Croatia Should Not Run Away from IMF

If the government is prepared to do what the IMF would ask of it, it is unclear why technical and financial assistance is undesirable.

An economic analyst of the Vienna Institute for International Relations, Vladimir Gligorov, told the Vecernji list daily that Croatia should not run away from the International Monetary Fund because a deal with the Fund results in a higher rating in Europe. 

- I don’t see the advantages of giving up from deals with the International Monetary Fund. If the government is prepared to do what the IMF would ask of it, it is unclear why technical and financial assistance is undesirable. Especially given the fact that the financial programme with the Fund opens access to funds for macroeconomic support of the European Union – Gligorov told the Croatian daily.

Gligorov also commented on theses on devaluation and depreciation of the Croatian currency, the kuna.

- Generally speaking, countries with flexible currencies are better off than those with fixed currencies. Also, if we rely on experience, recovery usually goes through an increase in exports, and that is easier for countries whose currency has depreciated.

Asked whether touching the profit side of the budget was the only possible solution in this situation, Gligorov said that if private expenditure and investments are decreased, then the reduction in public spending would significantly deepen the recession even more.