August 09th- 15th 2004
CONTENTS:
MANUFACTURER PRICES N JULY UP
NUMBER OF TOURIST IN ADRIATIC THIS WEEK SAME AS LAST YEAR
MORE TOURISTS IN CROATIAN NAUTICAL PORTS
OVER ONE FIFTH OF CROATIAN HOUSEHOLDS IN POSSESSION OF PC
ABOUT 40 PERCENT OF HOUSEHOLDS "BARELY MAKE ENDS MEET" - SURVEY
GOVT. INTENDS TO STABILISE EXTERNAL DEBT AND CARRY OUT STRUCTURAL REFORMS
THERE WILL BE NO MORE INOCULATIONS AGAINST SWINE PLAGUE AS OF 2005
AGRICULTURE MINISTER ON WHEAT CROP
CROATIAN PRIVATISATION FUND INVITES TENDERS FOR PURCHASE OF 'PIK VRBOVEC'
OSIJEK SUGAR MILL DIRECTOR ANNOUNCES LEGAL SUIT AGAINST BOSNIAN TELEVISION
NO MEETING SET BETWEEN LABOUR MINISTRY, MECHEL
JULY BEST MONTH IN HISTORY OF CROATIA AIRLINES
FOUR BIDS SUBMITTED FOR SIBENIK OVERHAUL SHIPYARD
NEW OWNER TAKES OVER CETINKA
LURA: EBIT OF 7.3 MILLION KUNA IN FIRST HALF OF 2004
KARLOVAC BREWERY: PROFIT OF 16.55 MILLION KUNA IN FIRST HALF OF 2004
ON-LINE TRAVEL AGENCY EXCEEDS LAST YEAR'S RESULTS
POTOMAC OPENS NEW PLANT IN DAVOR
TOTAL CARGO TURNOVER IN PORT PLOCE 954,000 TONNES
MORE PASSENGERS IN VUKOVAR PORT
IMF ON CROATIA
NEW EUROPEAN COMMISSION HAS ROOM FOR BULGARIA, ROMANIA, PERHAPS CROATIA
REUTERS: EUROPEAN ECONOMISTS FORECASTS THAT CROATIA WILL JOIN EU IN 2009
EASTERN CROATIAN COUNTY, INDIA AGREE ON COOPERATION
RUSSIA TO SEND TWO FIREFIGHTING AIRPLANES TO CROATIA
UNION FEDERATION FOR RAISING AMOUNT OF NON-TAXABLE INCOME
INCREASE OF OIL PRODUCTS' PRICES ENDANGERS FISHERMEN, FARMERS
1. ECONOMIC INDICATORS
MANUFACTURER PRICES N JULY UP
Manufacturer prices in Croatia in July increased by 0.9 percent in relation to June and 4.6 percent in relation to July 2003, the Central Bureau of Statistics said in a statement last week. In this year's first seven months manufacturer prices rose by 2.1 percent in relation to the same period the year before.
NUMBER OF TOURIST IN ADRIATIC THIS WEEK SAME AS LAST YEAR
The number of registered guests in the Adriatic in the second week of August is the same as in the same period last year -- 619,536 of whom 557,468 are foreigners and 62,068 are from Croatia -- read data released by the Croatian National Board of Tourism on Monday. According to the tourism board, this week there are 70,000 tourist more guests last week than last week the majority of whom are in Dalmatia.
MORE TOURISTS IN CROATIAN NAUTICAL PORTS
Croatian nautical ports in this year's first six months had 17 percent more guests who realised 16 percent more overnight stays than in the same period the year before, the Central Bureau of Statistics said in a statement on Tuesday. A total of 229,800 tourists, of whom 219,700 were foreigners, visited Croatian ports in the first six months. The number of Croatian tourists in ports amounted to 10,100 which is 31 percent more than in the same period last year.
