ZAGREB, Jan 31 (Hina) - The International Monetary Fund expects Croatia's Gross Domestic Product (GDP) to experience a recovery and growth rate of almost three per cent in the year 2000. Although the IMF had forecast a negative rate
of some 2.9 per cent for 1999, data for the third quarter have proved to be better than expected so that the negative growth rate in 1999 was about 1 per cent, IMF's permanent representative to Croatia Gary O'Callaghan said presenting IMF's annual report on Croatia.
ZAGREB, Jan 31 (Hina) - The International Monetary Fund expects
Croatia's Gross Domestic Product (GDP) to experience a recovery and
growth rate of almost three per cent in the year 2000.
Although the IMF had forecast a negative rate of some 2.9 per cent
for 1999, data for the third quarter have proved to be better than
expected so that the negative growth rate in 1999 was about 1 per
cent, IMF's permanent representative to Croatia Gary O'Callaghan
said presenting IMF's annual report on Croatia. #L#
This is the first time since last year that the report is made public
and Croatia is one of the few countries which agreed to the
publishing of all data, he said.
The negative trend in economy is a consequence of structural
problems and a strict monetary policy revealed problems in banks
and related organisations, the IMF official said.
The recovery of Croatia's economy, O'Callaghan said, is based on a
general increase of interest of foreign financiers into countries
in transition, as well as on visible positive attitudes toward
Croatia in the recent months.
The IMF expects that inflation in Croatia will be under control in
2000, amounting to some 3.5 per cent. It also expects a stable
exchange rate, improvements in the growth of overall liquid assets
and a balanced budget with a deficit of 0.2 per cent. The deficit in
foreign trade should be the same as in 1999, and the foreign debt is
expected to decrease from 39 to 36.5 per cent of GDP, whereas
currency reserves could stay at the current level of about 2.9
billion dollars, the IMF estimates.
State spending must be reduced and held under control whereas
pension and health systems must be reformed. By cutting down costs,
contributions from salaries will also be reduced, which will reduce
the cost of labour. This is why a medium-term 'social pact' with
unions and employers is necessary, O'Callaghan said, stressing the
need for Croatia to continue aspiring toward international
associations.
O'Callaghan estimates that the budget for 2000 should be lower by
some 500 million kuna (US$66.66 million) and he believes that the
reduction of taxes is not possible this year.
The Mission's current contract expires in March this year and the
IMF is ready to, should the Croatian Government request it,
continue talks on a stand-by contract. On the basis of its quota in
the IMF Croatia can count, if it wishes so, on some 150-250 million
dollars of IMF loans.
According to the IMF, the world economy in 2000 is expected to
recover and register a growth rate of 3.5 per cent, particularly in
European Union countries and countries in transition.
(hina) rml