Central Bank Governor Presents Semi-Annual Reports

By 22 March 2018

ZAGREB, March 22, 2018 - Croatian National Bank (HNB) governor Boris Vujčić said in Parliament on Thursday that it was difficult to find anywhere in the world a crisis that could be compared to the one in the Agrokor conglomerate, stressing however that although the crisis had not significantly affected Croatia's economy, it was necessary to make undermining the financial stability punishable under law.

Presenting semi-annual reports on the financial state of affairs, stability of prices and the implementation of the monetary policy in H1 2016, H2 2016 and H1 2017, Vujčić said that crises such as the one in Agrokor were rare, but that it was necessary to make undermining the financial stability a criminal offence, namely to sanction irresponsible actions of individuals for the common good.

"Losses recorded after the appointment of the emergency administration amount to approximately 7% of GDP and if we compare that with Germany for example, this would be as if a company in that country had hidden losses in the amount of 300 billion euro. Things like that rarely happen, except here," Vujčić said.

The governor underscored that the financial system had not been significantly exposed to the risk arising from Agrokor and that every possible scenario involving the conglomerate, including a total write-off of claims, could be handled. "The financial stability has been preserved, even in conditions involving the bankruptcy of the biggest company with an extremely high debt to GDP ratio," Vujčić said in Parliament.

The governor said that positive economic trends recorded in 2016 had continued in H1 2017. The real GDP was up 2.7% on the year, the labour market continued to recover and the number of people in work continued to go up in 2017, with the employment rate increasing by 1.8% in H1 2017 year-on-year. At the same time, the unemployment rate continued to go down, falling to 12.5% in June.

The central bank continued to support the economic recovery with the implementation of the expansive monetary policy in the first half of 2017, Vujčić said.