Trends in the balance of payments of the Republic of Croatia from 1993 to 1999: Analysis of circumstances, causes of the emergence and financing of the current account deficit

Balance of payments by definition is a summary account of economic transactions of a given economy With the rest of the world in a certain period of time. Balance of payments data are immensely important for the creators of a country's macroeconomic policy in decision-making. The main objective of this work is a presentation of the internal and external factors that influenced balance of payments trends (salary trends, repatriation of foreign currency savings, foreign debt reprogramming, the country's credit rating, interest rates, loans, customs protection, state budget, exchange rate etc.), the analysis of trends in certain balance of payments accounts and subaccounts in the period from the year 1993 to 1999, and the structural analysis of financing the balance of payments current account deficit. During the first two years of the period analysed the balance of payments current account balance was in surplus, whereas in 1995, due to the factors described, the trend of a spreading deficit started (which was stopped in 1998 and 1999, but has not been giving any signs of a "developing character"). The current account deficit can be sustained as long and up to the amount the creditors believe it can be sustained, under the assumption that the debtors regularly fulfill and show the intention of fulfilling their obligations in the future. Diversification of sources for financing the balance of payments' current account deficit into different forms of investment and time limits is by all means desirable because the risk is distributed to multiple markets and instruments. Changes in the structure of financing the Croatian balance of payments' current account deficit in the period mentioned are described, as well as the forms of financing and instruments. Furthermore, the long-term aspects of the justifiability of using certain forms and instruments have been indicated.