CRO FINMIN:TAX RELIEF AND CUTS IN EXPENDITURE AND RIGHTS ARE RELATED

ZAGREB, Feb 1 (Hina) - The orderly current financing, preparation of draft budget for 2000 and definition of new aspects in cooperation with foreign financial organisations are first tasks of Croatia's Finance Ministry led by new Minister Mato Crkvenac who, along with Deputy Minister Mijo Jukic and other assistants, held a news conference in Zagreb on Tuesday. The draft budget will start from cuts in expenditure, and one of principles for carrying out this reduction will be that there are no untouchable rights, Crkvenac told reporters. Possibilities for cuts in expenditure lay in maximum rationalisation of functioning of the state, reduction of usual government spending, lessening of budgetary expenses and exclusion of huge budgetary means for rehabilitation of various companies, the new minister added. The cuts in expenditure will lead to the disburdening of the economy and citizens. In this context, Crkvenac announced changes in the tax system adding that the relieving of the tax burden would be carried out this and next year. The Croatian National Parliament will adopt a budget for this year on time, by the end of March when the decision on temporary financing comes out of force, ministry officials promised. Crkvenac declined to speak of a possible amount of the planned budget at the moment. One of important tasks is to achieve a social pact soon. "On behalf of the Government we shall do our best to accomplish this objective as soon as possible, and I call on trade unions and employers to reach social peace for a period of three to five years so that we can carry out all what we have planned," the Finance Minister said. A task in this year will be to fully activate the Treasure Department in order that transparency can be ensured in inflow and usage of state money, he told reporters. He announced the drafting of three-year financing so that stability and long-term quality could be ensured besides transparency, which is important both for the state and tax payers. An increase in production, job creation, maintenance of export, the application of science and technology and ensuring of macroeconomic stability, social stability and justice were cited by Crkvenac as basic principles for the Croatian economic policy in 2000. This ministry will also struggle against corruption and advocate a law-based state as well as breaking of ties between politics and economic. Another tasks will be to de-centralise the state and help regional development as well as to fight against illiquidity. In the minister's mind, a third of the amount of 26.5 billion kuna (approximately 3.5 billion US dollars), reported as unpaid demands to the Institute for Payment Operations, can be described as the pure illiquidity, whereas the other two thirds have been brought about by insolvency and bad performance of firms. As the Finance Ministry has no knowledge of the exact amount of the state's debt toward companies and institutions, Minister Crkvenac on Monday forwarded a request to all budgetary users to provide the ministry with the exact data on the their debts until 31 January. The minister maintained that Croatia is at the middle of the standings of countries which have incurred debts. He said his country would no longer run into debts as it had done so far (at a speedy tempo and for final spending), but it would seek arrangements directed toward development projects, job creation and incentives to exports. The Finance Ministry is in touch with the World Bank and the International Monetary Fund (IMF) and it will soon begin official talks with the IMF, he added. (hina) ms