PRIME MINISTER MATESA PRESENTS DRAFT BUDGET FOR 1999

ZAGREB, Nov 26 (Hina) - The Croatian Government believes that the balanced draft budget with its revenue and expenditure which can be realised, is reason enough for the Parliament to seriously consider and discuss it and to adopt it so that Croatia could continue functioning as a normal state, Prime Minister Zlatko Matesa said on Thursday. Matesa said this presenting the draft state budget for 1999 (amounting to US$7.69 billion) in the Croatian Sabor's House of Representatives. The main objectives of Croatia's economic policy for next year are the preservation of stability and economic growth of five per cent, along with the further development of industrial production and the reduction of the taxable share in Gross National Product (GNP). Other objectives include a speedier increase of export, social protection, speedier restructuring, privatisation of the public sector and the stabilisation of the banking system. The Prime Minister also announced a moderately restrictive monetary policy with emphasis on the lowering of interest rates. Matesa also announced an analysis of the problem of mutual non- payment. Restrictions in the drawing up of the 1999 budget referred mostly to the expenditure imposed by the war - reconstruction and care for displaced people, soldiers and Homeland war victims. This category of spending accounts for almost one third of the budget, Matesa noted. The Government's policy in the area of social care is directed towards alleviating the situation in economy, taking over from counties the burden of health insurance for elderly members of peasant households, transfers to the Pension Fund amounting to 1.8 billion kuna and an agreement with unions increasing the non- taxable part of salaries and deductions for economically non- active population. Out of the total revenue of US$7.69 billion, the state budget alone will spend 37.5 billion kuna (US$5.95 billion). The difference of 11 billion kuna (US$1.74 billion) will be directed to non-budgetary funds, Matesa said. The main segments of the society the budget is oriented towards are: family (increase of the non-taxable part of the salary and child allowance), young people (improvement of the students' living standards, employment of trainees, housing loans) and pensioners (whose allowances in 1998 increased from 10-40 per cent). Matesa also pointed out the Government's approach to alleviating the situation in economy though loans for small and medium-sized entrepreneurs, export loans and loans and transfers to the sector of tourism. The infrastructure too is one of the Government's priorities. As regards the road infrastructure, the Government has decided to finance less big projects (they are to be financed mostly through foreign investments) and orient itself towards financing the construction of local roads and their maintenance. The process of railway restructuring and modernisation will continue, Matesa added. The beneficiaries which are registering the spending which exceeds budgetary growth are the ministries of culture, science, labour and social welfare, agriculture, education and health. Concluding the report, Matesa called for more careful spending. Nothing shall be bought or built if it's not necessary for the functioning of the state, he said calling on MPs to support his proposal. (hina) rml,