HNB governor: Political deadlock would risk recovery

Croatia can't afford political wrangling after inconclusive general elections because protracted instability would threaten a nascent recovery from six years of recession, Croatian National Bank (HNB) Governor Boris Vujcic has said in an interview for Bloomberg.

The next government needs to quickly draw up a list of measures to address growing public debt and a fiscal deficit the government sees narrowing to 4.5 percent of economic output this year, Vujcic told Bloomberg on Tuesday.

Any delay risks discouraging investors who've already reacted to the ballot by pushing up Croatian bond yields and selling the kuna, he said.

"One can hope that the government will be formed as soon as possible, because too long a period of uncertainty is not helpful," Vujcic said in his office in Zagreb. If investors perceive that any "prolonged period of negotiations might lead to outcomes that don't lead to reforms that are necessary, in a direction of fiscal consolidation that's necessary, or that they might lead to monetary-policy or financial-sector instabilities, then they might be hurtful."

Last update: Wed, 11/11/2015 - 16:37

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