Demekas was speaking at a press conference at the end of his 10-day working visit to review the implementation of a stand-by arrangement.
Demekas positively assessed the implementation of the economic programme this year, saying that the budget deficit would be substantially reduced in comparison to last year. He predicted that at the end of the year Croatia's foreign debt would be higher by two or three percentage points of GDP than it was at the end of 2003. It grew by about 15 percentage points during 2003.
He agreed with the Government's budget deficit projections of 3.7 per cent next year and its intention to cut the deficit to three per cent of GDP over the next three years.
The Government has set good targets for 2005 and the following years, but it will need broad support to meet them, he said.
Demekas stressed the need to change the pension indexation formula. He said he was glad that the Government and the state-owned Croatian Railways company had drawn up a restructuring plan, but reiterated that there was no doubt that "the health system is sick": He noted that all the people he had talked to agreed that something should be done to improve the health system.
The IMF mission also recommended that the Government step up privatisation processes, particularly the privatisation of chronic money-losers such as shipyards and ironworks.