indices, 1995 = 100) 1/

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Source: Direction of Trade Statistics (DOTS) database.1/ Four-month moving average indices.
Figure 2.
Figure 2.

Croatia and Selected CEECs: Exports of Goods to the EU, 1995-2001

(Market Share Indices, 1995 = 100)

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Source: Direction of Trade Statistics (DOTS) database.

4. A comparative analysis of export performance in individual sectors sheds additional light. Table 2 presents annual per capita export growth rates in various economic sectors. The inspection of the data shows that the countries experiencing high growth of goods exports tended to exhibit rapid (sometimes extremely rapid) growth of exports of consumer electronics, electronic components, manufacturing, and transport machinery. In only one of these sectors-transport machinery - has Croatia experienced relatively high growth. However, there is a caveat. Croatia’s transport equipment exports consists mostly of ships, which have a very high (up to 80 percent) import component. Therefore net exports of the transport sector are much lower than their gross value. In addition, the shipbuilding sector has been making losses and is subsidized by the government.

Table 2.

Croatia and Selected CEECs: Average Annual Change in Per Capita Exports in Selected Sectors, 1996-2000

(Percent per annum)

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Source: International Trade Center of UNCTAD, WTO.

C. External Competitiveness Indicators

5. This section analyzes a range of standard external competitiveness indicators, including unit labor costs (ULC), CPI and ULC based real effective exchange rate (REER) indices, and a proxy index for the relative price of nontradables. The advantages and shortcomings of these indicators are well known.2 In addition, one should bear in mind that these indicators mostly measure competitiveness in a narrow macroeconomic balance concept and that broader indicators, examined in Section E, also play a role in overall competitiveness. Nevertheless, together they provide valuable information about the change in country’s competitiveness position. By account of any of these indicators, there is no evidence of a deterioration of Croatia’s competitiveness compared to its main trading partners and other CEECs.

6. Figure 3 presents dollar valued indices of unit labor costs in Croatia and its main trading partners—Germany, Austria, and Italy (rom June 1995 until March 2002) Figure 4 shows unit labor costs in Croatia and other CEECs during the same period. The development in Croatia’s unit labor costs is consistently among the most favorable in both samples. A comparison of CPI—based REERs, based on the IMF Information Notice System (Figure 5), yields similar results.

Figure 3.
Figure 3.

Croatia and Major Trading Partners in the EU: Unit Labor Costs, June 1995-December 2001

(Indices in US dollar terms, June 1995 = 100)

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Figure 4.
Figure 4.

Croatia and Selected CEECs: Unit Labor Costs, June 1995-December 2001

(Indices in US dollar terms, June 1995 = 100)

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Source: National Statistical Offices, World Economic Outlook, and IMF staff estimates.
Figure 5.
Figure 5.

Croatia and Selected CEECs: CPI-Based Real Effective Exchange Rate Indices, June 1995-March 2002

(Index, June 1995 = 100)

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

7. Figure 6 compares various real exchange rate indicators: the CNB’s CPI—based REER, the IMF INS CPI—based REER, the CNB’s PPI—based REER, Partial ULC—based REER, and the ratio of retail prices of services in terms of goods. The CPI- based REER indices were stable throughout the whole period and in April 2002 were approximately at the same level as in June 1995. The partial ULC based REER has depreciated by 22.3 percent during the same period (consistently with the behavior of unit labor costs). The PPI—based REER also has depreciated (by 12.6 percent until April 2002), but by less than the partial ULC—based REER. By contrast, the relative price of services index has appreciated and in April 2002 was 17 percent higher than in June 1995.

Figure 6.
Figure 6.

Croatia: Real Exchange Rate Indicators, June 1995-March 2002

(Index, June 1995 = 100)

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Source: IMF Information Notice System.

8. These trends are consistent with experience of other transition economies. The appreciation of services prices is typical for the transition countries and is explained mostly by Balassa—Samuelson effects. The CPI based REER indices have appreciated relatively to the partial ULC based and PPI- based REER indices because they contain a higher share of non-tradable services. None of these indices signals a deterioration of Croatia’s external competitiveness over the recent period.

