"At the meeting we considered developments following the decision to reduce the rate of minimum required foreign currency claims of banks relative to their foreign currency liabilities. We clarified all doubts," Rohatinski told reporters.

He dismissed media speculations that the latest HNB decision to make more funds available for entrepreneurial loans had strained the relations between the central bank and the government.

"My impression is that the government fully supports these measures," he said, describing the talks with Kosor as "long, comprehensive, very frank, and successful".

Last Tuesday, the HNB Governor decided to reduce from 20 percent to 17 percent the rate of minimum required foreign currency claims of banks relative to their foreign currency liabilities so as to release approximately EUR 850 million (HRK 6.3 billion) into the banking system.

According to the HNB press release "the decision of the Governor was issued after consultations with the representatives of major banks and employers. Given the already high banking system liquidity, the additional amount that is made available for investments under this decision should facilitate loan realisation and ensure more favourable interest rates compared to those offered presently for all projects that can be realised quickly and that stand real chances of achieving profitable and competitive business operations in the domestic and foreign markets."

The decision was made "to stimulate investments in new projects that could contribute to improved exports and balance of payments and job creation over the shortest possible term. It is estimated that these investments will involve mainly investments in manufacturing and tourism."

The government issued a statement on Tuesday evening, saying that in principle it welcomed Rohatinski's decision under which the banking sector received about HRK 6.3 billion for financing business projects, notably for investments in the manufacturing industry and tourism.

The government in particularly welcomed the contribution such a decision would give to its efforts to reduce interest rates.

However, the government said the Croatian National Bank's decision was surprising given that it was adopted in consultation only with employers and banks, and given the selective approach to release funds for specific economic projects.

Still, if such a decision and the process of its adoption represent a change in the central bank's position and its active involvement in boosting economic growth, the government welcomes the bank's willingness to finally use monetary policy instruments to that end, the statement said.