HNB COUNCIL: GOVT EXPENDITURE SHOULD BE STOPPED AT THIS LEVEL

ZAGREB, Dec 22 (Hina) - The Council of the Croatian National Bank (HNB) at Wednesday's session discussed the starting points and expectations of the monetary policy for the upcoming year, the HNB said in a statement. From the standpoint of basic tasks of the Bank, this year will end according to expectations: the annual inflation rate will be about four per cent, and the kuna currency exchange rate in relation to the Euro will be less than five per cent weaker than a year ago, which confirms a satisfactory macro-economic stability- The gross international stock reserves will amount to about US$3 billion by the end of the year, which is about US$185 million more, under the current rate, than at the end of last year. According to estimated of expert services and the highest HNB body, should public expenditure be stopped at the level it is in the next year, more space would be open for sustaining economic growth, without endangering the exchange rate and rising inflation. The state's lesser debts towards the Central Bank and smaller banks would redirect a part of loans to the private sector, with a possible decrease of interest rates. The possible true economic growth is estimated to be around 2.6 per cent in the next year. Under such circumstances the balance-of-payments current account deficit, should it remain at the present level, would have significantly different characteristics: it would be realised at a higher level of international trade and service exchange, and a higher percentage of imports intended for the growing economic activities in the country. International stock reserves could remain at a level close to the current one, the HNB said. (hina) lml mm