9. The above analysis shows no evidence of a deterioration of competitiveness from the middle of 1995 until the present, but the question remains whether the level of competitiveness appropriate. Tables 3 and 4 show that Croatia has had one of the highest industrial dollar wages among CEECs throughout the period, while Croatia’s dollar GDP per capita was in line with average per capita GDP in those countries. Thus, Croatia has one of the highest ratios of industrial dollar wage to dollar GDP per capita among CEECs.

10. This paper does not attempt to estimate equilibrium wages and equilibrium real exchange rates for Croatia (and other CEECs) and any such assessments would be subject to a high degree of imprecision3. However, it can be argued that long-run equilibrium wages in Croatia and other CEECs, are higher than in Table 3, provided that these countries eventually will join the EU. Against this benchmark, Croatia’s current wage does not appear to be excessive in relation to its long-term equilibrium wage..

Table 3.

Croatia: Monthly Dollar Industrial Wages in Selected CEECs, 1997-2001

(in U.S. dollars)

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Source: Staff estimates.
Table 4.

Croatia: Monthly Dollar GDP per Capita in selected CEECs, 1997-2001

(in U.S. Dollars)

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Source: World Economic Outlook

11. It does not appear that in the sample of CEECs there is a negative correlation between the level of dollar wages and subsequent growth of exports of goods and services (Figure 7). However, there seems to be a negative correlation between the level of dollar wages and FDI as a share of GDP (Table 5 and Figure 8). This observation should be interpreted with caution since negative correlation does not mean causality.

Figure 7.
Figure 7.

Croatia and Selected CEECs: Industrial Dollar Wages in 1997 and Growth of Exports of Goods and Services, 1997-2001

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Figure 8.
Figure 8.

Croatia and Selected CEECs: Industrial Wages in 1997 and Cumulative FDI as a, Percentage of Cumulative GDP in 1997-2001

Citation: IMF Staff Country Reports 2002, 179; 10.5089/9781451817355.002.A003

Source: National Statistical Offices, World Economic Outlook, and IMF staff estimates.1/ Lines represent regression lines.
Table 5.

Croatia: Central and Eastern European Countries: Cumulative FDI, 1997-2001

(In percent of cumulative GDP)

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Source: World Economic Outlook.

12. Higher dollar wages in Croatia also might be partially explained by a lower level of initial overshooting compared to other CEECs. This is consistent with the fact that while dollar wages in most CEECs grew, Croatia’s dollar wage remained at the same level. The gap between Croatia’s dollar wage and the dollar wages in other CEECs has narrowed, with favorable consequences for Croatia’s competitiveness.

13. Summarizing, it does not appear that Croatia’s lagging performance in exports of goods is attributable to a loss of external competitiveness. The conclusion made earlier during the 1999 Article IV consultation therefore continues to hold4. However, as argued in Section E, reforms aimed at making labor markets and wages more flexible would improve Croatia’s competitiveness.

D. Progress in Trade Liberalization and Integration

14. Croatia became a member of the WTO in November 2000 and since then has made significant progress in implementing commitments under its WTO accession agreement and in further liberalizing its trade regime.

15. Under the WTO accession agreement, Croatia undertook commitments to gradually reduce tariffs on industrial goods over a period of 5 years and on agricultural goods over a period of 7 years. A major reduction of customs tariffs on industrial goods took place in the beginning of 2002 and the average industrial tariff was lowered to 3.5 percent.

16. Croatia signed a Stabilization and Association Agreement (CSAA) with the EU in October 2001 paving the way towards eventual integration with the EU. The agreement will enter into force after having been ratified by all EU member states, a process which is expected to last about two years. Until ratification the relations with the EU are governed by an Interim Agreement, effective since March 2002. The Interim Agreement includes the free movement of goods, relevant provisions for customs cooperation, and provisions regulating the harmonization of legislation.

17. Under the SAA, Croatia is committed to fostering regional cooperation, including cooperation in trade. Croatia signed bilateral trade agreement with the Republic of Slovenia (effective January 1998), Macedonia (effective September 1997), and Bosnia and Herzegovina (effective January 2001). In 2001 free trade agreements were signed with Bulgaria, the Czech Republic, Hungary, Poland. The negotiations towards bilateral agreements with Albania, Romania, and Yugoslavia are in progress and are expected to be concluded by the end of 2002 or the beginning of 2003. In addition, Croatia is in the process of negotiating free trade agreements with Latvia, Lithuania, and Estonia.

