Republic of Croatia: Selected Issues Paper

International Monetary Fund

No 2011/160, IMF Staff Country Reports from International Monetary Fund

Abstract: Croatia’s economic vulnerability is discussed in this study. Using the balance sheet approach (BSA), this paper analyzes Croatia’s overall and sectoral vulnerabilities. Croatia’s financial sector balance sheet is exposed to liquidity, contagion, and currency risks. With strong pre-crisis prudential policies and parent banks’ willingness to keep or even increase exposures, the economy’s capacity to tackle another major macroeconomic or financial shock is limited. Given the stable exchange rate policy, a consistent set of structural, fiscal, monetary, and prudential policies are needed for sustained growth and reduced vulnerabilities.

Keywords: ISCR; CR; debt; liability; currency; net; currency risk; short-term debt; Intersectoral asset; liability position; debt stock; creating flow; net foreign currency indebtedness; foreign currency buffer; prudential foreign currency buffer; foreign currency position; Currencies; Foreign currency exposure; Commercial banks; Financial sector; Public sector; Europe (search for similar items in EconPapers)
Pages: 16
Date: 2011-07-01
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