EVENTS RELATED TO BUDISA'S RETURN CAUSE DROP IN VALUE OF LEGSI INDEX

ZAGREB, Feb 22 (Hina) - The Lehman Brothers Euroasia Group Stability Index (LEGSI) for Croatia in February is 60, which is a drop of two points as against January. The drop in the value of the index, which reflects the political stability of countries in transition and some other countries and their resistance to internal crises, is the result of events related to the return of Drazen Budisa to the helm of the Croatian Social Liberal Party (HSLS). The LEGSI index is issued monthly with accompanying country reports by the US consulting firm Euroasia Group, in cooperation with the Lehman Brothers investment bank. Budisa's return to the helm of the HSLS and strained relations with HSLS government ministers may decrease the government's efficiency, it is said in the report for Croatia, which the Croatian Employers' Association published on its web site. Another stability risk factor is the workers' unions in five largest public companies having announced strikes if collective bargaining in their companies does not end by the end of February. It is believed this could hamper the government in its efforts to harmonise further economic reforms and cuts in the public spending. The government's good position in negotiations with the International Monetary Fund (IMF) is believed to have positively affected the stability index. Nevertheless, it is noted that Prime Minister Ivica Racan could have problems with his opponents in the coalition in future negotiations with the IMF. These factors have caused Croatia's drop from fourth (January) to fifth place on the LEGSI scale. Hungary is placed first and is followed by Poland, Brazil, Bulgaria and Croatia. Croatia is followed by Thailand, Russia, Turkey, Ukraine, Columbia, Indonesia, Aserbaijan, Argentina and Venezuela. Factors which determine a country's index include the government's political and economic measures and image at home and abroad and the most important events in the field of social affairs, security and economy which marked the monitored period. The index is considered a reliable indicator of a country's investment climate. (hina) rml