18. Croatia was invited to join CEFTA and is expected to become a member at the beginning of 2003. While Croatia is not a member of EFTA, it has a free trade agreement with this organization since 2001.

19. Table 6 summarizes the progress made by Croatia the past two years. In January 2000, Croatia had free trade agreements only with Macedonia and Slovenia. However, the table also shows that most of the CEECs signed most of their agreements in the mid—1990s and had a significant head start over Croatia.

Table 6.

Croatia: Selected Central and Eastern European Countries: Trade Arrangements

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Sources: EU Secioral and Trade Barriers Database; and IMF Trade Policy Division database.

Date refers to when agreement came into force.

The Czech Republic and the Slovar Republic have a customs union agreement.

The Czech and Slovak Federal Republic (CSFR) signed a Trade and Cooperation Agreement in May 1990 and an Association Agreement in December 1991, Following the dissolution of the CSFR. separate Association Agreements and supplementary protocols to

20. As a result of these and earlier trade reforms and measures, Croatia maintains a very liberal trade regime with a low 6.3 percent average tariff level (CEEC average -10 percent), and the lowest index of trade restrictiveness according to the IMF’s TPD trade restrictions database (Table 7).

Table 7.

Croatia: Central and Eastern European Countries: Tariff Structure Summary and Trade Restrictiveness Rating

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Source: IMF, Trade Policy Division.

21. Despite the substantial progress an important outstanding issue that needs to be addressed is joining the Pan European System of Cumulation of Origin. This agreement covers the EU, CEFTA, EFTA, the Baltic countries and Turkey and establishes a single rule of origin among participating countries. While Croatia has bilateral agreements on rules of origin with 28 countries of the System (including the EU and EFTA as a single area), not being a member of the System represents a substantial obstacle for Croatian exports, especially textiles. For example, final textile products made in the Czech Republic from Croatian fabric cannot be exported duty free to Germany despite the fact that Croatia has a bilateral agreement on rules of origin with both countries.

22. The Baltic, CEFTA, and EFTA countries already have agreed on Croatia entering the Pan European System, and the main remaining issue is getting an agreement from the EU. The clause in the EU’s SAA with Croatia indicates that “the Community declares its readiness to examine, within the Stabilization and Association Council, the issue of Croatia’s participation in diagonal cumulation of rules of origin once economic and commercial as well as other relevant conditions for granting diagonal cumulation have been established”5. According to Croatian officials, two issues need to be addressed prior to inclusion in the System. First, the Croatian customs service needs to be certified to ensure a sufficient level of monitoring efficiency of the system, in particular with respect to checking the rules of origin certificates. Second, free trade agreements with Albania and Yugoslavia must be signed.

23. Summarizing, Croatia has made significant progress in the past two years in liberalizing its trade regime and improving access to foreign markets for its exports. However, it was behind other CEECs in this process, especially in gaining access to the EU. With signed trade agreements yet to bear fruit and with an important obstacle for Croatian exports - not being a member of Pan European System of origin - remaining, trade issues are likely to be a significant factor in explaining Croatia’s lagging performance in exports of goods.

E. Broader Indicators of Competitiveness

24. While the real exchange rate measures of external competitiveness, and measures of trade restrictiveness discussed in the previous sections are important for assessing export performance and prospects, competitiveness also depends on other important, but more elusive and less quantifiable factors. These factors include flexibility of labor markets, levels of red tape and bureaucracy, entrepreneurial attitude, labor skills and education.. This chapter examines some of these broader assessments of Croatia’s competitiveness.

25. One of the most important factors affecting country’s competitiveness is their ability to attract foreign direct investment. Table 6 shows that between 1997 and 2001 Croatia’s FDI as a percentage of GDP was 4 percent, slightly below the average of CEECs (4.6 percent of GDP). A relatively late start in negotiating free trade agreements and obstacles in access to external markets (discussed above) may have adversely affected the attractiveness of Croatia for foreign investment. However, the attractiveness to FDI also is greatly affected by the investment climate and the level of administrative barriers to foreign investors. A recent report by the IFC/World Bank Foreign Investment Advisory Service (FIAS)6 suggests that Croatia still needs to implement significant measures to remove barriers facing foreign investors.

