PARLIAMENT STARTS DISCUSSION ON DRAFT BUDGET FOR 2002

ZAGREB, Nov 22 (Hina) - The Croatian government has proposed that the state budget for 2002 amount to 76.88 billion kuna (US$9.15 billion). According to the new methodology and accounting plan, budgetary revenues should amount to 73.9 billion kuna (US$8.8 billion). For the first time the budget includes health and social insurance funds, and the Employment Bureau fund. Presenting the budget in parliament, Finance Minister Mato Crkvenac said the budget was drafted on the projected GDP growth rate of 3.5 percent, an inflation rate of four percent at the most, and a balance-of-payments deficit of three percent. Presenting the budget and related laws, Crkvenac said this was probably the most important package of laws in the government's mandate because it contained the economic and development policy to be implemented in the second half of the mandate. GDP has been growing for the ninth quarter in a row, and it will increase by 4.5 percent this year. All this is accompanied by a strong growth of industrial production of 3.3 percent on average, and low inflation. The foreign debt is decreasing as well, as is the balance of payments current account deficit, which has been curbed to 2.1 percent of GDP. Speaking about the basic changes to be made next year, Crkvenac underlined that the share of state expenditures in GDP next year would be decreased by 4.5 percentage points in relation to 1999, to 28.1 percent of GDP. Reiterating several times that the budget was development-oriented and that it envisaged measures of active employment, Crkvenac said privatisation receipts were certain and would amount to 2.5 billion kuna (US$298 million), of which one half should be collected through the sale of the Croatia Osiguranje insurance company. The finance minister also announced the privatisation of the Croatian oil company INA, some banks, and a part of the portfolio of the Croatian Privatisation Fund, which is worth between six and seven billion euros. Commenting on the establishment of two new funds - for employment and development, and regional development, Crkvenac said the funds would be filled with privatisation receipts and added they were not extra-budgetary funds. The minister announced a simpler procedure for the founding of companies, stimulation of companies, their development and roles in the wider region, activating a desk at the Economy Ministry where investors would be able to obtain information, growth of domestic savings, amendments to the Labour Law, which would make temporary employment and employment at home possible, and the sale of military facilities and similar unused real-estate, even at a price of one kuna, to those who know what to manufacture. Speaking about loans Croatia could expect for the programme, Crkvenac said Croatia would draw 80 million dollars by the end of the year on the basis of an EFSAL loan, and the World Bank would grant another 101 million dollars next year for entrepreneurship. Loans can also be expected from the European Bank for Reconstruction and Development, the Council of Europe's Development Bank, the European Investment Bank and the European Union (for reconstruction). The Croatian Reconstruction and Development Bank has begun granting loans to companies directly, Crkvenac said. Some of the main characteristics of the state budget for 2002 are employment, an increase in the standard of living, openness, competitiveness and stability, he stressed. (hina) lml sb