PRESIDENT TUDJMAN'S ADDRESS - FACTS AND FIGURES (ECONOMY, EDUCATION, SCIENCE, SPORTS, JUDICIARY, SECURITY)

(ECONOMY, EDUCATION, SCIENCE, SPORTS, JUDICIARY, SECURITY) ZAGREB, Jan 22 (Hina) - Following are data on the situation in the Croatian economy, education, science and technology, publishing, health care, welfare policy, sports, the functioning of the judiciary and physical security of citizens, taken from President Tudjman's address to both Houses of Parliament on January 22. THE ECONOMY - GENERAL TRENDS Although the Croatian economy also experienced mild growth in 1994 and 1995, in 1996 the rate of growth of all major economic activities was higher. Thus, the rate of growth of the construction industry exceeded 15 percent, that of transportation reached 10 percent, while the increase of the real retail volume is expected to amount to 19 percent. Particular note should be made of the growth of room/nights in the tourist trade by as much as 68 percent in the first eleven months of 1996. Manufacturing, which is most affected by inherited problems and restructuring requirements, recorded a 3.1 percent growth of physical output. On the basis of the foregoing, the growth of the gross domestic product in 1996, in real terms, is estimated at about 7 percent, which is one of the highest rate of growth among transition country economies. The anticipated rate of growth of the domestic gross product in European Union countries for 1996 amounts to 1.6 percent. In this year we expect growth to continue at the rate of 6-7 percent. The higher rate of growth of our economy has been achieved with a low inflation rate and a stable rate of exchange, and this is - in our view - a particularly valuable point. In 1996 retail prices increased by 3.4 percent, much less than the prices in "transition" countries. Thus, such rates are approximately three times as high in the most successful transition countries, Slovenia and the Czech Republic! The 1996 rate of inflation in European Union countries was about 2.5 percent. By way of example, let me note that we completed and opened, in 1996, 48.9 km of motorways and semi-motorways. This year we are planning to open an additional 50 km of motorways and semi- motorways, and 25 km of other important highway facilities. Intensive development of the communications infrastructure was continued in 1996, with 106,636 new telephone lines which increased the total number of subscribers at the end of 1996 by 70 percent as compared to late 1990. During the same year, 2,000 km of optical-fibre cable were laid, bringing the overall length to 9,881 km (for the sake of comparison, let me note that only 156 of optical-fibre cable were laid in Croatia in late 1990). During only 5 years Croatian citizens invested 2.1 billion dollars (about 12 billion kuna) into "new" foreign exchange savings deposits. As of November 30, 1996, private savings totalled about 20 billion kuna. Interest rates in the money market have dropped below 10 percent. Interest on loans to firms and citizens is still high, but it tends to decrease. Trade in the Croatian capital market has also grown markedly in 1996. Thus, for example, the 1996 volume of trade at the Zagreb Stock Exchange, recognized as of last June also by the renowned London Exchange, amounted to 1.2 billion kuna, 5.6 times as much as in 1995. Over the past two years the amount of outstanding receivables has increased from 2 billion to 7.5 billion kuna. The international reserves of the National Bank of Croatia amount at present to 2.3 billion dollars; moreover, commercial banks hold an additional 2.1 billion dollars in their accounts. The figure roughly corresponds to our external debt which amounted to a total of 4.5 billion dollars on July 31, 1996. Over only five years of independence, the savings of Croatian citizens, and of the State and firms have reached the figure of one thousand dollars per capita, which matches the entire debt inherited from the Yugoslav period. In the recent assessment of all the three independent international agencies concerning investment credit rating, Croatia has been placed very high, among the first 40 countries in the world. Let me remind you that until recently, in terms of unofficial estimates, Croatia's place was below 120. In 1995 and 1996 Croatia has settled its relations with foreign creditors grouped in the Paris (March 1995) and London Club (July 1996). Croatia's total internal debt amounts to 16.2 billion kuna, or 16.5 percent of the current gross domestic product. This can be considered to be a very moderate figure because the percentage in most European Union countries ranges from about 50 to as much as 120 percent of the gross domestic product. Foreign investment into Croatian economy is also on the increase. Only in the first half of 1996 - including the privatization of part of the capital of Pliva and ZagrebaËka banka - foreign investment totalled about 400 million dollars; since Croatia's independence, foreign investment has already exceeded the figure of one billion dollars. Foreign investors are demonstrating increasing interest in Croatia. Direct foreign investment is in the interest of Croatia because it also involves new technologies and new markets. This year our commodity exports will reach about 4.6 billion dollars, and imports about 7.5 billion dollars. However, at the same time we have an increasing surplus in the service field, due primarily to transport