This Article IV Consultation highlights Aparecida de goiania married but still looking Croatia experienced solid growth in the last two years, with growth rates of about 4 percent exceeding those of the euro area and of many other transition countries. The recovery, initially propelled by private consumption and exports, has more recently extended to investment, encouraged by easy access to credit and public infrastructure spending. After decelerating at the end of in the wake of the slowdown in Europe, growth d strongly in the first quarter of supported by domestic demand.
The outlook for is moderately positive.
Croatia experienced solid growth in the last two years, but unemployment remains high. Following a brief recession ingrowth averaged 3. Initially triggered by a resumption of tourist inflows after the cessation of hostilities in Kosovo, growth has increasingly been supported by private consumption and business investment, fueled by higher disposable income, lower interest rates, and improved confidence Table 1. In spite of sizable job creation by small and medium sized enterprises, unemployment has not substantially fallen, reflecting ongoing restructuring and a growing labor force.
After reaching The short-run growth outlook is favorable, but marred Married wife looking real sex Vineyard Haven uncertainty. After a temporary deceleration at the end of in the wake of the slowdown in Europe, GDP grew by 4. With recovery of net exports still lagging, economic activity is sustained by strong domestic demand. In spite of reduced government transfers and wage moderation, private consumption grew at an annual rate of 6 percent in the first quarter. In the same period, bolstered by brisk credit expansion and large public projects, investment growth reached 9.
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Even though private consumption is likely to decelerate in the second half of the year after a rapid increase in household indebtedness, growth should reach 3. Exchange rate stability and structural changes Sexy women looking sex Jonesboro Arkansas helped reduce inflation to below the euro area level. Besides the success of monetary policy in maintaining a stable exchange rate, inflationary pressures are eased by trade liberalization, wage moderation, productivity increases, and enhanced competition in the retail sector.
In Mayheadline inflation fell to 1. Also in May, core inflation was 1 percent and producer price inflation was a negative 1.
However, reflecting pending increases in household electricity and natural gas prices, inflation is expected to accelerate in the second half of to reach 3. Despite the revival of private investment and the initiation of large public infrastructure projects, the external current deficit is small thanks to an increase in private saving Table 2.
After rising to 3. Nature sex Kidder Missouri MO projected improvement reflects several factors. Advance bookings suggest a strong tourist season while the opening of large retail stores is expected to continue reducing cross-border shopping.
More generally, improvements in services and income are expected to offset a worsening merchandise trade balance, which reflects high investment activity.
The competitiveness outlook remains positive. The CPI-based real effective exchange rate increased by less than 8 percent since January Figure 4but based on unit labor cost, competitiveness actually improved by more than 2 percent in the same period, and access to international markets is expected to expand further, reflecting the implementation of new free trade agreements. While improving in —01, the fiscal situation remains weak. With the implementation of important reforms in public administration and social transfers, the fiscal deficit of Horny girls wanna chat in Monaco central government has been reduced from 7.
Inthe authorities intend to lower the deficit to 4. However, in light of some slips in the first quarter Section IIthe attainment of this target is at risk. Moreover, expenditure outside the central government has been boosted Lonely senior searching horney cougar the launch of an ambitious highway construction project and the general government deficit is expected to remain unchanged at 6.
After rising by about 20 percentage points in —, the public debt ratio is projected to approach 54 percent of GDP inand is bound to increase further without corrective Lady looking sex Curtisville. Capital inflows are putting pressure on the exchange rate to appreciate. Euro conversion, privatization receipts, and the placement abroad of government bonds more than financed the modest current deficit, creating pressure on the kuna, which appreciated by some In addition to the large accumulation of reserves, the external debt ratio declined in and is projected to decline further in Table 3.
Appreciation pressures are expected to peak during the tourist season.
Seasonal fluctuations aside, the pressure from capital inflows is likely to persist in the medium term. While the remaining restrictions to short-term capital inflows will provide some protection, foreign direct investment inflows already amounted to 6. In the context of low inflation and an appreciating exchange rate, monetary policy continues to be accommodating.
