The deficit is expected to account for about three per cent of GDP by the end of the year and next year, regardless of who wins the parliamentary elections, Croatia should determine whether it would try to reduce the deficit to zero per cent in the next three to four years or wait to finish the financing of the infrastructure, Sanader said, adding that the government would push for the former option.
He voiced hope that the government would be supported in continuing the fiscal decentralisation, recalling that as of next year revenue from income tax would go in full to local and regional self-government units, while revenue from profit tax would go to the state.
Sanader recalled that Croatia's stand-by arrangement with the International Monetary Fund ended today. Croatia has passed the maturity test and the IMF has assessed that Croatia does not need a new deal and is capable of responsibly implementing its macroeconomic policy, he said.
The PM also recalled that Japan's leading credit rating agency recently raised Croatia's ranking and that a recent European Commission progress report indicated what was good, but also outstanding issues such as judicial reform and combating bribery and corruption.
Sanader said it was not correct that any political party was responsible for bribery, corruption and organised crime, or any dishonorable act, because "an honorable or dishonorable man is not a political, but a moral and ethical determinant".
Speaking of the fiscal policy in 2007, Finance Minister Ivan Suker recalled the 1991-95 war and its direct and indirect consequences. He said eight billion kuna was set aside in next year's budget to deal with those consequences and that they would continue to be a burden in the coming years as well.
The three-day conference "Croatia's Economic Policy in 2007" was organised by the Croatian Economists' Association in the northern Adriatic resort of Opatija, gathering about 400 participants on the first day.
(EUR1 = 7.33 kuna)