DIFFERENCES IN RELATIONS BETWEEN CROATIA AND IMF

WASHINGTON, March 16 (Hina) - The International Monetary Fund (IMF) Board of Directors should on Monday decide on a 250 million dollar worth agreement with Croatia, IMF spokeswoman Connie Lotze told Hina Friday. She added, however, that the Board could postpone the decision. The agreement between Croatia and the IMF would be valid for 14 months during which time Croatia would receive 200 million of so- called special drawing rights, worth about US$250 million. The Croatian government has announced it would not be using the funds, but rather, through the agreement with the IMF, strengthen its position on the international monetary market. The agreement with the IMF consolidates the government's economy policy whose priorities are expedited economic growth, stability of prices and decrease of inflation, a growth of employment and of the social standard, with a balanced budget. The Croatian Parliament this week adopted three laws which were a form of a precondition to the agreement with the IMF. These are amendments to the rights of Homeland Defence War soldiers, the rights of state officials and employees, and salaries in the public sector. On behalf of the government, the letter of intent accepting a memorandum with the IMF was on February 1 signed by vice-premier Slavko Linic, Finance Minister Mato Crkvenac and Croatian National Bank Governor, Zeljko Rohatinski. The signing of the arrangement with the International Monetary Fund has given rise to differences in opinions among the Presidential Office, the Government and the Croatian National Bank. The Presidential Office has sent a letter to the government warning about the possible damaging effect of the signing of a new stand-by arrangement with the IMF. The letter, that is, a document by a group of economists, was not publicly issues, but what the media have been able to discern is that their basic criticism is that the suggested arrangement was too restrictive. Croatia, they hold, has space for much a greater rate of economic growth and thus an increase in employment, and one of the important measures to this goal is the devaluation of the kuna, they said. The economists have assessed that government's projections, also mentioned in the IMF memorandum, on economic growth of four percent (for this year) are too low. They hold that there is space for greater rates -- from six to seven percent -- which would in turn draw employment. On the other hand, however, government officials responded that a speedy rate growth would lead to inflation, through devaluation. The group of economists have criticised the government that it continues to serve the maintaining of the kuna currency stability, thus remodelling the entire economic policy. The Croatian National Bank has firmly opted for maintaining the currency stability. The IMF arrangement, respecting the essential elements of the laws of economy, has set up the framework to an economic policy which includes a decrease in budgetary deficit and salary policy which will be based on the trends of manufacture, a decrease of internal economic imbalance, with the maintenance of the stability of the kuna and domestic prices. Government officials stressed the main significance of the stand- by arrangement with the IMF was not the 250 million dollars, but rather the consolidation of Croatia's position on the international monetary market and the growth of Croatia's rating. (hina) lml sb