and tourist services, and remittances from expatriates. The foreign trade deficit will probably remain at the 1996 level of 2.8 - 2.9 billion dollars. In 1996 the growth of real earnings has mainly followed the growth of labour productivity, hence it did not have an inflationary effect. In 1997, in view of the envisioned increase of the rate of growth, real incomes can be expected to increase at an even faster rate. In its budget for 1997 the Government has endevoured to correct the shortcomings with respect to the earnings of public servants and to pensions. The rates of income taxation have been reduced, funds allocated to wages and salaries have been increased, and the funds allocated to pension funds have been increased substantially, from 1.1 billion to 2.3 billion kuna. The process of privatization was continued successfully in 1996. A total of 2,549 firms have been privatized (through transformation). Out of this figure, 1,126 firms have been privatized fully, in 1,135 the Croatian Privatization Fund is the minority owner, and in only 108 the majority owner. It would be justified to claim that the Croatian model of privatization has produced widespread shareholding because one- fifth to one-fourth of the population will be avail themselves of privatization opportunities. It should in particular be noted that the proceeds of the sales of property during privatization in the 1962-1996 period exceeded 10 billion kuna, out of which the first ten months of 1996 alone account for 2.4 billion kuna. Privatization has made it possible to reduce public debt by almost 7 billion kuna, thus relieving the tax burden of our citizens in years to come as well. Investments into the construction and reconstruction of the infrastructure destroyed in the war have totalled about 3 billion kuna. More than one billion kuna has been invested into the construction and reconstruction of infrastructure in areas affected by war operations in 1996 alone. More than 23,100 housing units with all degrees of damage have been reconstructed, or are about to be fully reconstructed, in the period from 1993 until the end of 1996. More than 2 billion kuna have been spent for the purpose. The reconstruction of an additional 9,251 housing units started in 1996, and plans for this year envision the reconstruction of about 18,000 family homes for about 70,000 returnees. During 1996 nonrepayable subsidies were granted to 1,093 owners for the repair of less damaged homes and apartments. In 1996 a total of 2,622,149,000 kuna, or about 8.2 of the government budget for the year, was allocated from the government budget or public firm revenues to reconstruction of the liberated areas. The funds envisioned for the reconstruction of areas of particular governmental concern in the government budget for 1997 are even higher by 28 percent. In 1996 513 million kuna were paid from the government budget in the form of incentives and compensations in agricultural production. The amount of 570 million kuna has been earmarked, in 1997, for enhanced production crediting, investments, and incentives and compensations. In order to additionally relieve agricultural production, as of 1997 the tax on cadastral income has been abrogated, leaving an additional 70 million at the disposal of the taxpayers - farming households. EDUCATION The school system in Croatia covers the following: - 435 pre-school institutions with 14,368 employees; - 2,245 primary and branch schools with 37,515 teachers and 429,922 pupils; - 350 secondary schools with 201,665 students and 17,987 employees; - 18,000 pupils and students attend Croatian supplementary classes abroad run by 102 teachers; - 14 private schools and 47 private pre-school institutions opened in 1996. Results of particular note were achieved in the building and outfitting of schools. In 1996 the Ministries of Education and Reconstruction invested more than 100,000,000 kuna into the construction and thorough reconstruction of primary and secondary schools, while 35,000,000 kuna have been invested into the investment maintenance of an additional 535 school buildings. The school computerization programme involved the installation of 1,400 computers in 227 primary and secondary schools, with a 30% savings as compared with the planned expenditure. SCIENCE AND TECHNOLOGY Last year marked the start of the National Science and Research Programme. About a thousand projects have already been contracted in accordance with the National Programme, the average project value being 73.000 kuna/year. In 1996 financial support has been provided to more than 900 post-graduate degree candidates, out of which 350 have already won their master's degrees and are currently working on their doctorates. In the autumn of 1996 a competition was made public for the first 20 Ph.D. candidates who will be employed at the University of Osijek and immediately start their doctoral studies at the best international universities. After graduation they will continue to teach in Osijek, where the construction of houses to be made available to them will be completed in the meantime. It has also been decided to proceed with the construction of the first 100 apartments for post- graduate degree candidates and young scientists in Zagreb. In adition to the programme at the University of Osijek, similar projects are also being prepared in Rijeka, Split and Dubrovnik. The County of Sisak is providing a number of apartments