CRO. LOWER HOUSE CONDUCTS HEATED DEBATE ON PUBLIC DEBT

ZAGREB, June 29 (Hina) - Discussing reports on the public debt and state guarantees on Thursday, the Croatian parliament's House of Representatives focused on questions whether Croatia was over- indebted and if state guarantees represented a hazard for the budget. State guarantees caused a very heated discussion. The former government between 1996 and 1999 issued guarantees amounting to 21.5 billion kuna (US$2.69 billion). According to Ivan Suker of the Croatian Democratic Union (HDZ), guarantees represent only potential debt because the state will have to pay for them only if the borrower is unable to return the loan. Suker said that even if some of these guarantees had to be paid, they could be considered incentives given that most were issued to key branches of the economy, for road building, tourism, agriculture, and shipbuilding. The 1.6 billion kuna (US$200 million) worth of guarantees which the state has had to pay thus far is not a huge sum, he assessed. Josip Leko of the Social Democratic Party (SDP) disagreed, saying the sum represented about 11 percent of the entire amount of guarantees issued, and that most, namely 11.7 billion kuna (US$1.46 billion), was still active. If the trend of paying for guarantees from past years continues, we cannot expect a decrease in tax burden and pressure on the budget, he concluded. SDP's Branislav Tusek agreed, saying guarantees were a development failure, and that most would soon have to be paid. He wondered about the state of enterprises for which guarantees were issued, and if those who issued guarantees "left and right", even to private companies, would be called to account. Tusek said the public debt report showed the state had spent more than it had created in past years. Totalling at 46.2 billion kuna (US$5.77 billion), the public debt, together with state guarantees, accounts for almost 50 percent of Gross National Product. According to Tusek, it would not be critical if the public debt had increased the employment and production rates. That money, however, went into spending and the financial rehabilitation of prospectless companies, which shows the former government was lacking in vision, he asserted. The former prime minister, HDZ's Zlatko Matesa, responded by saying the public debt did not account for 50 but 32 percent of GNP, given that guarantees, according to international criteria, are not part of the public debt. Croatia is not over-indebted under any one criteria, he asserted, adding it was unbelievable that the same exact data could be read differently by everybody. Lower House MPs today also argued about another issue encumbering Croatia's public debt, namely the sum of Croatian citizens' money which remained in the former Yugoslav national bank (NBJ) in 1990. HDZ's Juraj Njavro said that according to some estimates, Croatia's residents had lost US$31 billion. SDP's Dubravka Horvat said the Croatian National Bank had withdrawn sums in dinars, the then Yugoslav currency, corresponding to the foreign exchange sums Croatian citizens had in NBJ. We can only speak of losses in differences in exchange rates, she asserted. A heated discussion ensued, but HDZ's Njavro calmed the situation by suggesting that the HNB issue a detailed report on the matter. (hina) ha jn