KUNA IS STABLE; NO DEVALUATION IMMINENT - SKEGRO

ZAGREB, Oct 22 (Hina) - With the slight weakening of the kuna in relation to the German mark, and its strengthening in relation to the US dollar, the stability of the rate of the kuna has been maintained. There can be no devaluation because the kuna has not got a fixed rate. Many justified expenditures from the state budget will next year have to be reviewed, decreased, and some probably postponed until the year 2000, Croatian Foreign Minister Borislav Skegro told reporters after a Croatian government session on Thursday. The basics of the macro-economic policy are such that the rate of the kuna will not slide further. I am convinced of that, Skegro said. He added that he was aware of the fact that the Croatian National Bank would not allow further depreciation of the kuna. Reporters asked Skegro to explain his recent statement that the Croatian state budget will face a hard time next year. Skegro recalled that the preliminary draft budget for 1998 included a planned foreign debt amounting to US$350 million. Mid-year, we anticipated turbulence on the international market, and following the influx of resources collected by the Value Added Tax, we decided to give up on the US350 million and balance the budget. The resources can be borrowed on the international market, but conditions are such that Croatia cannot afford to do so, considering the high interest rates and short payment deadlines. "We will motion a budget which will be close to a balance," Skegro said. It is possible that many justified expenditures will have to be reviewed, decreased and even postponed, he stressed. Our main task is to maintain macro-economic stability, the stability of prices and exchange rate, and at the moment, the biggest obstacle to that is a stable budget which will not demand tight resources and short-term debts, Skegro said. Recalling claims by the Croatian Employers' Association (CEA) that Croatia has internal debt of US$11.2 billion, Skegro said "I do not know what somebody considers an internal debt". There are public debts, foreign debts, unpaid debts which are being paid by blocking accounts of certain companies. I do not know what remains, Skegro said. He added that he could say nothing more about the amount of US$11.2 billion until he saw sources and structure of the information. It seems to me that the amount has been blown out of proportion. If that is truly so, which I doubt, then it would be a good idea for the CEA to primarily start off from its members and submit to the government a list of its member companies heading the list of debtors, Skegro stressed. As far as the public sector is concerned, Skegro said that the figures were known. Asked to comment on the fact that the CEA also requested a decrease on tax rates, Skegro said it was immature to selectively request a decrease of certain tax rates, and at the same time request an increase in pensions, social benefits, infrastructure and stimulation in economy. Skegro called on the people who suggested this to "draft a budget for next year on at least ten earnings and expenditure items," after which they will be "called to a meeting on planning the budget for next year." (hina) lml