for the professors of the Teacher Training College in Petrinja. The first technology centre directly connected with the University has been established in Zagreb in cooperation with the Faculty of Mechanical Engineering and Naval Architecture. The technology centres in Split and Rijeka are also at an advanced stage of development. International scientific cooperation has been very intensive. Thirty international and other agreements have already been signed, and as many are being prepared. They have provided more than 1,600 foreign scholarship/months (short-term, undergraduate and post-graduate) for students, post-graduate degree candidates and scientists. The budget of the Ministry of Science and Technology includes monetary subsidies for about 2,500 participations of Croatian scientists in international meetings. The activity of thirty practical Croatian language teachers is being financed at European universities. Seven additional teachers will be financed in 1997. Particular attention has been focused on the foundation of higher schools intended to train more quickly and efficiently the specialists required first of all by the economy. The first independent higher schools were founded: the Higher Medical School in Zagreb, the Higher Police School in Zagreb, and the first private Music Academy in Lovran. The first university departments are being founded in Dubrovnik and Karlovac, and the courses will start in 1997. Scholarship regulations were adopted, and the government budget ensured the funding of the first thousand government scholarships for talented students, students affected by the war and those in need of financial suport, as well as for professions in short supply. PUBLISHING The liveliness of the publishing scene is particularly evinced by the fact that about 1,700 publishing firms were active in Croatrian in 1996, and that more than 3,000 new titles were published in that year alone. For the sake of comparison, in 1990 Croatia had 200 publishers who printed about 1,900 titles. HEALTH CARE The basis and the backbone of the health care system is still the Croatian Health Insurance Institute. As compared with 1995, the financing of health care was increased by 7.1 percent, and expenditures totalled about 7.66 billion kuna. The system completed the year without losses. This required strict financial discipline, but a high standard of health care was retained, and even improved in some segments, according to the indices of the World Health Organization. The rate of employment was maintained, salaries increased, and the provision of drugs and medical supplies was stable and satisfactory. Last year was distinguished by the reconstruction of health care facilities destroyed during the Serbian aggression. At the present moment the Ministry of Health appears as an investor on 92 sites. During 1996 114 million kuna were spent on the reconstruction of the structural part of destroyed institutions. At the same time, 31 million kuna were expended in order to rehabilitate the very old and neglected state-owned health care facilities. Last year was also the first year of development of the Croatian health care system since the start of its reorganization in 1990. New state-of-the-art equipment worth 187 million kuna was acquired, one-half from the first loan of the World Bank. Negotiations for a new loan are underway. Investments into the reconstruction of Croatia's health care facilities and acquisition of equipment totalled 332 million kuna in 1996. This has also permitted the further upgrading of top- level medicine. Privatization continued in 1996. Currently there are more than 2,000 private operators (individuals and institutions) who have invested considerable amounts into facilities and equipment. Additional private health insurance schemes have also started operating. In terms of the absolute amount per capita, consumption in health care is still much lower than the average for OECD countries (as low as one-fifth of the latter!). Therefore, expectations should be adjusted to this fact because one cannot reach overnight the level of consumption in economically developed countries. WELFARE POLICY The living standards of employed persons will be improved by the opening of about 50,000 new jobs, by real growth of wages and salaries (up to about 15 percent) facilitated by tax reliefs granted to the economy and to the population, by real growth of GDP of at least 7 percent, and by a stable rate of exchange and a low rate of inflation sustained at about 2 percent. An important part in the actual improvement of standards of living will also be played by the continued decrease of rates of interest, accelerated growth of investment and savings of about 20 percent. Moreover, all the preconditions have already been provided for defreezing old foreign exchange savings. As soon as possible, in the coming months, we must enact laws and develop a system of state support for housing construction loans and long-term crediting of housing construction. The Law on the Rights of Croatian Homeland War Defenders and Members of Their Families, enacted last year, has created the conditions for the implementation of effective care. The 1997 government budget allocates about 2.2 billion kuna for the purpose. The material position of retired persons will be improved considerably, and pensions will grow at a faster rate than wages and salaries - in spite of the fact that retired persons