RACAN: FIVE BILLION KUNA FOR DEVELOPMENT AND EMPLOYMENT IN 2002

ZAGREB, Nov 12 (Hina) - Three quarters, or 56 billion kuna, of the 2002 state budget will be allocated for social spending. Almost five billion kuna will be directed into a development and employment fund, Prime Minister Ivica Racan said Monday. He did not specify the budget amount for 2002, but it is expected the budget will amount to close to 74 billion kuna. Of 56 billion kuna to be used for covering social costs, 24 billion will be set aside for pensions, 2.5 billion for child and maternity allowances and children equipment, 1.6 billion for sickleave allowances, 14.1 billion for salaries in the state administration and public sector, not including the health sector, 11 billion will be allocated for health care, 1.6 billion for welfare and disability benefits, and around one billion for unemployment benefits. The budget we are preparing will be fair, and its social dimension strong, Racan told the Croatian Radio. He announced an ambitious project of a development and employment fund, which should be allocated close to five billion kuna. These funds will be obtained through privatisation and will be used for development purposes only, and not for budgetary expenditures as has been the case so far. Racan stressed that the 2002 budget would be transparent, because it will specify the entire public expenditure, including health and pension funds and the Employment Bureau. He reiterated the government's firm commitment to decreasing the budgetary deficit from this year's 5.3 percent to 4.25 percent of GDP in 2002. Reducing the deficit means reducing the possibility to live at the expense of future generations, Racan added. He confirmed the basic wage of budgetary users would stay at this year's level. We will not reduce rights, but the policy of restriction in the state administration will continue, Racan said. He announced the Croatian Army would radically decrease its man- power, however not through layoffs but other measures, such as permanent reserve forces, which will receive certain allowances. That way, the number of the armed forces would decrease by 5,000 to 6,000. The Prime Minister announced that the government was working on an important document on priorities in the second part of its term. He did not specify any details, but said the government would continue to stimulate development and employment. Government coordinating bodies will analyse the draft budget this evening, and discuss it at its extraordinary, closed-door session on Tuesday. The government will formulate the budget on Thursday before sending it into parliamentary procedure. (hina) np