26. The FIAS report looked in detail at the procedures investors would have to follow in order to establish and legally operate a business in Croatia. The investigation concentrated on four generic areas of the investment process: entry procedures (e.g., immigration and work permits), business establishment procedures (e.g., registration and licensing), locating procedures (e.g., land registration and construction permit), and operating procedures (e.g., tax collection and customs, labor regulations, and government inspections).

27. The report concluded that Croatia ranks poorly with regard to these key elements of the investment process. By contrast, the operating environment does not pose significant challenges to foreign investors, and Croatia compares well with other CEECs in this area. The report provided a number of specific recommendations to improve performance in these areas.

28. The 2001 World Economic Forum’s (WEF) European Competitiveness and Transition Report identifies 20 factors affecting competitiveness including macroeconomic stability, startup conditions for businesses, development of the financial system, education, corruption, rule of law, labor market flexibility, and others. The report assesses the five CEEC candidates to EU accession against these factors on seven-point scale and finds that they achieve relatively high rankings with regard to capital accumulation, low taxes, education, and intensity of competition and workplace incentives. They ranked higher than the EU average on labor market flexibility and, by a slight margin, on taxation levels.

29. The findings of the FIAS and the WEF reports suggest that Croatia needs to intensify reforms aimed at creating a better investment climate and increasing labor market flexibility and competition.

F. Conclusions

  • The REER/ULC indicators do not show any deterioration of competitiveness. However, Croatia’s competitiveness would benefit from more flexible labor market and wage policies.

  • Croatia has made significant progress in further liberalizing its trade regime and gaining access to export markets, but these measures only have started to bear fruit and some significant obstacles (e.g., being outside the system of cumulation of origin) remain.

  • The relatively high growth of exports of services compared to other CEECs suggests that Croatia may have a comparative advantage in service exports because of nature and location (e.g., transport and tourism).

  • However, even if this is true, growth in exports of goods has been too low, and analysis of sectoral trends suggests that Croatia did not manage to restructure its industry towards high growth export sectors.

  • As pointed out above, the reason for this disappointing performance is not a loss of price or cost competitiveness. Rather the explanation seems to be lack of structural reform in the labor and enterprise sector, and continuing protection of some industries in dire need of restructuring (in particular, shipbuilding). Accelerating these reforms is a key to increasing the export of goods.

STATISTICAL APPENDIX

Table A1.

Croatia: Gross Domestic Product at Constant 1997 Prices, 1990-2002 1/

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Sources: Central Bureau of Statistics; and IMF staff.

Following the publication of a new quarterly series in June 1999, data from 1997 onwards have been revised.

Table A2.

Croatia: Gross Value Added and Gross Domestic Product at Current Prices, 1997-2002

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Sources: Central Bureau of Statistics; and IMF staff.

January-March quarter.

Table A3.

Croatia: Gross Domestic Product by Sector at Constant 1997 Prices, 1997-2002

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Source: Central Bureau of Statistics.

January-March quarter.

Table A4.

Croatia: Trends in Industrial Production, 1993-2002

(Industrial production by main industrial groupings, 2000=100)

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Source: Central Bureau of Statistics.
Table A5.

Croatia: Agricultural Production, 1995-2001

(1994=100)

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Source: Central Bureau of Statistics.
Table A6.

Croatia: Tourism—Overnight Stays, 1990-2002

(In thousands)

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Source: Central Bureau of Statistics.
Table A7.

Croatia: Nights Spent by Tourists According to Type of Accommodation, 1995-2001

(In thousands)

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Source: Central Bureau of Statistics.
Table A8.

Croatia: Nights Spent by Tourists According to Region of Origin, 1995-2001

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Source: Central Bureau of Statistics.
Table A9.

Croatia: Composition of Employment, 1997-2001

(In thousands)

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Source: Central Bureau of Statistics.

Excludes persons employed in police and defense. Persons employed in crafts and trades and free-lancers are included only in the total.

Refers to persons employed in crafts and trades as well as free-lancers.

Table A10.

