A rapidly slowing economy has prompted the government to reinforce policy easing using monetary, fiscal and administrative measures. Further broad-based easing is expected to head off a hard landing. Meanwhile, the pace of financial reforms is expected to accelerate in 2015. The priority is being given to further capital account opening, combined with significant steps towards full interest rate liberalization and introduction of deposit insurance. A gradual depreciation of the RMB is still our central scenario, but a more pronounced adjustment cannot be ruled out.
Hampered by a large state-owned sector and slow pace of reforms, Croatia has struggled to regain real GDP growth since 2009. Last year marked the sixth consecutive year of recession, the deepest and most protracted in the region and second only to Greece among EU members. The recession has contributed to large and persistent fiscal deficits, with rapidly rising debt increasing the economy’s vulnerability to external shocks. Determined and fast implementation of sweeping structural reforms is necessary to stave off a potential debt crisis and reboot the ailing economy.
On April 30, the IIF Senior Accounting Group (SAG) submitted its response letter on the Guidance on Accounting for Expected Credit Losses (“ECL”) (the “Guidance”) consultative document issued by the Basel Committee. While the SAG shares the Committee’s expectation that banks will achieve high quality implementation of the new accounting requirements, the Guidance as currently drafted raises a number of concerns on which detailed comments and drafting suggestions are provided.