OVER ONE FIFTH OF CROATIAN HOUSEHOLDS IN POSSESSION OF PC
Over one fifth of Croatian households have personal computers, and the highest increase in the number of households in the possession of PCs was registered in 2003 in comparison to the previous year, regarding the equipment with consumer durables. Over a half of Croatian households have a car, but in 2003 a mild decrease was registered as last year, 53.5 percent of households possessed a car as against 55.3 percent in 2002, according to a report which the Central Bureau of Statistics issued last Monday. On the other hand, the number of households in possession of more than one car rose last year when 8.3 percent of households had two cars as against seven percent in 2002. The report was based on an opinion poll which the Central Bureau of Statistics conducted on 2,985 households. The results of the poll show a steady increase in the equipment of households with consumer durables.
ABOUT 40 PERCENT OF HOUSEHOLDS "BARELY MAKE ENDS MEET" - SURVEY
Croatian consumers assess the financial position of their households as increasingly worse, according to a survey published in Privredni Vjesnik magazine which shows that about 40 percent of respondents "barely make ends meet", about 10 percent are forced to reduce savings, while about 20 percent "have to borrow". The survey, which covered 600 households, was conducted in late June by the magazine's research centre in cooperation with the GfK Zagreb agency. According to the survey, the possibilities of saving are perceived as smaller, households' financial position is assessed as worsening, while prevailing are assessments about the impossibility of purchasing permanent consumer goods or investing in the construction of houses and flats or improving housing conditions.
2. ACTIVITIES OF GOVERNMENT, MINISTRIES AND STATE INSTITUTIONS
GOVT. INTENDS TO STABILISE EXTERNAL DEBT AND CARRY OUT STRUCTURAL REFORMS
The fiscal adjustment aimed at the stabilisation of Croatia's external debt at the current level of some 77 percent of Gross Domestic Product, and structural reforms aimed at the reducing of a role of the state in the economy and promoting the private sector's activities, are the foundations od the Croatian government's economic programme for 2004 and 2005. The guidelines for the economic policy in the said period are presented in the Ivo Sanader Cabinet's Letter of Intent and Memorandum on Economic and Financial Policies, documents pertaining to the latest stand-by arrangement which the International Monetary Fund approved to Croatia earlier this month. Several most important documents on the matter were released on the web site of the Croatian National Bank (HNB) on Thursday afternoon. On 4 August 2004, the IMF Executive Board approved a 20-month Stand-By Arrangement in an amount equivalent to SDR 97 million (about US141.3 million) for the Republic of Croatia to support the country's economic program. The Croatian authorities intend to treat the arrangement as precautionary and are not planning to draw funds under the credit. "The unwinding of the credit boom and the restoration of fiscal discipline are expected to maintain real GDP growth to 3.5 to 3.75 percent and keep the current account deficit around 5 to 5.5 percent of GDP in 2004-05. Inflation will remain at the range of 2-3 percent per year," according to the the Memorandum. "Given this economic outlook, we expect the policies for 2004-05 outlined in this Memorandum will result in stabilizing the external debt-to-GDP ratio at around its end-May 2004 level," it read. Measures aim at a general government deficit of 9.3 billion kuna (41 percent of GDP) "on a GFS 2001 basis including net lending, an adjustment of 1.8 percent of GDP from 2003. This target was set in the 2004 budget," it added. "The 2005 budget will aim at a general government deficit of 3.7 percent of GDP, with continued effort to limit HBOR's net lending. To achieve this objective, we intend to contain the general government wage bill growth to no more than the rate of inflation," the document read; Next year, the government intends to start the medium-term process of tax reform. Another important measure is that budget financing will gradually shift to domestic sources. The government will limit the issuance of new government debt guarantees. The Sanader cabinet also intends to strengthen financial discipline and improve the performance of public enterprises. The government regards structural reforms as a key element of its programme "in order both to supplement our macroeconomic policies and to prepare our economy for EU accession." "These reforms are thus a critical part of our program also for 2004-05, and most of them are incorporated in a three-year Programmatic Adjustment Loan (PAL) from the World Bank, expected to be agreed in early 2005." The documents highlights "urgent need to enhance transparency and efficiency in public expenditure and debt management". The government is planning to restore momentum in the privatization process. "The HFP (Croatian Privatisation Fubnd) aims at privatizing all companies in which the government holds a share of up to 25 percent by year-end and all remaining holdings in its portfolio by end-June 2005. Outside HFP's portfolio, we will resume efforts to restructure and privatize large state enterprises. In particular, the government will sell at least 15 percent of the oil company (INA) by end-2005 and will formulate the plan on privatization of the insurance company (CO) by end-June 2005 and complete the third phase of privatization of the telecommunication company (HT) by end-December 2005. Finally, the government will disengage from Croatia Banka by end-June 2005 and consider the options for privatization or a strategic partnership for HPB," the document said among other things.
