ZAGREB, June 4 (Hina) - Croatia and the International Monetary Fund (IMF) could sign a new, 18-month stand-by arrangement in August this year, if everything goes as planned. The US$200-million-worth arrangement, to last until the end
of 2000, is intended for the purposes of fiscal adjustment, the IMF Mission head in Croatia Hans M. Flickenschild told a news conference in Zagreb on Friday. The basis of the arrangement is fiscal adjustment because tax revenue is smaller than expected. The main element of fiscal adjustment is the adjustment of extra-budgetary funds - the pension and health funds, whose representatives have held talks with the IMF Mission members. Flickenschild said he believed the deficit in the state budget of 1 per cent of gross domestic product was sustainable. A stable exchange rate of the kuna is and will be one of the main aims in the programme of monetary and fis
ZAGREB, June 4 (Hina) - Croatia and the International Monetary Fund
(IMF) could sign a new, 18-month stand-by arrangement in August
this year, if everything goes as planned.
The US$200-million-worth arrangement, to last until the end of
2000, is intended for the purposes of fiscal adjustment, the IMF
Mission head in Croatia Hans M. Flickenschild told a news
conference in Zagreb on Friday.
The basis of the arrangement is fiscal adjustment because tax
revenue is smaller than expected. The main element of fiscal
adjustment is the adjustment of extra-budgetary funds - the pension
and health funds, whose representatives have held talks with the
IMF Mission members.
Flickenschild said he believed the deficit in the state budget of 1
per cent of gross domestic product was sustainable.
A stable exchange rate of the kuna is and will be one of the main aims
in the programme of monetary and fiscal policy, especially since
the stability of the kuna has improved lately, thus granting the
Croatian economy the quality of competitiveness.
A special item in the arrangement is the salary policy.
According to Flickenschild, the IMF is concerned about the level of
salaries in the state sector and believes a 17 per cent salary rise,
as envisaged by an agreement between the Government and the unions
of workers in public services, is too high. The Government and the
unions should agree on the postponement of implementation of that
agreement and reach another one on a reasonable salary rise of 5-6
per cent, Flickenschild said.
Asked whether the possible failure to accept slower salary growth
would influence the granting of the stand-by arrangement,
Flickenschild said it was difficult to support a major salary
increase for public services as the one mentioned.
Asked whether there were other measures which could bring about an
increase in salaries, he said the unions had proposed cutting
expenditure for defence, which currently receives 4.2 per cent of
GDP, and reducing salaries of high state officials.
The privatisation of public companies is important for the fiscal
policy, primarily for filling up the budget, Flickenschild said,
adding the implementation of a court decision for the state to pay
its debt to pensioners could perhaps be postponed for about four
years.
(hina) jn rml