Republic of Croatia: Selected Issues

IMF Staff Country Reports, February 12, 2019

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Republic of Croatia: Selected Issues

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Bibliographic details

• Published: February 12, 2019
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781484398692.002

Overview and approach

• Paper examines how intersectoral vulnerabilities and risks shifted over 2001–17, and especially after the Global Financial Crisis.
• Analyzes financial positions at sectoral levels: deposit taking institutions and non-financial corporations, households, the public sector, and the Croatian National Bank.
• Disaggregation performed by instruments, currencies, and maturities.
• Employed balance sheet analysis (BSA) to gauge cross-sectional exposures and risks.
• BSA approach described as a method to study an economy as a system of interlinked sectoral balance sheets.

Key findings

• Standard macroeconomic indicators demonstrate that Croatia’s overall external vulnerabilities have declined since 2010.
• The balance sheet matrix shows little improvement in reduction of important cross-sectoral dependencies and liabilities to the rest of the world over 2010–17.
• Cross-sectoral exposures and FX-linked liabilities remain material risks despite improvements in headline external vulnerability metrics.

Policy recommendations and strategies

• Encourage deleveraging through specific policy options and strategies (recommendation highlighted in the paper).
• Policies to reduce the remaining vulnerabilities are discussed (paper provides detailed policy options).

Subjects and keywords (as listed)

• Subjects: Banking, Currencies, External debt, Financial institutions, Financial statements, Foreign exchange, Loans, Money, Public financial management (PFM)
• Keywords: balance sheet, bank, Central and Eastern Europe, CR, Currencies, debt, Eastern Europe, Financial statements, FX, FX debt, FX lending, FX mismatch, FX position, FX stress test, Global, ISCR, Loans, sustainability analysis

Content in this bundle

• Republic of Croatia: Selected Issues; IMF Country Report No. 19/47; January 23, 2019
  • Republic of Croatia: Selected Issues; IMF Country Report No. 19/47; January 23, 2019 (Markdown version)
  • Republic of Croatia: Selected Issues; IMF Country Report No. 19/47; January 23, 2019 (PDF)