IMF MISSION BEGINS LAST ROUND OF NEGOTIATIONS ON NEW ARRANGEMENT

ZAGREB, Dec 6 (Hina) - Representatives of the International Monetary Fund (IMF) Mission on Friday started the last round of negotiations on a new stand-by arrangement with the Croatian government, government sources reported. #L# Sources in the government expect the negotiations to be completed next week, and if a new stand-by arrangement is agreed on, it could get before the IMF board of directors on January 24. All macroeconomic indicators to which the IMF pays special attention are within satisfactory margins -- the government plans a low rate of inflation, the budgetary deficit should account for 2.5 percent of next year's GDP, and the state deficit will be five percent of GDP. The deficit was an essential issue which surfaced in talks with IMF members in mid-November. However, the government's amendments to the draft budget for next year have managed to reduce the state deficit to five percent of the GDP. The only indicator causing some concern could be Croatia's debts which are slightly under 60 percent of the GDP. The new stand-by arrangement would be valid only for the next year, during the mandate of the incumbent government. Such an arrangement in the fourth, electoral year is a message to investors that they may invest safely in Croatia, government sources said. (hina) lml