MATESA DISMISSES CHANCES OF DEVALUATION OF KUNA

( Editorial: --> 7812 ) ZAGREB, 28 Jan (Hina) - Croatian Prime Minister Zlatko Matesa on Wednesday ruled out any possibilities of devaluation of the country's currency. In answer to questions by journalists at a press conference, Matesa said it would be extremely foolish to solve individual issues with an artificial devaluation of the kuna. Matesa called the press conference to speak about his government's continued policy and strategy of economic stability, and its new obligations resulting from Tuesday's state of the nation address by President Franjo Tudjman. The Croatian Prime Minister said it was the strong stance of the government and the central Croatian National Bank that the restrictive monetary policy be carried out as a basic fundamental of the economic strategy. Matesa said the return of foreign currency savings from abroad was being considered. He announced the drawing up of a new law on banks and the continued restructuring of the public sector. The new law on banks should form the basis of long-term stability in the banking system as well as in the economy, Matesa said. The Croatian Prime Minister said the government would this year especially focus on stimulating employment and exports. The government will soon complete a document on the national employment policy, Matesa said. As a measure towards that goal he announced a reduction in contribution rates from and on wages. The backbone of government policy is to increase employment, stimulate exports and build up the economy by reducing contributions on wages, the Prime Minister said. He added that the state would subsidise part of the contributions on wages for trainees and pay special attention to finding employment for demobilised defenders. Matesa confirmed increasing the non-taxable portion of wages was being considered, but for now the government did not plan any changes. Regarding stimulating exports, the Prime Minister assessed as important the recent introduction of Value Added Tax (VAT) which he said had already achieved good results in stopping the "grey market". The state will stimulate exports, as has already been done in shipbuilding, he said. The government is also intensively working on preparations for a reform of the pension system and continued restructuring of the health system. Matesa also announced a complete law on the functioning of local self-government and authority, and the completion of a law on the rights and duties of public officials. He also answered questions on the planned protests on Thursday organised by the Federation of Independent Trade Unions of Croatia (SSSH) as a warning to the government and parliament about the negative effects of Value Added Tax and the difficult economic and social situation in the country. Matesa insisted that the government had shown its exceptional sensibility and will for democratic dialogue. Protesting is a democratic right, but it is impossible to run a policy which on the one hand wants to increase wages and on the other the creation of jobs, the Prime Minister said. Matesa also considers that many have forgotten the government's established priorities, including the renewal of the Danube River region whose war damage amounts to more than four billion dollars. Forgotten is the fact that Croatia still looks after 130,000 displaced persons and refugees, the Croatian Prime Minister said, adding that in relation to this it was hard to understand demands for tax reduction. "The government is absolutely open, but it can not discuss unsubstantiated demands," he said. Matesa announced a one-day official visit to Romania on 3 February, adding he was especially satisfied that the government delegation would be joined by more than a dozen Croatian business people. On the question of Croatian-Slovene relations, Matesa said he assessed as positive a meeting between the foreign ministers and the signing of a free trade agreement. Relations with Slovenia are progressing independent of incidents and problems which arise, Matesa said, announcing that Croatia would offer Slovenia the signing of a declaration on the protection of minorities based on standards set by the Council of Europe. (Hina) jn mb 281845 MET jan 98