MINISTER ORDERS PROBE INTO SPECULATIONS ABOUT IMF DEAL

ZAGREB, Jan 29 (Hina) - Croatian Finance Minister Mato Crkvenac has ordered a probe to establish who disseminated partial information on the non-completion of Croatia's arrangement with the International Monetary Fund (IMF) during Croatia's issuance of new government euro-bonds. Addressing reporters on Tuesday, Crkvenac said police could join in the investigation as it could be proved this was an act directed against the state and national interests. Croatia's issuing of EUR500-worth government bonds is an important success, Crkvenac said, adding it could have been even bigger had the issuance not been preceded by speculations about Croatia's relations with the IMF. Crkvenac said the current arrangement with the IMF would be completed as announced. An IMF mission will visit Croatia in early February, with the possibility of talks on a new arrangement to follow, he added. The successful bond issuance confirms that Croatia's economic policy is effective because the investors' interest was based on a set of positive indicators. They include the government's reform orientation as well as economic indicators - an economic growth rate that is higher than expected, an inflation rate lower than expected, growing foreign currency reserves, and a steady decrease of the budgetary deficit. Croatia has issued 500 million euros worth of government bonds on the European market for a period of seven years and with an annual interest rate of 6.25%. Demand for the bonds was four times higher than the offer, Crkvenac said, announcing the state planned to issue another 25 billion yens (200 million euros) of government bonds on the Japanese market, and another 2.5 billion kuna of bonds on the domestic market. The successful bond issuance is a solid foundation for investments on foreign financial markets and other security markets, e.g. for municipal bonds for the financing of regional development projects and corporative bonds, he said. (hina) sb rml