NEW DEAL WITH IMF WOULD REPLACE CURRENT ONE - STATE SECRETARY

ZAGREB, March 8 (Hina) - Beginning negotiations on a new stand-by agreement with the International Monetary Fund (IMF) could replace the completion of the current, still valid deal, the state secretary at the Finance Ministry, Martina Dalic, said on Monday.#L# A 14-month stand-by deal the former government signed with the IMF in February 2003 formally expires on April 2. One of the key unrealised items is the state deficit, planned to account for 4.5 percent of GDP. Finance Ministry leaders told reporters today said deficit in 2003 amounted to 5.5 percent of GDP. "The current administration did not sign this (still valid) agreement and was unable to affect its execution. Important for us are future relations with the IMF and a new agreement," Dalic said, adding that the Ivo Sanader Cabinet had agreed with the IMF to sign a new deal. "Beginning negotiations on a new agreement will replace the completion of the old one," Dalic said. She declined to speculate on the outcome of the negotiations, but voiced hope they would be successful. Asked how the non-completion of the current agreement might affect Croatia's future position, Dalic said Croatia's standing depended on its credibility and economic policy. She said the new authorities, by beginning negotiations on a new agreement with the IMF, wanted to show the international community and financial institutions that they would pursue a policy supporting macroeconomic stability. (Hina) ha sb