CROATIA IS NOT FACING BANKRUPTCY -- FINANCE MINISTER

ZAGREB, June 28 (Hina) - Estimates that Croatia is in depression and facing bankruptcy, while the budget is in confusion, are incorrect, Croatian Finance Minister Mato Crkvenac said before the parliament. He stressed additional debts present no danger because Croatia does not have high outstanding debts. Explaining the draft review of the budget, the minister stressed the review is being carried out so funds can be secured for the decentralisation process and so funds for pensions can be paid into and out of the state treasury as of July 1. The review is also being carried out because of the two billion kuna lesser planned profits from privatisation, for which amount the government will ask for additional debts. Whether we will have debts that amount to this much depends on the turnover of privatisation, which is planned at 6.5 billion kuna, Crkvenac said. He stressed the turnover will not be realised at any cost, but only if it is concluded the privatisation of some companies are worth it. The state's debts is no danger because Croatia has good rating and can receive loans at favourable conditions both on the home and foreign markets, Crkvenac stressed. There is also no danger of an increased budgetary deficit which will be no more than the planned 5.3 percent of the GDP, he said, stressing there is a tendency of decreased deficit because in relation to 1999, the deficit has been decreased by three billion kuna. Only fund deficits, particularly the pension fund, present a problem. Public assessments that Croatia is in a depression and facing bankruptcy, while the budget is in confusion, are incorrect, Crkvenac said. He, however, conceded that there are problems in certain expense items which will be larger than planned by the end of the year. Crkvenac said this government has within a year and a half increased social contributions by five billion kuna, but is constantly being accused of curbing them. The government is not carrying out a restrictive social policy, but failed to explain this to the public, Crkvenac said. He stressed the government will continue to insist on budgetary expenses not being increased, nor profits because this would mean picking citizens' and the economy's pockets. We will not give up on the restrictive fiscal policy as it stimulates a growth of the economy, Crkvenac said, citing data on the growth of industrial production, sales, and the stop of the growth of unemployment, which, he said, is not only a seasonal occurrence. In developed countries, as well as in countries in transition, economic growth is slowing down, which in Croatia, after last year's growth of 3.7 percent, it will this year significantly exceed four percent, the minister said. MPs of the Croatian Democratic Union (HDZ) asked what kind of a social policy is this if salaries are being decreased, and how can he say Croatia is not overly indebted when the external debts has grown. If 12 billion kuna really disappeared, why does not the government look for the money and initiate proceedings against those responsible, Zlatko Matesa asked. In reply, Crkvenac agreed with claims that salaries are not too high. But, he stressed, during the HDZ's reign, salaries in non- production industries increased without any foundation in the growth of production. He added that from 1997 to 1999, the budget was increased from 37 to 49 billion kuna, and this is a catastrophic mistake because the money was drawn from companies and the citizens, he said. (hina) lml sb