ZAGREB, Jan 18 (Hina) - Croatia's stand-by arrangement with the International Monetary Fund is in effect until May, but some at the IMF think that because of the possible failure of all criteria being fulfilled, the arrangement will
not be brought to an end so that a new arrangement can be signed which would include the commitments from an existing Memorandum, sources close to the Croatian National Bank said. Officials at the central bank, however, do not expect the IMF to insist on this. According to the bank's information and information from the government, they believe that everything important Croatia has committed itself by signing the Memorandum on Economic Policy from the stand-by arrangement with the IMF will be fulfilled as planned. They also believe that there was no reason for the existing arrangement not to be brought to an appropriate end just because of possible overstepping of
ZAGREB, Jan 18 (Hina) - Croatia's stand-by arrangement with the
International Monetary Fund is in effect until May, but some at the
IMF think that because of the possible failure of all criteria being
fulfilled, the arrangement will not be brought to an end so that a
new arrangement can be signed which would include the commitments
from an existing Memorandum, sources close to the Croatian National
Bank said.
Officials at the central bank, however, do not expect the IMF to
insist on this. According to the bank's information and information
from the government, they believe that everything important
Croatia has committed itself by signing the Memorandum on Economic
Policy from the stand-by arrangement with the IMF will be fulfilled
as planned. They also believe that there was no reason for the
existing arrangement not to be brought to an appropriate end just
because of possible overstepping of not so important elements of
the Memorandum.
The Central Bank stressed that in the monetary sphere, all
structural measures from the stand-by arrangement had been
fulfilled. The arrangement was granted in March 2001.
According to information from the Finance Minister, it is certain
that the basic criterion from this sphere would also be fulfilled,
which is that the deficit of the consolidated budget would be about
5.3 percent of the gross domestic product.
It is, however, possible that some criteria are overstepped to some
extent, which was why Croatia requested an extension of the
deadline for them to be met. This primarily pertains to salaries in
the public sector, and especially to the dismissal of more than
3,000 employees in the government sector, especially the army, for
which the government has requested a deadline to be the end of March
this year.
The central bank stressed that some at the IMF did think that a
possible non-fulfillment of all parameters could lead to the
existing arrangement not being completed, but a new arrangement
would be signed which would implicitly include obligations on the
realisation of the existing memorandum.
The government or the central bank do not have an official stance on
this. The bank, did, however say, that they did not expect the IMF to
insist on such solutions.
Sources from the bank's leadership believe that this would be a
suggestion which neither the government nor the bank should accept,
because the formal non-completion of the existing arrangement
would imply that the commitments from the arrangement had not been
met, thus giving Croatia one more chance to fulfil them. This could
also be reflected on Croatia's position on international monetary
markets.
Things will probably be much clearer at the end of this and the start
of next month, when an IMF Mission will be visiting Croatia, and the
main subject of its discussions will be the results of Croatian
economic policy last year, especially in the fiscal sphere.
(hina) lml sb