PARLIAMENT WORKING BODIES SUPPORT DRAFT BUDGET FOR 1998

( Editorial: --> 3844 ) ZAGREB, 26 Nov (Hina) - At a House of Representatives session held Wednesday, Premier Zlatko Matesa and Finance Minister Borislav Skegro explained the Government draft budget for 1998. Macroeconomic conditions for the drawing-up of the draft budget for 1998 were real economic growth of 7% to 7.5% and keeping down the inflation rate to 3% to 3.5%, Matesa said. The basic guidelines for the drawing-up of the budget were tax reduction, re-distribution of expenses and the maintaining of a consolidated state budget and non-budgetary funds, he stressed. According to the draft budget for 1998, overall revenue should amount to 36.8 billion kuna, and expenses to 38.8 billion kuna. The budget deficit of some two billion kuna would be covered by loans from Croatia and abroad. "The application of the tax system will leave the economy with 1.7 billion kuna more than in 1997," Matesa said. State expenses (38.8 billion kuna) amount to some 31% of gross national product, Matesa said. The draft budget proposes re-distribution for the benefit of justice, science, culture, the education and school system, agriculture and infrastructure. According to the draft budget, it is expected that there will be an increase in expenditure of the Justice Ministry (17%), science (13.8%), education and sport (9.56%) and culture (8.8%). Some five billion kuna of spending, intended for the Ministry of Reconstruction and Development and the Ministry of Croatian Homeland War Defenders, had been caused by the war and its consequences. That would take some 5% of GNP and is unique for Croatia, Matesa said. The budget deficit of two billion kuna amounts to some 1.6% of GNP, and such a deficit guarantees that Croatia will not be overindebted, although it will have to take loans amounting to 6.8 billion kuna, Matesa said. Explaining in detail the two sides of the budget - revenue and expenses - Finance Minister Skegro said that the greatest tax reduction was to be achieved by the introduction of VAT, by the means of which some 15 billion kuna are to be gathered. According to the draft budget, 391 million kuna (or 200 million more than in 1997) should be gathered from state company profits. The privatisation of companies is expected to yield 1.85 billion kuna, which is one billion kuna more than in 1997. In that context, Skegro mentioned several privatisation projects, adding they did not refer to the privatisation of public enterprises. Capital expenditures will also be higher by 17.2% (they amount to 5.3 billion kuna). "As long as the situation is like this, as long as current revenues are larger than expenditures, we don't have to worry about economic growth," Skegro said. The next year is when the largest part of loans, both domestic and foreign, are to paid. Out of 6.8 billion kuna of planned indebtedness, 4.8 billion is intended for loan payment. The draft budget for 1998 was supported by the lower house working bodies. Opposition representatives voiced sharp criticism. They pointed to the fact that the budget was increasing every year, that the state was too expensive and that development components were being neglected. They asked that some elements be re-distributed, for example to the benefit of agriculture. The strategy of economic development should have been discussed and a framework for budgetary developments should have been given in parliamentary discussion before the drawing up of the draft budget, opposition representatives said. (hina) jn rm 261816 MET nov 97