THERE WILL BE NO MORE INOCULATIONS AGAINST SWINE PLAGUE AS OF 2005
As of next year Croatia will no more carry out protective inoculations against swine plague, which will make it possible for the country to export pork to the European Union, Croatian Agriculture Minister announced on Thursday. As long as pigs are inoculated against swine plague, Croatia cannot export fresh pork or pork semi-durable products but only fermented products. Croatia wants to accept conditions and legislation of the European Union, and therefore there will be no longer inoculations against swine plague as of 2005, Minister Petar Cobankovic told a news conference in Zagreb. Pork can be exported only two years after the cessation of this sort of inoculations, he said adding that Croatia also would resume a great risk in light of soft borders with its neighbours.
AGRICULTURE MINISTER ON WHEAT CROP
In spite of bad weather, the quality of this year's wheat crop in Croatia is above the average and of a total of 850,000 tonnes of crop, 600,000 tonnes or 70.5 percent have been purchased so far, Croatian Agriculture Forestry and Water Management Minister Petar Cobankovic said on Thursday. So far, a total of 311.1 million kuna before VAT have been paid for the purchased wheat, the minister said and added that because of the wheat's good quality more than one kuna had been paid per one kilo of wheat.
CROATIAN PRIVATISATION FUND INVITES TENDERS FOR PURCHASE OF 'PIK VRBOVEC'
The Croatian Privatisation Fund (HFP) has invited tenders for the purchase of 99.73 percent of shares of the PIK Vrbovec agribusiness, with the initial price of one million kuna. The deadline for offering tenders is 14:00 hrs 27 August 2004, according the public invitation published on the web site of the HFP and in Saturday's issue of the Vjesnik daily. According to figures published in the call for tenders, the company's assets came to 362.97 million kuna at the end of 2003, and liabilities totalled 501.77 million kuna. The company's stock capital of 558.07 million kuna is divided in 5,580,797 shares. Of this amount, 5,565,726 shares (99.73 percent) are offered for sale at the initial price of one million kuna. Possible buyers are also asked to retain the current number of PIK Vrbovec employees over the next year or carry out other programmes for providing for possible redundant workers. There are now 1,401 workers in this company.
3. COMPANIES
OSIJEK SUGAR MILL DIRECTOR ANNOUNCES LEGAL SUIT AGAINST BOSNIAN TELEVISION
The chairman of the managing board of the sugar mill in the eastern Croatian city of Osijek has announced legal action against Television of the Federation of Bosnia-Herzegovina (TV FBIH) over a report this TV station aired on Friday claiming that sugar, which had been smuggled from Bosnia via Croatia to the EU, had been repacked in the Osijek plant."I have heard the news and I am flabbergasted. Such nonsense and impudence," Zvonimir Krnjakovic said on Saturday, adding that the Osijek mill had never imported other companies' sugar, let alone repacked it for the export to the European Union. The report will do huge damage to our company, and all of us in the mill are shocked, the company's management board chairman said adding that accusations could have far-reaching repercussions for the entire country. Therefore Krnjakovic intends to ask assistance from Croatian as well as international institutions. Former CEO of the Osijek sugar mill, Miroslav Kos, who was at the helm of the company from 1990 to 2002 and who is also now employed in it, said that the mill had to respond quickly to accusations, as the report could damage the entire national production of sugar. "The news is silly, tendentious and absolutely incorrect," Kos said. adding that "some lobbies do not like to see that the sugar production and its export are going all right in Croatia". TV FBIH reported that certain humanitarian agencies imported great amounts of sugar in Bosnia-Herzegovina after the war, and that some individuals transferred sugar to Croatia in order to export it in the European Union, and that profit earned in this way seemed to have been used for financing terrorist organisations. According to TV FBIH, members of some relief agencies, organised in a network, transferred sugar to Croatia where they repacked sugar supplies and exported them to the European Union over several years immediately after the war ended in Bosnia in 1995. The entire job was masterminded by Tunisian Sefik Ayadi, the head of the Muvafak humanitarian organisation in Bosnia and Herzegovina, the television said adding that sugar, previously imported in Bosnia with false papers, ended up in the sugar mill in Osijek in which it was repacked for the export to EU member states.
