The IMF encourages Croatia and other countries in the region with a similar situation to downsize their public sector, reduce fiscal deficit and state ownership in the economy, as well as legislation pertaining to the economy, Deppler said at a news conference presenting the IMF's outlook publication the World Economic Report.
The experience of the countries which 20 years ago had the most successful economies, such as Great Britain, Ireland, Denmark or the Netherlands, shows that those countries achieved faster growth because they had taken that direction and that strategy should be followed by Croatia as well, Deppler said.
He noted that although Croatia's growth rates were growing twice as fast as those of EU countries, the country, like most countries in the region, still had a growth rate that was twice lower than those of other developing countries. The crucial difference between those two groups is the role of the state in the economy and legislation regulating the economy, Deppler said.
Asked how the IMF viewed Croatia's monetary and fiscal policy in that context, Deppler said that the IMF Mission would not have agreed with the findings of a recent review of the stand-by arrangement with Croatia if it had not believed that they were true.
He also commented on a forecast from the World Economic Report that in 2007 Croatia would see an additional increase in the balance of payments current account deficit, saying that first estimates spoke about a drop to below six percent of GDP, but that now it seemed that the figure could be higher, mostly due to high oil prices.