IMF Staff Country Reports

Republic of Croatia: Selected Issues

July 29, 2024

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

International Monetary Fund. European Dept. "Republic of Croatia: Selected Issues", IMF Staff Country Reports 2024, 247 (2024), accessed November 21, 2024, https://doi.org/10.5089/9798400285400.002

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Summary

This Selected Issues paper explains corporate sector balance sheet vulnerabilities in Croatia. It serves as a background analysis to the systemic risk assessment presented in the staff report and follows established approaches to stress-test the corporate sector. Croatian firms have significantly improved their balance sheets since the prolonged recession after the Global Financial Crisis, helped by deleveraging and narrowing country risk premium as Croatia advanced its euro adoption agenda. The calibration of shocks follows the macro-financial scenarios of the 2023 EU-wide banking sector stress tests by the European Banking Authority. Micro-level simulations confirm the resilience of the corporate sector against adverse shocks to profitability and financing costs. The well-capitalized banking sector overall is also found to have buffers to absorb negative spillovers from the corporate sector. The simulated results suggest that shocks to nonfinancial corporations (NFC) could significantly raise banks’ nonperforming loans. The declining borrowing costs and improving financial strength of NFCs in Croatia point to the need to examine both financing and nonfinancing related obstacles.

Subject: Corporate sector, Economic sectors, Housing, Housing prices, Labor, Labor markets, Labor shortages, National accounts, Prices

Keywords: B. housing affordability assessment, Corporate sector, Eastern Europe, Europe, Global, Housing, Housing cost indicator, Housing prices, Labor markets, Labor shortages, NFC balance sheet strength, Policy option, Taxation of housing

Publication Details

You May Also Be Interested In...

Burkina Faso: Report on Government Finance Statistics Mission (March 18–29, 2024)

November 18, 2024

Quarterly Projection Model for the Bank of Ghana: Extensions and Applications

November 15, 2024

Libya: Technical Assistance Report-Redesign of Income Tax Forms

November 15, 2024

Growth Convergence and Public Finances of India and its States

November 15, 2024