The Executive Board of the International Monetary Fund at its Friday meeting continued discussing the further course of the cooperation of the IMF with Croatia and decided to put off for the time being the release of the second tranche under the Fund's three-year extended arrangement with Croatia that had been approved in March 1997. The Board agreed to take up the issue possibly on September 10 and no later than October 10.

The postponed withdrawal of the expected credit tranche in the amount of USD 40 million will not produce any significant direct effects on financial developments in Croatia because the resources withdrawn from the IMF are used for the purpose of strengthening the country's external liquidity position, and, at the moment, international reserves kept in the accounts of the Croatian central bank amount to USD 2.4 billion, while foreign exchange reserves held by commercial banks amount to additional USD 2.3 billion. After adding the expected summer increase in reserves to the mentioned amounts, it becomes clear that available foreign exchange resources are approximately equivalent to the amount of total external debt that Croatia has contracted so far, which provides evidence of its very favorable external liquidity position.

Regardless of the decision made by the IMF Executive Board, it should be pointed out that the main objective of Croatian economic and monetary policies - fostering sound and sustainable economic growth in a stable macroeconomic framework - remains unchanged, and so does the commitment of the Croatian authorities to achieve this goal through the use of measures and instruments that befit a modern and open market economy. The National Bank of Croatia and the Government of the Republic of Croatia agree on such an approach and they share the opinion that the resumption of such policies will, in the first place, be of benefit to Croatia, and that this should soon contribute, as was the case in the previous years, to the justified and fruitful continuation of our cooperation with international financial institutions.