NO MEETING SET BETWEEN LABOUR MINISTRY, MECHEL
An official meeting between the Ministry of the Economy, Labour and Entrepreneurship and the Mechel company has not been set, but once it receives the business plan the ministry will be ready for further talks in order to eliminate existing problems, the ministry's state secretary for the economy, Vladimir Vrankovic, has told Hina. Owing to the outstanding importance of the economic activity of the ironworks in Sisak, the ministry has said in a statement it is interested in successfully resolving the existing "business problems" in the Mechel Ironworks and will extend the support necessary to stabilise business. The ministry has added the change of the contract as requested by Mechel is not within the ministry's competence and must be dealt with by the two interested parties. The Croatian Metal Workers Union's representative in Mechel, Mato Somic, has said most of the ironworks' 1,620 employees have been sent on collective annual leave, while those who already were on this year's annual leave were given paid days off with compensation amounting to the average salary in the last three months. Production in the ironworks has been completely discontinued, Somic has said, adding that about 300 workers are there to take care of security and maintenance. The Metal Workers Union's Mechel branch objects to the changing of the purchase contract as proposed by Mechel director general Nasibulla Mukhatdinov at a July 13 meeting. The union wants Mechel to ensure production and make sure that all 1,700 employees keep their jobs as stipulated in the purchase contract. The union is also opposed to the withdrawal of a bank guarantee of EUR3.6 million for the payment of six minimum monthly wages for all employees in case Mechel walks out of the ironworks.
JULY BEST MONTH IN HISTORY OF CROATIA AIRLINES
The national flag carrier Croatia Airlines had 188,000 passengers on board in July which is a record high number of passengers in a month for this company. Company officials expect to have about 1.56 million passangers on board by year's end.
FOUR BIDS SUBMITTED FOR SIBENIK OVERHAUL SHIPYARD
Four Croatian companies have submitted bids to be granted concessions for the construction and overhaul of boats in the Sibenik Overhaul Shipyard, the Ministry of the Sea, Tourism, Transport and Development has said. The bids have been submitted by two companies from Sibenik and one from Primosten, and a joint bid submitted by two companies from Zagreb. The expert body which opened the bids will meet once again to analyse them before proposing a candidate to the government. The concession is granted for a period of 30 years. Under the bid invitation, the permanent part of the concession is defined in the amount of a minimum three kuna per square metre, while the variable part amounts to a minimum one percent of the annual revenue.
NEW OWNER TAKES OVER CETINKA
The Trilj-based plastic factory Cetinka has been taken over by the new owner, the Gibli International company from Sesvete, which bought Cetinka for 800,000 euros with the obligation that it would keep all 130 employees. The overhaul of the production line and the boiler-room is due to begin right away. The objective is to obtain the ISO9001 standard and increase monthly output to a minimum 180 tonnes within a year's time, new director Vedran Vilovic has said, adding that plans also include increasing the production of foils and solid PVC boards to 350 tonnes by 2007. Cetinka, which was founded in 1958, until 1990 continually increased output and the number of employees. In 1989 it had about 850 employees, was producing up to 1,000 tonnes of PVC foils and solid PVC boards per month and was the leading manufacturer in its field in the region. Bankruptcy proceedings were launched in February 2002. After a number of failed attempts, Cetinka was sold to the new owner a little over a month ago in a bid invitation.