Croatia: Trends in Employment and Unemployment, 1991-2001 1/

(In units, unless otherwise indicated; end of period)

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Sources: State Institute for Macroeconomic Analysis and Forecasting; Central Bureau of Statistics; and Croatian Employment Office

Comprises formerly socially owned enterprise sector as well as government sector.

Private sector employment includes individual farmers, entrepreneurs and their employees, independent professional workers, and employees at private enterprises. From 1992 onwards, private enterprises established in the process of privatization are included.

Total employment estimates are based on employees paying pension contributions.

End-March.

Table A11.

Croatia: Trends in Total Labor Costs, 1999-2001 1/

(In thousands of kunas)

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Source: Finacijska agencija (FINA), former ZAP

Excluding employees of the Ministry of Defense and the Ministry of Internal Affairs.

Contributions to the Croatian Chamber of Economy. This contribution was abolished in 2001.

Table A12.

Croatia: Average Monthly Net Wages and Salaries, 1995-2002 1/

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Sources: Central Bureau of Statistics; and IMF staff estimates.

Comprises the formerly socially owned industrial sector (“economy”) and the general government sector (“non-economy”). Persons employed in the police and defense, in crafts and trades and free-lancers and private farmers are not included.

Table 13.

Croatia: Average Gross Monthly Pay Per Employee, 1997-2002 1/

(In kuna)

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Source: Central Bureau of Statistics.

Excludes persons employed in crafts and trades, free-lancers, police and defense, as well as private farmers.

January-April average.

Table A14.

Croatia: Indices of Nominal Net Wages and Salaries Per Employee, 1997-2002 1/

(1997=100)

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Source: Central Bureau of Statistics.

Excludes persons employed in crafts and trades, free-lancers, police and defense, as well as private farmers.

April.

Table A15.

Croatia: Indices of Real Net Wages and Salaries Per Employee, 1997-2002 1/

(1997=100)

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Source: Central Bureau of Statistics.

Excludes persons employed in crafts and trades, free-lancers, police and defense, as well as private farmers.

April.

Table A16.

Croatia: Price Developments, 1994-2002

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Source: Central Bureau of Statistics.
Table A17.

Croatia: Retail Inflation Rates, 1994-2002

(Annual average percentage change)

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Source: Central Bureau of Statistics.

Average January-May.

All beverages in 2002.

Housing and public utilities services in 2002.

Transport and communications in 2002.

Table A18.

Croatia: Number of Enterprises in the Economic Sector and Number of Legal Entities Undergoing Bankruptcy, 1996-2001

(End of year; in units)

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Source: Central Bureau of Statistics.
Table A19.

Croatia: Budgetary Central Government Fiscal Operations by Economic Category, 1997-2001 1/

(In percent of GDP)

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Sources: Ministry of Finance; and IMF staff estimates.

Accrual basis. Inclusive of five former extrabudgetary funds (Pension fund, Health insurance fund, Employment fund, Water management fund, and Child benefit fund).

Table A20.

Croatia: Budgetary Central Government Expenditure by Function, 1997-2001 1/

(In percent of GDP)

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Sources; Ministry of Finance and IMF staff estimates.

Cash basis. Inclusive of five former extrabudgetary funds (Pension fund, Health insurance fund. Employment fund, Child benefit fund, and Water management fund).

Table A21.

Croatia: Consolidated Central Government Fiscal Operations by Economic Category, 1997-2001 1/

(In percent of GDP)

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Sources: Ministry of Finance; and IMF staff estimates

Accrual basis. Inclusive of five former extrabudgetary funds (pension fund, health insurance fund, employment fund, water management fund, and child benefit fund), the agencies for highway (HAC) and road construction (HC), the privatization fund (HFP), and the bank rehabilitation and deposit insurance agencies (DAB).

Table A22.

Croatia: Consolidated Central Government Expenditure by Function, 1997-2001 1/

(In percent of GDP)

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Source: Ministry of Finance; and IMF staff estimates.

Cash basis. Inclusive of five former extrabudgetary funds (pension fund, health insurance fund, employment fund, child benefit fund, and water management fund), the agencies for highway (HAC) and road construction (HC), the privatization fund (HFP), and the bank rehabilitation and deposit insurance agencies (DAB).

Table A23.

