FINANCE MINISTER SAYS ECONOMIC TRENDS ARE POSITIVE

ZAGREB, Aug 8 (Hina) - The Croatian economy is coming out of the crisis and depression, trends are very positive and will enable the further implementation of the incumbent government's programme, primarily the stimulation of economic growth and employment, Finance Minister Mato Crkvenac told Hina on Wednesday.#L# Croatia is not without problems, but they are far smaller than some say, he said, announcing an impending revision would not reduce the budget but focus on reallocation and restructuring. The total budgetary expenditure stays the same, 49.67 billion kuna (approx. $5.98 billion), while the revision will cover an amount ranging between 870 million and one billion kuna. The budget revision refers to seven fields: wages that will not be cut, current expenditure, subsidies, and capital expenditure that will be cut, pensions requiring additional funds, the health system in which citizens will pay higher participation fees, and various social measures that will cost more those with various privileges. Crkvenac resolutely dismissed claims that the measures were being implemented at the International Monetary Fund's dictate. They are part of the government's programme and represent the enforcement of the basic principle that public sector expenditure must be adapted to the possibilities of the economy, he said. The minister emphasised it was very important, at a time when many tried to score political pointy by offering general assessments, to be objective in pointing out the actual situation in Croatia, the problems, where the state was unsuccessful, and what were the government's priorities, including the budget revision. Speaking about problems, Crkvenac singled out lateness in the implementation of reforms, which he said was the result of the government's insufficient insisting on deadlines and a strong resistance by some "very loud" people who did not want their interest impinged on. Another problem is the inefficient government administration, which includes the judiciary, and the fact that Croats have failed to realise that market economy requires everyone to take better care of themselves and work more, according to the minister. He said the incumbent government had inherited in 1999 a negative growth rate of 0.4 percent, which rose to the positive 3.7 percent a year later and 4.2 in this year's first trimester. Production in 1999 dropped by 1.4 percent but rose by 1.7 in 2000 to the current six percent. In 1999, economic losses exceeded profit by 4.3 billion kuna. In 2000, the incumbent government's first mandate year, the economic profit exceeded losses by 2.1 billion kuna. Crkvenac further said Croatia was gradually resolving the unemployment issue, and that illiquidity was no longer a problem. Both domestic and foreign currency liquidity is high, he added. He reminded the incumbent government had cleared the debts accumulated in the past ten years. Interest rates are dropping, there are no major problems in the balance of payments, foreign reserves continue to grow, and Croatia's political, economic, and financial rating abroad is rising. Speaking about the government's main tasks in the autumn, the finance minister singled out a resolute orientation towards development and employment. In the next couple of years, efforts will be invested to increase economic growth to five percent and more, which means the national economy will become one of the most dynamic, he said. Taxes will not increase in the coming period, Crkvenac said. Next year, revenue from privatisation will be cut by half and the budgetary deficit will drop too. This year it accounted for 5.3 percent of the Gross Domestic Product while in 2002 it will drop to 4.25 percent. The minister concluded by saying the principle was to bring social benefits to the level of the national economy's objective possibilities. Changes in the social sphere do not mean entitlements will be revoked, although some will be reduced, he told Hina. (hina) ha