LURA: EBIT OF 7.3 MILLION KUNA IN FIRST HALF OF 2004
Lura, a major Croatian food company, realised business revenues of 972.1 million kuna in the first half of 2004, which was a rise of 3.8 percent in comparison to the same period in 2003, Lura CEO Zeljko Peric told a news conference last week. The earnings before interest and tax (EBIT) rose to 7.3 million kuna from 282,000 kuna registered in the first half of 2003. The company's profit was 17.9 million kuna, Peric said. Sales revenues totalled 944.2 million kuna (a six-percent rise), and other sorts of revenues totalled 27.9 million kuna. As regards sales in neighbouring countries, a rise was registered in Serbia-Montenegro and Slovenia, while Lura's sales shrank in Bosnia-Herzegovina, which was ascribed to the postponement of the implementation of a Croatian-Bosnian free trade agreement, the company's CEO explained. He announced the expansion of the company's activities in Romania, Bulgaria and Hungary with the help of strategic partners, but without new acquisitions in the first period, and the strengthening of Lura's position in Slovenia, Bosnia-Herzegovina and Serbia-Montenegro.
KARLOVAC BREWERY: PROFIT OF 16.55 MILLION KUNA IN FIRST HALF OF 2004
The brewery in the city of Karlovac earned 16.55 million kuna as a net profit in the first half of 2004, according to a financial report which the Karlovacka Pivovara company sent to the Varazdin Stock Exchange. This was a considerably better result in comparison to business results in the first half of 2003 when the company had a loss of 2.24 million kuna. In the first six months of this year, the company's revenues totalled 210.15 million kuna (18.78 percent more than in the same period of 2003). This brewery is owned by the Heineken Adria that holds 94.42 percent of its shares.
ON-LINE TRAVEL AGENCY EXCEEDS LAST YEAR'S RESULTS
Over 36,000 foreign tourists arrived in Croatia by early August by booking holidays with the Croatian on-line travel agency "adriatica.net". The figure exceeded the agency's turnover in 2003 by seven percent. After a successful July, the agency says it is satisfied with the first August results, notably from the Italian market since Italian tourists account for 20.41 percent of the agency's clients. The agency conducts nearly 80 percent of its business via the Internet and most of its offer includes private accommodation, which includes 11,000 apartments, rooms and houses along the coast and on the islands. The agency expects this year's annual turnover to exceed last year's by about 20 percent.
POTOMAC OPENS NEW PLANT IN DAVOR
The production of ties and silk scarves has begun in a new plant of the Davor-based Potomac company. The construction of the new production plant, an investment of over 4.5 million kuna, began in June 2003, head of production Alojz Jakircevic has said. The production of Croata ties in Davor began in 1996, when the output was 30,000 items. This year, the output of ties and silk scarves by the end of this year is expected to amount to 200,000 items. The new plant has 35 employees, while new openings will be advertised by the end of the year.
TOTAL CARGO TURNOVER IN PORT PLOCE 954,000 TONNES
In this year's first seven months, a total of 954,810 tonnes of goods went through the southern Croatian port of Ploce which is 48 percent more than in the same period the year before. The biggest cargo turnover was made for Bosnia-Herzegovina, namely 763,525 tonnes or one third more than in 2003. This is also a record high turnover over the last 14 years, namely since Croatia gained independence.
MORE PASSENGERS IN VUKOVAR PORT
In this year's first half a significantly higher number of passengers and cargo turnover was registered in the eastern Croatian port of Vukovar, port officials said in a statement. A total of 17 passenger ships, which carried 2,223 passengers, docked in Vukovar port in the first six months, while cargo turnover in the same period went up by 57.1 percent. Another 40 passenger ships with approximately 5,200 passangers should dock in Vukovar port by year's end.
4. INTERNATIONAL COOPERATION
IMF ON CROATIA
The International Monetary Fund (IMF) supports the plans of the Croatian government to continue reducing deficit and tax burden in the middle term period, the IMF has said in its assessment regarding a request for a new stand-by deal. On 4 August 2004, the IMF Executive Committee approved a US141 million stand-by loan arrangement for Croatia for a 20-month period, to support the country's economic program. The Croatian authorities have said they intend to treat the arrangement as precautionary and are not planning to withdraw the approved funds. The IMF said Croatia had been recording a fast growth and low inflation rate since the mid-1990s which, however, had resulted in a higher external imbalance, notably in the last several years.
