BANKERS HOLD MEETING ON CURRENT SITUATION IN CROATIAN ECONOMY

ZAGREB, Oct 24 (Hina) - This year's growth rate of Gross Domestic Product will exceed four percent and may even reach 4.5%, while the inflation rate will remain below 4.5%, Croatian National Bank (HNB) governor Zeljko Rohatinski said at a meeting of domestic bankers on Wednesday. Rohatinski said the deficit in the current balance of payments would range between one and 1.1 billion dollars and account for 5.3 percent of GDP. The money supply in 2001 has increased by 18.5% as against the previous year, he said. Commenting on some future HNB measures, the governor said the HNB Council would be advised to lower the rate of compulsory reserves from 22 to 19%, and increase the rate of compulsory kuna reserves from 20 to 25%. Changes will also be suggested in the sector of instruments, particularly as regards the differentiation of treasury bonds. The chief economists at the Privredna Banka Zagreb and the Zagrebacka Banka, Martina Dalic and Zarko Miljenovic, and a member of the Raiffeisenbank Management Board, Velimir Sonje, were unanimous about the effect of global developments on the Croatian economy. The economic environment in 2002 is very uncertain, they said, estimating that the rate of Croatia's economic growth would drop and that deficits would be entirely covered with loans, to be sought on the domestic market. Assessing that no country in transition has such dynamics as regards the increase of foreign debts as Croatia, Dalic said it was very bad that money for large projects, such as the Zagreb-Split motorway, was redirected from the budget into para-state funds. Apart from a pension reform, the state must have more nerve to carry out a reform of the health and education systems, said Sonje, advocating a debate on an early introduction of the euro and the benefits of such a move. (hina) sb rml