Governor of the central bank (HNB), Boris Vujcic, said in Dubrovnik on Monday that the bank was closely following the developments related to the restructuring of the indebted food and retail group Agrokor, and that agreeing on a debt settlement with its creditors would remove the risk of significant consequences for Croatia's economy.

“The HNB is not directly involved (in the Agrokor restructuring plan), but we are closely following the situation, because it is important for the economy and the bank’s exposure to the conglomerate. It now seems that a settlement will be agreed, but whether it will be actually signed depends on those who are expected to sign it,” Vujcic told reporters on the margins of an economic conference in Dubrovnik.

Vujcic said that if a settlement is agreed, a significant risk for the economy at large would be removed.

“A less controlled way of solving the problem that would lead to bankruptcy (of Agrokor) would definitely result in a more negative impact on GDP growth, but not in the sense of causing a recession,” said Vujcic.

Asked to comment on the government’s performance in saving Agrokor from bankruptcy, Vujcic said that it could be described as very good, provided that a settlement with Agrokor’s creditors is reached.

Vujcic was appointed governor in July 2012, to serve a six-year term. Asked if he would like to stay on the job and get another term by the Parliament, Vujcic said that his future would be known very soon.

He also commented on Croatia’s latest economic indicators, including the recently reported slowdown in economic growth and a drop in exports and industrial output, which he attributed to the wider slowing down of growth across Europe over the first three months of 2018.

“That slowing down (in Europe) has coincided with problems at Croatian state-owned companies that have not been restructured yet, such as the Uljanik shipyard and the Petrokemija fertiliser manufacturer,” said Vujcic, noting that the statistical drop in exports was also due to the unusually high baseline, given that in the first quarter of 2017 exports grew strongly, by 25 percent.

“But business and consumer optimism indices are rather high, so we can expect the slowdown to be temporary,” Vujcic said.

Asked about risks related to the national economy’s increasingly high reliance on tourist industry revenues, Vujcic said that although tourism was good for the country, Croatia could not live only off tourism.

Asked about the problem of population drain and whether Croatians could be made to stay in the country by getting increased salaries, Vujcic said that pay rises were already happening.

Business people cite the lack of adequately trained labour force as the second biggest obstacle for doing business in Croatia, which is being dealt with with pay rises and partly with immigration.

“Some workers are leaving, some are coming. That is a reality that needs to be faced,” he said, repeating that structural reforms were the best solution to those problems as well.

Vukjcic about the correlation of figures showing that 230,000 people have left Croatia, which are figures cited in an HNB survey, and the unemployment rate going down, Vujcic said that a continued growth of employment also played a role in the reduction of unemployment levels.

“The unemployment rate is probably even lower than indicted by official figures, but employers have difficulty finding workers. We also have to give young people the kind of competencies that will be sought after on the labour market. The government must be proactive in that regard, because we cannot educate our young people for things there will be no demand for,” said Vujcic.

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