Croatia: Consolidated General Government Fiscal Operations by Economic Category, 1997-2001 1/

(In percent of GDP)

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Sources: Ministry of Finance; and IMF staff estimates

Accrual basis

Table A24.

Croatia: Consolidated General Government Expenditure by Function, 1997-2001 1/

(In percent of GDP)

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Source: Ministry of Finance.

Cash basis

Table A25.

Croatia: Outstanding Stock of Central Government Debt, 1997-2001

(End of period)

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Sources: CNB, Ministry of Finance; and IMF staff estimates.

Health Fund oustanding liabilities and central budget arrears

Table A26.

Croatia: Health Insurance, 1997-2001

(Number of persons insured; annual averages)

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Sources: Central Bureau of Statistics; and Croatian Health Insurance Institute.

Including active farmers.

Table A27:

Croatia: Disability and Retirement Insurance, 1997-2001

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Sources: Central Bureau of Statistics; and Croatian Pension Institute.

Payment for disabled workers for December 1998 (payment in January 1999) and temporary benefits for Croatian defenders for 1999 are included.

Table A28.

Croatia: Number of Beneficiaries and Pension Payments by the Croatian Pension Institute, 1997-2001

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Sources: Croatian Pension Institute: and Central Bureau of Statistics.

Before 1996 the number of beneficiaries from other former SFRY republics were not separately identified, and from May 2000, pensions for the beneficiaries from Bosnia and Herzegovina were not paid.

Insured persons of the Workers’ Fund only.

Population between 20 and 59 years old over population aged 60 or more.

Average pension divided by average net wage.

Old age pension divided by average net wage.

Table A29.

Croatia: Employment in Selected National Public Enterprises, 1997-2001

(End of year; in units)

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Sources: Financijska agencija (FINA), former ZAP; and individual enterprises.

Split in two agencies (HC and HAC) in 2001.

Table A30.

Croatia: Monetary Survey, 1996-2002 1/

(In millions of kuna; end of period)

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Source: Croatian National Bank.

From 1999 onwards, excludes assets and liabilities of banks declared bankrupt in April 1999. Changes in the statistical reporting system introduced a break in the data in July 1999.

Includes all central government agencies and funds, and the Croatian Bank for Reconstruction and Development (HBOR).

Table A31.

Croatia: Monetary Authorities’ Balance Sheet, 1996-2002

(In millions of kuna; end of period)

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Source: Croatian National Bank.

Includes the reserve position in the IMF.

Includes all central government agencies and funds, and the Croatian Bank for Reconstruction and Development (HBOR).

From 1999 onwards, includes overdue claims on banks for which bankruptcy proceedings have been initialed.

From 1999 onwards, includes deposits of banks for which bankruptcy proceedings were initiated.

Table A32.

Croatia: Deposit Money Banks’ Accounts, 1996-2002 1/

(In millions of kuna; end of period)

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Source: Croatian National Bank.

From 1999 onwards, excludes assets and liabilities of banks declared bankrupt in April 1999. Changes in the statistical reporting system introduced a break in the data in July 1999.

Includes all central government agencies and funds, and the Croatian Bank for Reconstruction and Development (HBOR).

Table A33.

Croatia: Deposit Rates of the Croatian National Bank, 1996-2002

(In percent, annualized)

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Source: Croatian National Bank.
Table A34.

Croatia: Credit Rates of the Croatian National Bank, 1996-2002

(In percent, annualized)

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Source: Croatian National Bank.

From 1999 onwards, interest rates on short-term liquidity credits are set as follows: a) up to 3 months: 50 basis points above Lombard; b) more than 3 months: 100 basis points above Lombard.

Table A35.

Croatia: Deposit Money Banks’ Deposit Rates, 1996-2002 1/

(Monthly weighted average; in percent, annualized)

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Source: Croatian National Bank.

From January 2002 onwards, includes saving banks.

Table A36.

Croatia: Deposit Money Banks’ Credit Rates, 1996-2002 1/

(Monthly weighted average; in percent, annualized)

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Source: Croatian National Bank.

From January 2002 onwards, includes savings banks and excludes interbank credits. The weighting methodology has also been changed.

Table A37.

Croatia: Banking System by Ownership, 1997-2001

(End of period; percentage of total)

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Source: Croatian National Bank.

