ZAGREB, June 6 (Hina) - Croatian officials have reached agreement with an International Monetary Fund mission on postponing talks on a new stand-by arrangement until September, Vice-Premier Slavko Linic told reporters on Thursday. The
agreement was reached during the mission's regular two-week visit to Croatia.
ZAGREB, June 6 (Hina) - Croatian officials have reached agreement
with an International Monetary Fund mission on postponing talks on
a new stand-by arrangement until September, Vice-Premier Slavko
Linic told reporters on Thursday. The agreement was reached during
the mission's regular two-week visit to Croatia. #L#
Until September, when talks on the new stand-by arrangement are to
start, the government will have to prepare the consolidated budget,
which will include not only the state budget, but other extra-
budgetary funds as well, including the budgets of the bodies of
local self-government.
Linic reminded about the IMF's positive evaluation of the
government's policy, which he said resulted in the improvement of
macro-economic conditions in the past 2.5 years. The IMF mission,
Linic says, has positively assessed the country's stable economic
situation, continued economic growth of around four percent, a low
inflation rate, a stable financial sector, a drop in interest
rates, and an increase in investments.
The state deficit, which is a major problem, is expected to account
for around 6 to 6.5 percent of the Gross Domestic Product this year.
This is considered to be the reason for the slow growth, Linic said.
Although foreign debts are high, it is positive that loans are used
for investments, Linic said.
The IMF believes that in the next year and a half the government
should be efficient in implementing solutions and reforming the
judiciary and the administrative sector. The revival of economy
requires further privatisation and the flexibility of the labour
market, to be achieved with the new labour legislation, the mission
believes.
A mission report notes that Croatia is entering an election time,
however, it also notes that delayed reforms are not caused by
political reasons but by the slowness and inefficiency of the state
administration, Linic says.
The IMF has two scenarios of Croatia's future development, Linic
said, adding that the first one included a growth rate of 4.5
percent, a mild increase in employment, and a slight decrease of
unemployment. The other scenario envisages an annual growth rate of
seven percent, higher labour flexibility and cuts in the number of
employees in public services. The mission does not believe very
much the second scenario could become a reality given the fact that
new elections are approaching.
Asked about President Stjepan Mesic's statement after a meeting
with the IMF mission on Croatia drawing up its own economic
programme, Linic said the economic stability programme the
government was implementing was the government's programme and
nobody had imposed it.
The programme was endorsed by the parliament even before the first
stand-by arrangement with the IMF was signed, Linic said, adding
that he was not aware of any other programme.
(hina) rml sb