CRKVENAC: 2002 BUDGET WILL AMOUNT TO SLIGHTLY OVER 70 BILLION KUNA

ZAGREB, Nov 6 (Hina) - Preliminary talks about a draft state budget for the year 2002 started in the Croatian government on Tuesday with discussions among Croatian government coordinating bodies. Finance Minister Mato Crkvenac did not want to comment on details of the draft, saying he would be able to do so after talks with the ministers. The budget will amount to "slightly over 70 billion kuna (USD8.43 billion), including 24.5 billion kuna of revenues and obligations of funds," he said. Namely, next year's budget will include contributions for pension and health insurance and employment. Next year's budget would include contributions from those funds as well as their deficits, worth four billion kuna, which is a considerable burden, he said. The state budget in the classic sense of the term (without the pension and health funds) should amount to slightly over 50 billion kuna and the austerity policy will remain in force, Crkvenac said. Last year's revenues amounted to 49.7 billion kuna, a level that has been maintained throughout this year. Next year's revenues will be somewhat lower, the minister said after the signing of a contract between the Croatian Roads company and Deutsche Bank London. Cuts in budgetary spending are necessary because of the need to cover deficits in the funds which are to be included in the budget next year, and the need to cover the costs of the pension reform and reduce budgetary deficits, Crkvenac said. The finance minister did not give a straightforward answer regarding claims on a decrease in farming and shipbuilding subsidies. All budgetary items will be reduced by a certain amount, including subsidies, Crkvenac said, adding a draft proposal on the cuts will be reasonable. He also failed to give a direct answer when asked if next year would see an increase in excise taxes on imported cars, saying this would depend on the entire budget. Crkvenac reiterated that the basic principles of the budget policy were the resumption of a restrictive fiscal policy, the reduction of the deficit from this year's 5.3 to 4.25% of GDP next year, and the reduction of the current budgetary deficit and debts. Privatisation receipts will no longer be used for budgetary spending but directed into reconstruction, development and employment, he said. Crkvenac expects the draft budget, to be discussed today by government members, will cause different reactions because ministries usually claim more funds than allocated. The draft will be discussed by the government this week and the Finance Ministry should have its final version at the beginning of next week. Crkvenac dismissed as unfounded claims that revising this year's budget twice was a bad decision, that the Government lacked a clear policy and that mistakes were being made in the management of privatisation receipts. He maintains the principles of the budget policy had not been abandoned in any case nor had spending been increased. This year's privatisation revenues have not been realised as planned, but the state had to respond to an unfavourable situation on the market and it made a wise decision, he said. "All finances are under control, and spending and deficits are being reduced," Crkvenac said. The International Monetary Fund yesterday adopted a report on the implementation of a stand-by arrangement with Croatia, he said, adding the IMF had positively assessed the achievements of the country's fiscal policy. (hina) rml