Croatian central bank (HNB) governor, Boris Vujcic, said on Thursday that even if a solution is not reached for the ailing Agrokor food and retail conglomerate, the country's banking system would still remain stable, and its banks well capitalised.

“Even in the worst case scenario, even if no solution is reached and banks have to write-off all their claims, and get nothing back, the banking system will remain stable and banks will stay well capitalised,” Vujcic told reporters on the margins of a conference on Croatia’s money market. He added, however, that he expected a settlement to be reached with Agrokor’s creditors.

Asked how the situation with Agrokor might unfold considering the latest circumstances and whether the company would still be able to obtain loans, Vujcic said that the outcome depended on the settlement model.

“In the short term it will certainly be able to get loans, whereas in the long term that depends on the structure of the settlement. I think that it shouldn’t have any problems in getting long term loans either,” he said, and added that Agrokor’s biggest creditors were banks.

“Our estimate was that the influence of developments at Agrokor in 2017 amounted to 0.2 percent or 0.3 percent lower GDP, than if the crisis had not occurred, primarily because investments have stopped, not just by Agrokor, but by related companies that ran into problems,” he said.

Addressing the conference, Vujcic spoke about monetary policies in 2018-19 and challenges of the labour market considering the population drain and the arrival of automated work. He said that at the moment there were two very important trends that will define the structure of the labour market in the world and in Croatia in the future.

“The first one refers to the fact that we have a demographic drop which has been further enhanced by strong emigration after we had joined the EU, which works to dwindle the available labour force in Croatia, while on the other hand we have a growing number of jobs that can’t be filled with workers,” Vujcic said.

He added that the two trends would lead to two effects – one is a considerable pressure on salary growth, and the other one is that this year the first significant immigration into the country will occur as there are 30,000 new work permits available for imported workers.

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