Public shareholding exceeding 20 percent.

Table A38.

Croatia: Banking Sector Assets and Liabilities, 1995-2001

(End of period; percent of GDP)

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Source: Croatian National Bank.
Table A39.

Croatia: Quality of Banks’ Loan Portfolio, 1995-2001

(In percent, end of period)

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Source: Croatian National Bank.
Table A40.

Croatia: Balance of Payments, 1994–2001 1/

(In millions of U.S. dollars, unless otherwise indicated)

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Sources: Croatian National Bank, World Economic Outlook, and staff estimates

Based upon CNE balance of payments revisions of February 2002 and preliminary data for end-December, 2001.

Estimates for Q1 2002 include the assumed change in resident deposits reflecting the introduction of the Euro.

Data for short term commercial bank credits derived from the CNB foreign exchange department.

Coverage only includes import trade credits with maturities of less than three months.

Gross reserves adjusted downward by foreign currency redeposit requirements held at the CNB, and by the amount of outstanding foreign currency CNB bills.

Does not include debt that was excluded from the London Club agreement.

Coverage is limited to short term debt contracts registered with the CNB.

Short-term debt is presented on a remaining maturity basis.

Table A41.

Croatia: Merchandise Exports and Imports, 1999-2002 1/

(In millions of U.S. Dollars)

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Source: Central Bureau of Statistics (CBS).

Data have not been revised in line with the 1998 balance of payments compilation methodology. They include trade with countries of the former SFRY. Monthly series for 1999 revised by CBS, but only on the level of totals. CBS reports on classification of countries are more aggregate than before and data on trade with former Yugoslavia are not available for all countries.

Table A42.

Croatia: Composition of Exports (SITC), 1994-2001 1/

(In millions of U.S. dollars)

article image
Source: Central Bureau of Statistics.

Data have not been revised in line with the 1998 balance of payments compilation methodology.

Table A43.

Croatia: Composition of Imports (SITC), 1994-2001 1/

(In millions of U.S. dollars)

article image
Source: Central Bureau of Statistics.

Data have not been revised in line with the 1998 balance of payments compilation methodology.

Table A44.

Croatia: Exports by Destination, 1994-2001 1/

(In millions of U.S. dollars)

article image
Source: Central Bureau of Statistics and the Fund staff estimates.

Data have not been revised in line with the 1998 balance of payments compilation methodology.

2/ Countries of the former USSR includes 14 countries. It does not include Belarus.

3/ Developing Middle East countries refer to the OPEC countries excluding Indonesia amd Venezuela.

Table A45.

Croatia: Imports by Origin, 1994-2001 1/

(In millions of U.S. dollars)

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Source: Central Bureau of Statistics.

Data have not been revised in line with the 1998 balance of payments compilation methodology.

Table A46.

Croatia: Exchange Rates and International Reserves, 1990-2002

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Source: Croatian National Bank

Real effective exchange rates are calculated relative to seven currencies using retail or consumer prices. An increases in the rate denotes a real depreciation.

Table A47.

Croatia: External Debt, 1994-2001 1/

(In millions of U.S. dollars, unless otherwise stated)

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Sources: Croatian National Bank; and Fund staff estimates.

Excludes nonreported principal payments. Includes short-term credits and currency and deposits.

References

  • Halpern, Laszlo and Charlez Wyplosz, 1997, “Equilibrium Exchange Rates in Transition Economies,” Staff Papers, International Monetary Fund, Vol. 44, No. 4.

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  • Hinkle, Lawrence, and Peter J. Montiel, 1999, “Exchange Rate Misalignment: Concepts and Measure for Development Countries,” Oxford University Press.

    • Search Google Scholar
    • Export Citation

  • Foreign Investment Advisory Service of the IFC and World Bank, 2002, “Croatia: Administrative Barriers to Foreign Investment,” Report.

    • Search Google Scholar
    • Export Citation

  • Krajnyak, Kornelia and Jeromin Zettelmeyer, 1998, “Competitiveness in Transition Economies: What Scope for Real Appreciation?” Staff Papers, International Monetary Fund, Vol. 45, No. 2.

