PREMIER ANNOUNCES FURTHER POLITICAL & ECONOMIC STABILITY IN 1999

( Editorial: --> 0546 ) ZAGREB, Sept 15 (Hina) - Croatian Premier Zlatko Matesa on Tuesday outlined the basic postulates of the government's economic policy in 1999. Matesa was addressing the Croatian Economy Forum at the Zagreb Autumn Trade Fair, which opened yesterday. The government's plans for next year include a gross national product (GNP) growth of seven per cent, an inflation rate between two and three per cent, a balanced budget and neat state finances, the growth of salaries and pensions in line with the growth of productivity, income tax relieving, and the extension of payment deadlines and higher bases for value added tax. The government will persevere in political and economic stability as preconditions for economic growth, Matesa told the 500 participants in the forum. For next year Matesa also announced lower state expenditure, harmonisation of customs protection, further measures towards employment stimulation, and higher means for export stimulation through the Croatian Bank for Reconstruction and Development (HBOR). The government will dedicate special attention to tourism and agriculture, said the Premier. Plans include a complete change in the stimulation and remuneration systems in agriculture, highly favourable loans for the preparation of next year's tourist season in cooperation with the HBOR, and further investments in tourism. Matesa also announced measures for small and medium-sized companies and businesses, including reduced and simpler book- keeping. The Premier said the coupon privatisation was nearing completion, with only the privatisation of public companies left. A legal solution for the partial privatisation of Croatian Telecommunications, oil giant INA and other companies is imminent, Matesa said. "These laws will reconcile Croatia's national interests and the need for competition", he said, adding nothing had been done in the privatisation of public companies on a local level. Matesa recalled that since 1994, the GNP had risen by about 40 per cent. Since 1995, industrial production has been growing by an annual 6.8 per cent, salaries are also increasing, while the inflation rate continues to be low, at less than three per cent in the last year. A problem lies in the balance of current accounts and the estimate that this year this deficit might account for up to seven per cent of the GNP, said the Premier, adding the government would draft measures for resolving the issue of mutual (non)payments and the protection of creditors. The state's total domestic and foreign debt accounts for about 30 per cent of the GNP, Matesa said, pointing out this was twice less than the Maastricht criteria. The banking system is basically stable and healthy, but some marginal banks do have problems, said the Premier. He corroborated this assessment with data on a 14-per cent growth of total savings, with US$688 million in the first seven months of this year, and with US$1.4 billion, an increase of 16 per cent in the banks' assets. Matesa also announced measures the government and the central bank would take to cut interest rates. Once authorities in Bosnia have become stable following last weekend's general elections, the Croatian government's policy will be clearly determined by the Washington and Dayton peace agreements, Matesa said. He in particular mentioned talks on an agreement for special relations between Croatia and the Croat-Muslim Federation of Bosnia-Herzegovina, and on the use of Croatia's southern port of Ploce for Bosnia's necessities. (hina) ha jn 151644 MET sep 98