Croatia's gross international reserves reached €18.1 billion at the end of July 2020, which was the second consecutive month to see an increase in gross international reserves after four months of decline, caused by the economic lockdown due to the coronavirus pandemic.

According to the latest data from the Croatian central bank (HNB), gross international reserves on July 31 amounted to €18.1 billion as against €17.3 billion at the end of June, a 10 percent increase from the end of May and a 6.7 percent drop from the end of 2019.

The decline in gross international reserves in March, April and May was a direct consequence of the coronavirus pandemic and the accompanying economic lockdown and the depreciation of the national currency, Raiffeisenbank (RBA) analysts say, recalling that the HNB had responded with interventions on the foreign exchange market to keep the kuna-euro exchange rate stable.

RBA analysts believe that Croatia’s recent entry into the European Exchange Rate Mechanism II will have an additional positive effect on the exchange rate stability, noting that the central bank’s consistent policy of keeping the exchange rate stable will remain unquestionable.

They also believe that gross international reserves will be sufficient to successfully finance possible imbalances in the balance of payments and conduct a stable monetary policy, that is, keep the exchange rate stable.

According to HNB projections, gross foreign debt payments entirely cover current obligations towards international creditors that fall due by the end of the year.