Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets




Major Political and Economic Events


The introduction of the Insider Trading Laws.a4


The Law on Insurance and Sale of Securities came into force.a3


The Law on Investment Funds came into force.a3


Domestic juridical persons were permitted to invest abroad in the form of FDI.a3


ADR effective date. (Company=PLIVA D.D. - REG S)a11


IFC announced the launching of the IFCG Croatia Index, which has eight stocks with an initial market capitalization of $1.76 billion.


The state began distributing free privatization vouchers for 450 state-owned firms worth some $2 billion.


Croatia's central depository agency announced that 14 issuers would transfer share registering responsibilities to the electronic clearing and settlement agency.


The Zagreb bourse launched an upgraded and fully-automated trading system to enable automated matching of orders and allow for continuous trading.


(Provisions specific to commercial banks and other credit institutions) Reserve requirements on banks' foreign liabilities were introduced.a3(first entry)


(Provisions specific to institutional investors) One-half of the liquid asset requirement should be held in investment grade banks in OECD countries with investment grade sovereign ratings. The remaining 50% must be held in remunerated accounts held at the CNB.a3


The ZSE (Zagreb Stock Exchange) approved the full listing of food conglomerate Podravka, opening the way for Podravka GDRs to be listed on the London Stock Exchange.


The kuna lost 5.4% of its value.


Fitch IBCA downgraded Croatia's long-term foreign currency credit rating. Unemployment figures rose to a record high of 19.6%


(Provisions specific to institutional investors) A new law on obligatory and voluntary pension funds was enacted.a3


The long-awaited central depository agency began to operate. Government delayed telecom sector privatization.


The government accepted an $850 million bid by Deutsche Telecom for 35% of the Croatian telecom company.


President Franjo Tudjman died of long illness.


(Controls on credit operations) Foreign credit operations have to be registered with the CNB.a3


The voters voted in Ivica Racan as the prime minister, who campaigned on economic liberalization, fiscal austerity, clean government, and improved human rights. Stipe Mesic was elected president, showing voters' preference for international integration.


By the second quarter, the constitution was reformed to prevent a return to the days of an all-powerful President, and the parliament was granted more control over the armed forces and the security services.


Croatia was rewarded for strengthening its democracy with membership in NATO's Partnership for Peace.


The country rationalized its import duties in preparation for its entry into the World Trade Organization in July. There was a flurry of bank consolidations.


The central bank approved the acquisition of up to 65% of Dalmatinska Banka by Reginter. The government announced plans for the 2001 sale of Croatia Insurance, the oil and gas company Ina, and the state electricity concern Hep. Unemployment remained at more than 20% and some people accused the prime minister of spending too much time trying to please his coalition partners.


The budget deficit was more than three times the planned deficit for 2000 and inflation was up.


A trimmed-down budget for 2001 was passed. The government decided to repay the obligations of the previous government.


In the first quarter, Prime Minister Ivica Racan introduced political reforms, and created an environment conductive for privatization and foreign investment. Croatia received indications from NATO that it would be welcomed as a member in the near future.


Protests began over the government's cooperation with the international tribunal investigating Balkan war crimes.


The government adopted a comprehensive strategy for long-term economic development, "Croatia in the 21st Century". T-bills are tradable at the Exchange. Foreign entities cannot buy them directly, but must go through an intermediary such as a commercial bank. Foreign investors can purchase GDR (global depository receipts) issued by Pliva (pharmaceutical company) and Zagrebacka Banka.pp


Following its parliamentary victory in July, Racan's government gained legislative approval for liberalization of the electricity sector.


The kuna faced appreciation twice, in July and September, forcing the Central Bank to curb the currency.


Croatia signed the Stabilization and Association Agreement on trade matters with the EU in the fourth quarter.


The government gave up majority control of national telecom company, Hrvatski Telecom. The central bank allowed UniCredito Italiano and Allianz AG to acquire Zagrebaka, Croatia's largest bank.


Yugoslavia returns art works, including Orthodox icons, looted after the fall of the city of Vukovar 10 years earlier.


Croatia will lift the ban on transporting oil products on its roads that has sparked fierce opposition from neighbouring Slovenia and Bosnia-Herzegovina.


Foreign Minister Tonino Picula visits Belgrade for talks with his Yugoslav counterpart, the first such visit since independence. b6


PM Racan resigns as infighting within the coalition paralyses economic reform. President Mesic asks him to form a new government.


Under pressure from nationalists, government declines to hand over retired Gen Janko Bobetko, indicted for war crimes by The Hague tribunal. Health grounds are cited. b6


The Central Bank has announced that it had eased its discount rate from 5.9% to 4.5% as part of its strategy of monetary easing within the country. b1


Government Approves Judicial Reform Plan, focusing mostly on improvements to court facilities.


The government has given its approval to a package of tax changes, making small adjustments to personal income taxation that are likely in most cases to leave people with higher net wages.


Croatia submits formal application for EU membership.


Gen Mirko Norac, seen by many Croats as a war hero, sentenced to 12 years for killing of several dozen Serb civilians in 1991. b6


Death of Gen Bobetko ends controversy surrounding his extradition to The Hague.


Croatia's Prime Minister Ivica Racan and Health Minister Andro Vlahusic announced government plans for hospital renovation and construction worth K7bn (US$1.091bn).


The World bank has signed a loan package worth US$156m with the Croatian government


Croatia Signs US$67m Pre-Membership Aid Agreement with EU. b1


The World Bank has approved the release of a US$100m loan, the second transaction of a two-part US$202m structural adjustment loan that was first approved in December 2001


Ivo Sanader of Croatian Democratic Union (HDZ) becomes prime minister in a minority government following his party's success in elections the previous month. b6


Croatia's new government got straight down to one of its election promises yesterday, approving a reduction in value-added tax from 22% to 20%.


Two retired Croatian generals, Mladen Markac and Ivan Cermak, appear before The Hague tribunal charged with crimes against humanity for atrocities allegedly committed against Serbs during the war in Croatia in 1995. They plead not guilty. b6


Croatia's governing party has overwhelmingly endorsed Prime Minister Ivo Sanader as its leader for another four years.


Wartime Croatian Serb leader Milan Babic jailed for 13 years by Hague tribunal for his part in war crimes against non-Serbs in self-proclaimed Krajina Serb republic where he was leader in the early 1990s. b6


Central Bank stepped into the interbank market, offering fixed rate securities of K7.36:1 euro. The move marks the second intervention in the past fortnight, and the sixth of the current year.


Regulations on Foreign Investors


Restrictions: FDI, inward portfolio investments, and profit transfers abroad are not restricted.

Taxation: Double taxation is avoided.a6


Restrictions: No change.

Taxation: No capital or dividend tax.a7


Taxation: Corporate tax rate is changed from 35 to 20%.


Taxation: capital gain tax is 20%. 15 percent tax on interest revenue, dividends and royalties.


Restrictions: New laws were passed to boost investment in tourism, research and manufacturing.

Taxation: no change.


Restrictions: 1. The government established the Agency for Trade and Investment Promotion in January. 2. The Croatian National Bank and/or the Cabinet of Ministers are granted authority to impose capital restrictions (restrictions on repatriation of profits, capital etc.) if they assess that outflows or inflows of capital could cause significant problems to conducting monetary policy or carrying out foreign exchange policy. b7