The CNB has been reluctant to fully sterilize its large foreign exchange purchases. The increase in kuna liquidity has reduced money market rates to below 2 percent, but lower inflation and an appreciating exchange rate have resulted in some tightening of monetary conditions Figure 7. The foreign currency liquidity resulting from euro conversion in lateinitially placed abroad by banks, has returned to the domestic market after most of the additional deposits Asian sluts Barneville-Carteret in the banking system as a result of improved confidence.
As a consequence, credit to both consumers and businesses continued to expand strongly, with an annual increase of about 25 percent in April, and broad money growth, which reached almost 47 percent year-on-year at the height of euro conversion Casual Hook Ups IL Marshall 62441 January, declined only gradually to about 38 percent in April.
Despite a run on the third largest bank, the banking system has remained stable.
The authorities reacted promptly by providing liquidity support, taking over the majority stake of the bank for a symbolic price, and changing its management. The bank has been reprivatized and will be recapitalized by the new owner. The deposit outflow, which had spread to two other banks, stopped and began to reverse itself in May. Progress in structural reforms continues to be slow. Even when parliament approved framework legislation, delays in the preparation of by-laws or weaknesses in the institutions responsible Lonely seeking casual sex Blowing Rock the implementation often reduced the effectiveness of reforms.
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Nonetheless, progress has been made in rationalizing social transfers, introducing a second pillar of the pension system, reforming the public sector Worcester massachusetts porn site system and the police and defense sectors, starting fiscal decentralization, and introducing a single treasury. In the financial sector, the legislative framework was strengthened and bank privatization was all but completed.
However, reforms have lagged behind in other areas. Among large public enterprises, only the telecom company has been privatized.
Reforms in the health, education, and judicial sectors have been repeatedly postponed. Long-overdue labor market reforms have been delayed by strong union opposition.
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Subsidies to agriculture, shipbuilding, and other sectors have remained high. As these reforms are being postponed, the medium-term prospects for growth and employment remain seriously impaired. The authorities have generally been receptive to Fund policy advice, but implementation outside the financial sector has been hampered by unwieldy government decision-making procedures and strong popular opposition. In concluding the last Article IV consultation with Croatia on March 19,Executive Directors welcomed the progress achieved in restoring control over public finances and the adoption of a comprehensive economic program for — They urged rapid fiscal consolidation and an acceleration of structural reforms including privatization, Lady looking sex Basile the program supported under the month stand-by arrangement SBA that expired in May sought to promote.
Although policy implementation was mixed, Free pussy Memphis in the structural area, performance under the SBA-supported program was broadly satisfactory.
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However, four end-March performance criteria—fiscal deficit, bank credit to the government, bank credit to public enterprises, and government expenditure arrears—were not observed, reflecting overruns in wages and capital expenditure, lower-than-projected personal income tax revenue, and privatization shortfalls Table 7. Throughout the arrangement period, slips occurred with respect to structural performance criteria and benchmarks.
In particular, a large shortfall of privatization receipts—which required waivers for the nonobservance of end performance criteria on government arrears, government bank borrowing, and public debt contracting—caused the public debt ratio to continue to rise rather than decline, as originally programmed. After the expiration of the SBA in May, the authorities had expressed interest in a successor arrangement, to be treated, like its predecessor, as precautionary.
However, discussions have not been completed due a delay in the preparation of fiscal data based on a broader general government consolidation see below. It was agreed to discussions in Lakewood Colorado bitch fl The discussions focused on fiscal sustainability, monetary policy stance, and progress in structural reforms. The performance of the economy in the last two years has been good.
The external current deficit and inflation have remained low, and GDP growth rates have exceeded those of EU accession countries. While GDP is expected to decelerate on average inthis is due to the weakening of external demand. With the latter expected to pick up soon, output is likely to accelerate again. Against this background, the discussions focused on forward-looking issues that cast doubt on an otherwise favorable outlook. The authorities noted that the current fiscal effort was sizable.
They reconfirmed their fiscal targets under the recent SBA-supported program, i. They also stressed that the Horny wife Sacramento adjustment effort was stronger than suggested by these figures because of a revenue loss of some 1. The staff welcomed these developments in the central budget, but noted that the fiscal position was much weaker if assessed at a broader level.
As large infrastructure spending was now taking place outside the central government, the general government deficit was still as high as 6.
Staff argued that a more upfront fiscal adjustment was called for.