The delegation arrived in Croatia on 2 December for a ten-day visit with the aim of reviewing the implementation of the stand-by arrangement which Zagreb signed with the Fund at the start of August.
According to a press release issued by the Sabor, the IMF delegation gave preliminary assessments on the achievements in 2004 and expectations in 2005 in microeconomic policy, privatisation, monetary policy and investments.
It was highlighted that the basic purpose of the stand-by deal was to curb the rise of the country's external debt and the main instrument for this was the reduction of the fiscal deficit in 2004 and 2005.
The IMF representatives commended the government for cutting the budgetary deficit this year in comparison to 2003, when the previous government left a high deficit, according to the press release.
The government was also commended for the same Value Added Tax rates and for cutting the spending on salaries and reducing benefits.
Minor progress was perceived in privatisation and the reform of the pension system and public health, the press release read.
Commenting on problems in the health sector at a news conference after the talks, Demekas said that public health in Croatia was sick.
He said that Croatia was spending twice as much as other other transition countries on the health sector regarding the share of the public health spending in Gross Domestic Product.
Demekas believes that the problem lies in lack of control of the expenditure.
He went on to say that the Croatian government had began implementing appropriate measures in the middle of this year and that it would have to continue those moves in order to reduce costs in hospitals and other health institutions.
According to figures from the Croatian Health Insurance Agency (HZZO), 4.5 million people in Croatia are covered by the health insurance scheme and about 98 percent of them do not pay for health services from their own budgets. Demekas said that in a situation like that it was impossible to control demand.
"If the price is zero kunas, demand is infinite," the IMF official said.
He said that it was encouraging that the government was thinking of schemes for additional health insurance and introduction of some forms of participation.
Nothing is free, either in public health or in education. "The question is who pays and how much they pay," he added.
Demekas said he was going to discuss these issues at the forthcoming meeting with other Croatian officials and institutions.