ZAGREB, Sept 12 (Hina) - Croatia's indebtedness has risen to a worrisome level, but the authorities are prepared to service all the debts as they are solvent and can remain solvent in the coming period if more attention is paid to
export, the finance minister said during Friday's parliamentary debate on the government's report on the state debt.
ZAGREB, Sept 12 (Hina) - Croatia's indebtedness has risen to a
worrisome level, but the authorities are prepared to service all
the debts as they are solvent and can remain solvent in the coming
period if more attention is paid to export, the finance minister
said during Friday's parliamentary debate on the government's
report on the state debt. #L#
Minister Mato Crkvenac said that in the situation when the entire
total foreign debt came to 19.2 billion US dollars, of which 7.3
billion was the state debt, there were no problems in paying the
debt. However, he warned about an unfavourable trend in the rise in
the deficit of the balance of payments.
Crkvenac said that the success of the economic policy, including
the repayment of the debt, depended on a successful export policy
and encouragement of exports. The minister voiced hope that the
issue of the balance of payments would be improved this year in
comparison to 2002.
"It is true that the government, but also economic subjects, are not
doing enough in bids to stimulate export," he admitted, calling on
all relevant subjects to think more about this problem.
By the end of this year, Croatia's foreign debt, along with the
balance of payments deficit of seven percent of GDP, could come
close to 21 billion dollars, i.e. it could exceed 70 percent of GDP,
according to figures which Croatian National Bank (HNB) governor
Zeljko Rohatinski presented at a news conference yesterday.
Informing the parliament on where the money from the debt was spent,
Crkvenac said slightly over one third of the state debt went for
covering debts incurred because of the war as well as for covering
damage caused by murky economic dealings. One-fourth has covered a
budgetary deficit and funds necessary for spending, and over one-
third has been used in development and investments.
He said that the government proposed 19 measures so as to stimulate
economic development and facilitate the repayment of the debt.
The minister informed MPs on eight major causes for incurring such a
high state debt.
One of those causes was the changes in the relation between the
values of currencies, namely the changes in the ratio of the
national currency kuna to the dollar and the euro, which cost
Croatia some 2.5 billion dollars this and last year.
The second reason for incurring high debts were the consequences of
the war and costs of the reconstruction. Crkvenac said that in the
last few years, about eight billion kuna had been allocated from the
state budget for the recovery of war-stricken areas.
The high state debt was also partly a consequence of the failed
privatisation process in the mid-1990s. The current authorities
had to remove the negative effects of that model of privatisation,
and had to take on loans from abroad for that purpose.
In this context, the minister cited figures indicating about 9.5
billion kuna of the inherited debt, 2.5 billion kuna of the debt
which should be paid to depositors in bankrupt banks, and 700
million were needed to bail out ailing companies.
A lot of money was spent to recover the economy and solve problems of
unemployment, he said, adding that the growth rate was now five
percent in comparison to 2000.
The process of liberalising the market and reforms in the army and
judiciary and negative effects of de-industrialisation also needed
great investments, he said.
(hina) ms