NEW EUROPEAN COMMISSION HAS ROOM FOR BULGARIA, ROMANIA, PERHAPS CROATIA
European Commission President Jose Manuel Barroso has said his new team will have room for representatives of Bulgaria and Romania, and perhaps Croatia, Deutsche Welle radio said on Friday. Barroso revealed the line-up of the new European Commission at a press conference. Speaking of the appointment of Finland's Olli Rehn as enlargement commissioner, Barroso said Rehn would do a good job both in terms of European Union enlargement and the Balkans. Rehn is responsible also for Western Balkan issues, that's a priority but when it comes to enlargement, now it's Bulgaria and Romania's turn, Barroso said. Croatia follows and after that we will see what the proposal will be considering Turkey, he added. After that, time will tell, but it's clear that the enlargement commissioner will not have as much to do as was the case until now, Deutsche Welle quoted Barroso as saying.
REUTERS: EUROPEAN ECONOMISTS FORECASTS THAT CROATIA WILL JOIN EU IN 2009
According to results of a poll of 37 economists, which the Reuters agency published on Thursday, Croatia will very likely join the European Union in 2009, Serbia in 2015, while Bulgaria and Romania will be admitted to the Union in 2007. "The poll of 37 economists, taken on August 9-11, showed expectations were largely unchanged from the last survey in May, although the latest poll gave slightly higher chances of 2007 entry for both Bulgaria and Romania and pushed back Serbia's likely EU entry date from May's 2012 forecast," the agency reported. "Meanwhile Croatia, which was made a European Union entry candidate in June, may be able to join the EU at the same time as Romania and Bulgaria if it sprints through its negotiations," it added.
EASTERN CROATIAN COUNTY, INDIA AGREE ON COOPERATION
Ports and free zones in eastern Croatia's Vukovar-Srijem County will be the Indian economy's entry points to the European market, Indian Ambassador Kailash Lal Agrawal and prefect Nikola Safer said in Vinkovci on Wednesday. The ambassador said he expected cultural cooperation to continue, adding the exchange of students from the two countries was also possible. "I stress that besides cultural cooperation, we will do everything to establish trade and economic cooperation." Safer said talks also addressed the timber and wood, electronic and leather industries. The Indian ambassador visited Vinkovci to attend a performance of the Indian classical dance troupe Odissi, which last night ended a 15-date tour of Croatia.
RUSSIA TO SEND TWO FIREFIGHTING AIRPLANES TO CROATIA
Two Russian firefighting airplanes Beriev-200 should arrive in Croatia this autumn. The planes should for now satisfy Croatia's needs for firefighting aircraft, Croatia's chief firefighting commander Mladen Jurin said last Wednesday. Jurin, however, told Croatian Radio Croatia still needed several helicopters and airtractors. He said negotiations with Russians on the supply of another two Beriev aircraft should start in about ten days. The two Beriev planes are worth 60 million US dollars. The making of the planes will be financed by the Russian government which will thus settle a part of the debt of the former Soviet Union to Croatia.
5. UNIONS
UNION FEDERATION FOR RAISING AMOUNT OF NON-TAXABLE INCOME
The Independent Croatian Trade Unions federation (NHS) proposed to the government on Friday to urgently raise the amount of non-taxable income from the current 1,500 to 2,300-2,400 kuna. The NHS said the increase should be implemented before the autumn and that it would not jeopardise budgetary revenue. Such a measure would at least somewhat alleviate the increasingly frequent increases in prices, notably of oil products, NHS president Kresimir Sever told reporters. The NHS believes the government should also re-examine the whole social system and introduce additional measures for the most socially sensitive population. Sever recalled that apart from oil products, this year prices had gone up for water, gas, flats, lawyers' services, fruit, vegetables, road tolls and medicines. He added heating, public and rail transport were likely to become more expensive in the autumn due to higher oil prices. (EUR1 = 7.4 kuna)
INCREASE OF OIL PRODUCTS' PRICES ENDANGERS FISHERMEN, FARMERS
The Croatian Association of Trade Unions said in a statement on Wednesday the ninth increase in oil products' prices this year directly jeopardised fishermen and farmers, brought their survival into question, and initiated the increase of other products' prices, thus additionally undermining the social status of a great part of the population. The statement signed by HUS vice president Ozren Matijasevic urged the government to "adopt measures and decisions which will benefit this people (and) prevent the unfair increase in the prices of energy sources and the inappropriate behaviour of monopoly companies, such as (oil company) INA in this case". The HUS also accused the government of not keeping its pre-election promises.
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