engleski

The Determinants of Foreign Borrowing of the Republic of Croatia

To manage a foreign debt means to eliminate sudden shocks pertaining to factors that support the infrastructure of demand for foreign loans. The undiminished demand for influx of foreign capital creates the issue of viability of foreign debts in the Republic of Croatia. The model of supply and demand for net foreign loans in the Republic of Croatia tends to set dimensions to the issue of viability of foreign debts. The quantity of supply of foreign financial loans is determined by six explanatory variables that form the demand for foreign loans in the Republic of Croatia in an empirical period during 1991-1999. The predictable variables represent the exogenous macro-economic performance of the Croatian economy system and implicity act on the current loan burdening and reiteration of new burdening. The tendency of the foreign net financing is explained through the model of high statistic signification (total and single - per certain parameters). In the case of four predictors: the GDP growth rate, the balance between the ratio of fiscal budget/GDP, inflation rate, export growth rate, gained is the expected direction of trends in relation to the net foreign indebtendss. In the case of the variable of direct foreign investment/GDP, the result has a double-sense meaning since the economic theory in this example is unidentified. In the case of non variable, the gained results are opposite to the expectations, in the respect to the ratio of foreign debt/GDP (or rather alternatively foreign debt/export). The six fundamental variables are statistically significant in proving the hypothesis that a certain systematic component of exogenous factors exists in the creation of the net foreign debt. The regressive analysis indicates that there are over 99% of mutual factors present in determining the co-varation of the variable of supply and the factor of demand in net foreign loans.

foreign debt; fiscal deficit; export; inflation rate; external borrowings

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