Since the health reform is expected to start in the second half of this year, an additional 300 million kuna of arrears will be accumulated in the health sector in the first half of the year, says the government in a letter of intent on the second review of the stand-by arrangement with the IMF.
The letter, which was released on the web site of the Croatian National Bank (HNB) as part of materials on the second review of the stand-by arrangement, focuses on structural reforms, notably health reform.
The government has already sent to parliament a set of health bills, and it is expected that the laws will go into force on July 1. The government believes that the health reform will stop the accumulation of new arrears in the health sector.
The government expects to receive by the end of April a plan on the restructuring of shipyards. The plan, which is to be approved by the end of June, is expected to include a description of the privatisation of shipyards, including public tenders and defined terms.
It is noted in the letter that an invitation for bids for the Pula-based Uljanik shipyard would be announced by the end of the year.
The government says that plans for the privatisation of the Croatia Osiguranje insurance company had been postponed due to unresolved compensation claims and that it expects the privatisation process to start in the second half of the year.
Plans exist to merge and privatise the two remaining state-owned banks, Croatia Banka and Hrvatska Postanska Banka.
The government cites in the letter ongoing structural reforms such as the restructuring of Croatian Railways, plans to prepare a plan of reform for the system of social benefits, etc.
The government recalls in the letter its goals in 2005 - a real GDP growth rate of around four percent, keeping the average inflation rate at 3.25 - 3.5 percent, keeping the balance-of-payments current account deficit at or below six percent of GDP and the general government budget at 3.3 percent of GDP.
Risks for such projections are linked primarily with possible deterioration in the external sector, a continued and intensified loan growth, and the planned payment of the state debt to pensioners, which may affect consumption and imports, the letter said.
In case of considerable deterioration in the macroeconomic environment, the government is ready to adjust its policy and goals to protect the goals of its programme, the letter read.