CROATIA CENTRAL BANK TO DISCUSS CHANGING SOME CRITERIA WITH IMF

ZAGREB, April 24 (Hina) - The execution of measures outlined in the memorandum on economic and financial policies regarding Croatia's stand-by arrangement with the IMF is acceptable on the whole, but talks will be held with the IMF in May about possible corrections to certain execution criteria, related to the deficit in the current payment balance and the increase of foreign currency reserves in the central bank. #L# This was reported on Thursday by representatives of the Croatian National Bank (HNB) who, together with a government delegation, recently visited the International Monetary Fund and the World Bank. The HNB estimates that its net current foreign currency reserves this year will increase by about US$200 million, while the memorandum foresees an increase of $490 million. This is one issue that will be discussed with the IMF Mission expected in Zagreb next month. The HNB, wishing to maintain exchange rate stability in a period of increased demand for foreign currency, in this year's first quarter intervened on the foreign currency market by selling EUR315 million. This engaged a significantly higher amount of foreign currency reserves than was foreseen by the memorandum, but the central bank explained that this criteria would be executed in the second quarter. As far as meeting individual criteria used for evaluating the success of the execution of the stand-by deal, it was pointed out that fiscal policy measures had been completely fulfilled. As regards the state deficit, it was lower than foreseen, which earned Croatia a compliment from the IMF. Some structural reforms, however, are late and the deficit in the current payment balance for 2002 (with a 6.9 percent share in the GDP) is significantly higher than that foreseen in the memorandum. This matter will be discussed in May, i.e. whether this should be changed and when, along with any other criteria. (hina) sp/ha sb