Review article
Trends in the Balance of Payments of the Republic of Croatia from 1993 to 1999: Analysis of Circumstances, Causes of the Emergence and Financing of the Current Account Deficit
Davor GALINEC
Abstract
Balance of payments by definition is a summary account of
economic transactions of a given economy with the rest of
the world in a certain period of time. Balance of payments
data are immensely important for the creators of a country's
macroeconomic policy in decision-making. The main
objective of this work is a presentation of the internal and
external factors that influenced balance of payments trends
(salary trends, repatriation of foreign currency savings,
foreign debt reprogramming, the country's credit rating,
interest rates, loans, customs protection, state budget,
exchange rate etc.), the analysis of trends in certain balance
of payments accounts and subaccounts in the period from
the year 1993 to 1999, and the structural analysis of
financing the balance of payments current account deficit.
During the first two years of the period analysed the balance
of payments current account balance was in surplus,
whereas in 1995, due to the factors described, the trend of a
spreading deficit started (which was stopped in 1998 and
1999, but has not been giving any signs of a "developing
character"). The current account deficit can be sustained as
long and up to the amount the creditors believe it can be
sustained, under the assumption that the debtors regularly
fulfill and show the intention of fulfilling their obligations in
the future. Diversification of sources for financing the
balance of payments' current account deficit into different
forms of investment and time limits is by all means desirable
because the risk is distributed to multiple markets and
instruments. Changes in the structure of financing the
Croatian balance of payments' current account deficit in the
period mentioned are described, as well as the forms of
financing and instruments. Furthermore, the long-term
aspects of the justifiability of using certain forms and
instruments have been indicated.
Keywords
Hrčak ID:
20034
URI
Publication date:
30.6.2001.
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