account for about 19 percent of the entire population, and of the very unfavourable ratio of retired persons to employed insurees (1 to 1.7). Short-term steps were taken last year in order to partly improve the position of retired persons, and the average pension at the end of 1996 amounted to 1,035 kuna. The pensions were increased already in January by incorporating 100 kuna into the base, and by the 10 percent increase of this new base. The 1997 budget allocates 2 billion kuna to pension increases, twice as much as in 1996. Moreover, the Croatian Privatization Fund has transferred shares worth 1.8 billion kuna to pension funds. Pursuant to the Privatization Law, 30 percent of the capital stock of juridical persons in the ownership of Croartia is also being transferred to pension funds. In view of the foregoing, I believe that the increase of pensions in 1997 should total at least 25 percent. The efforts made by the State in achieving social security are demonstrated best by the following figures: at the national level, the government budget and extrabudgetary funds allocated in 1996 6.3 billion kuna to social programmes. The envisioned figure for 1997 is 8.5 billion kuna, which is a 35 percent increase. In 1996 a number of steps were taken in order to improve the social status of the most endangered population. Altogether about 300,000 persons availed themselves of various material forms of social welfare from government, local and humanitarian sources. The 1996 government budget alone allocated 320 million kuna for the purpose. The amount of 450 million kuna is being envisioned for l997. SPORTS In the period from 1992 to 1996 Croatian sportsmen won a total of 309 medals (74 gold, 91 silver and 114 bronze medals) at European and world championships, Olympic and Mediterranean Games, and other competitions. The following achievements of world-wide value can be singled out in 1996: - The gold Olympic medal won by the Croatian handball team in Atlanta. - The silver Olympic medal of the Croatian waterpolo team in Atlanta. - The Podravka handball team of Koprivnica became the 1996 European champion. - The Mladost, Zagreb waterpolo team won the 1996 European championship. - Tennis players Goran Ivanišević and Iva Majoli rank very high on the ATP list (4th and 7h position, respectively). - Boxer Ćeljko Mavrović is the European champion. - Mirjana Lučić won the Junior Grand Slam US Open Tournament in New York, and is ranked as the second junior tennis player in the world in the category to 18 years; Ivan Ljubičić reached the finals in the Wimbledon (London) junior category. - Branka Pereglin is the world cross-bow champion. - The Croatian junior basketball team won the first place at the European Championships. - Hrvoje Stević is the junior chess world champion. - Croatian juniors won the 1st, 2nd and 3rd place in sailing and canoeing at the World Championships. Considerable improvements have also been achieved in the quantity and quality of sports activity organization in schools. All the primary and secondary schools have organized school sports clubs (total 1,500 school clubs) in order to promote the development of young people and provide for the more meaningful use of leisure time. FUNCTIONING OF THE JUDICIARY The number of lawsuits awaiting judicial procedure is still on the increase, and the bureaucratic settlement of cases still takes an ever longer time. At the end of 1996 the number of unsolved cases exceeded one million. This had led to a degree of legal insecurity and occasioned the justified discontent of the Croatian people. The understaffing of courts has long been stressed as one of the main reasons underlying the delays in dealing even with the pressing cases. Nevertheless, more than two-thirds (1,080) of judge posts have not been filled, and 27.9 percent (417 judges) are still missing. (In the same period of 1996 the number of judges still to be appointed was 569, of 38 percent). PHYSICAL SECURITY OF CITIZENS The positive trends denoting the generally favourable citizens' security situation in physical and property terms have been sustained in 1996. Over the first ten months of 1996 there has been a decline of the total number of criminal offences by 4.4 percent as compared with the same period in 1995, and a 74.5 percent improvement in the detection of perpetrators. At the same time, due account should be taken of enhanced danger posed by new forms of crime, but also of the positive changes in the structure of criminal offence detection. In 1996 the rate of detection of organized crime increased by 5.1 percent, of white-collar crime by 8.4 percent, and of drug- related crime by as much as 141.2 percent. As contrasted to the generally favourable trends in overall security, the number of fires has increased by 28.6 percent, and so has the number of people killed and injured in fires. It should be noted that quite a few fires took place in the newly liberated areas, and there were as many as 288 fires in mined areas. In spite of the general increase of road traffic, over the first ten months of 1996 the number of accidents dropped by 3.3 percent, the number of accidents with fatal casualties by 9.1 percent, the number of persons killed by 8.5 percent and of those injured by 6.8 percent. These figures are encouraging, demonstrating the need to sustain the consistent enforcement of the National Road Traffic Safety Programme. (hina) jn as 221834 MET jan 97