CROATIA MUST REFORM SOCIAL SYSTEM TO REDUCE PUBLIC EXPENDITURE

ZAGREB, March 19 (Hina) - Croatia must urgently reform its social sector in order to reduce its unsustainably high public expenditure, World Bank director for Croatia and Albania, Arntraud Hartmann, said in Zagreb on Friday. The development of the social sector is a key area of cooperation with the World Bank in any country, considering the fact that it does not draw foreign capital, as a rule, Hartmann said after talks with Croatian Vice-Premier, Ljerka Mintas-Hodak, on Friday. Hartmann warned that the percentage o GDP being set aside for pension insurance in Croatia was impermissibly high. Such a high percentage is not only unsustainable in Croatia, it would not be sustainable in West European countries either, she stressed. Pensioners must receive appropriate pensions, that is, sufficient funds to live off, Hartmann said. The World Bank has already drafted a project for the reform of the health system, while the other is being prepared. Cooperation in education has only just began with Croatia, and the defining of future cooperation is in process. Confirming that the talks with World Bank experts should establish priorities of reform of the overall social system, which is "very important" for Croatia's economic stability, as a large amount of budgetary resources are being drawn into the area, Mintas Hodak stressed an amount of US$25 million had been mentioned with regards to the reform of the pension system. Adequate laws and institutions must be created to carry out the reforms, she added. (hina) lml