    • Search Google Scholar
    • Export Citation

  • Lipschitz, Leslie and Donogh McDonald, 1991, “Real Exchange Rates and Competitiveness: a Clarification of Concepts, and Some Measuresments for Europe,” IMF Working Paper 91/25 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Marsh, Ian and Stephen Tokarick, 1994, “Competitiveness Indicators: A Theoretical and Empirical Assessment”, IMF Working Paper 94/29 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • World Economic Forum, 2002, “The European Competitiveness and Transition Report 2001-2002,” Oxford University Press.

1

Prepared by Sergei Dodzin

3

See Halpern and Wyplosz (1997), and Krajnyak and Zettelmeyer (1998) for examples of estimating equilibrium dollar wages using econometric methods.

4

Republic of Croatia - Selected Issues and Statistical Annex (SM/99/301) - December 1999

5

See Counsel Decision Concerning the signature of the Stabilization and Association Agreement between the European Communities and its Member States and the Republic of Croatia on behalf of the European Community (COM 2001/301), September 2001, page 65.

6

Croatia: Administrative Barriers to Foreign Investment, Foreign Investment Advisory Service of the IFC and World Bank, February 2002.

Same Series

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Cover IMF Staff Country Reports
Republic of Croatia: Selected Issues and Statistical Appendix
Author:
International Monetary Fund
Volume/Issue:
Volume 2002: Issue 179
Publisher:
International Monetary Fund
ISBN:
9781451817355
ISSN:
1934-7685
Pages:
100
DOI:
https://doi.org/10.5089/9781451817355.002
  • Figure 1.
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    Figure 1.

    Croatia: Exports of Goods, 1995-2001

    (Market Share Indices, 1995 = 100) 1/

  • Figure 2.
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    Figure 2.

    Croatia and Selected CEECs: Exports of Goods to the EU, 1995-2001

    (Market Share Indices, 1995 = 100)

  • Figure 3.
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    Figure 3.

    Croatia and Major Trading Partners in the EU: Unit Labor Costs, June 1995-December 2001

    (Indices in US dollar terms, June 1995 = 100)

  • Figure 4.
    View in gallery
    Figure 4.

    Croatia and Selected CEECs: Unit Labor Costs, June 1995-December 2001

    (Indices in US dollar terms, June 1995 = 100)

  • Figure 5.
    View in gallery
    Figure 5.

    Croatia and Selected CEECs: CPI-Based Real Effective Exchange Rate Indices, June 1995-March 2002

    (Index, June 1995 = 100)

  • Figure 6.
    View in gallery
    Figure 6.

    Croatia: Real Exchange Rate Indicators, June 1995-March 2002

    (Index, June 1995 = 100)

  • Figure 7.
    View in gallery
    Figure 7.

    Croatia and Selected CEECs: Industrial Dollar Wages in 1997 and Growth of Exports of Goods and Services, 1997-2001

  • Figure 8.
    View in gallery
    Figure 8.

    Croatia and Selected CEECs: Industrial Wages in 1997 and Cumulative FDI as a, Percentage of Cumulative GDP in 1997-2001

Figure 1.

Croatia: Exports of Goods, 1995-2001

(Market Share Indices, 1995 = 100) 1/
Figure 2.

Croatia and Selected CEECs: Exports of Goods to the EU, 1995-2001

(Market Share Indices, 1995 = 100)
Figure 3.

Croatia and Major Trading Partners in the EU: Unit Labor Costs, June 1995-December 2001

(Indices in US dollar terms, June 1995 = 100)
Figure 4.

Croatia and Selected CEECs: Unit Labor Costs, June 1995-December 2001

(Indices in US dollar terms, June 1995 = 100)
Figure 5.

Croatia and Selected CEECs: CPI-Based Real Effective Exchange Rate Indices, June 1995-March 2002

(Index, June 1995 = 100)
Figure 6.

Croatia: Real Exchange Rate Indicators, June 1995-March 2002

(Index, June 1995 = 100)
Figure 7.

Croatia and Selected CEECs: Industrial Dollar Wages in 1997 and Growth of Exports of Goods and Services, 1997-2001
Figure 8.

Croatia and Selected CEECs: Industrial Wages in 1997 and Cumulative FDI as a, Percentage of Cumulative GDP in 1997-2001