GOVT HAS MADE MAJOR STEPS TOWARD OVERCOMING RECESSION IN 2000 - MINISTER

ZAGREB, Dec 22 (Hina) - The Croatian Finance Ministry and the entire government have made first steps toward overcoming the state of recession and structural crisis in 2000, Finance Minister Mato Crkvenac said on Friday. #L# The Ministry's priorities in 2001 include starting the operation of the state treasury, reducing grey economy, updating some sectors, primarily the customs sector, and resuming successful participation in international financial markets, Crkvenac said. The finance minister believes that criticisms by some politicians, scientists and journalists who claim that the government is improvising and has no economic programme are superficial, incompetent and shallow. The government has managed to free the economic policy from political pressures, reverse unfavourable economic trends and create such economic conditions which will guarantee long-term macro-economic stability, he said. According to Crkvenac, this year's three quarters saw an increase in economic activity and the Ministry estimates that this year's economic growth rate will amount to three percent, inflation to 7.5 percent whereas the 2001 inflation rate is estimated at 4.5 percent. The deficit in the 2000 balance of payment accounts for five percent of Gross Domestic Product and is estimated at four percent in 2001, he said. The government has not managed to change the trend of non- investment and the overall investment amount this year was lower than amortization, he said. However, there are some indicators that next spring banks could start an investment cycle, which could be facilitated with funds obtained through a stand-by arrangement with the International Monetary Fund and the European Investment Bank, the minister announced. The government has managed to open Croatia toward the international community both in terms of politics and economy, it has realised two successful government bond issues, agreed on a stand-by arrangement with the IMF and improved the country's credit rating. The Finance Ministry has done a major job: prepared two budgets, reversed the trend of rising state spending, paid a significant part of the internal debt (8.7 billion kuna in 2000, out of a total of 9.5 billion kuna), returned to depositors 2.3 billion kuna worth of deposits in banks which have gone bankrupt, adopted a new taxation system and prepared a project on the return of the state debt to pensioners as well as reduced labour costs by reducing contributions. The 2001 budget is nominally two percent lower than the 2000 budget and its real decrease amounts to as much as 10 percent, Crkvenac said announcing that part of budgetary revenues would be collected through the sale of state shares in public companies. The wage budget for the public sector will be reduced by ten percent, he said adding this did not mean that salaries in the public sector would be reduced. (hina) rml