WASHINGTON, April 26 (Hina) - A Croatian delegation participating in the spring session of the International Monetary Fund and the World Bank in Washington on Saturday discussed a new stand-by arrangement with the IMF and the
stabilising of Croatia's foreign debt.
WASHINGTON, April 26 (Hina) - A Croatian delegation participating in
the spring session of the International Monetary Fund and the World
Bank in Washington on Saturday discussed a new stand-by arrangement
with the IMF and the stabilising of Croatia's foreign debt.#L#
The delegation, which comprised officials from the Croatian National
Bank (HNB) and the Finance Ministry, met the IMF's Director for
Europe, Michael Deppler, the Executive Director for the Croatian
constituency, Jeroen Kremers, and the head of the IMF Mission to
Croatia, Dimitri Demekas.
The new stand-by arrangement, just like the previous two, would be a
precautionary arrangement, the State Secretary at the Finance
Ministry, Martina Dalic, told reporters on Sunday.
"There would be no drawing of funds, but the arrangement would serve
as support for the credibility of Croatia's economic policy and
positions on international capital markets during possible accession
talks with the European Union," Dalic said announcing a visit by an
IMF delegation to Zagreb after May 18, when the talks on the new
stand-by arrangement should be completed.
The IMF officials pointed to the problem of Croatia's foreign debt
which makes the country vulnerable to external shocks and possible
market disturbances.
HNB governor Zeljko Rohatinski told reporters that both sides shared
the view that the foreign debt required urgent action to stabilise it.
The IMF believes that this primarily refers to the consolidation of
public finances, Rohatinski said.
The purpose of a possible new stand-by arrangement would be to
stabilise the share of the foreign debt in GDP.
Croatia's overall foreign debt at the end of February 2004 totalled 24
billion dollars, while GDP at the end of last year totalled 29 billion
dollars, which accounts for 76 percent of GDP. The IMF believes that
during 2004 and 2005 the foreign debt should be stabilised to account
for 76 percent of GDP expressed in euros, Rohatinski said.
Rohatinski believes that this can be achieved with fiscal adjustment
and an adequate monetary policy as well as by creating conditions for
the state to seek more loans on the domestic market.
Croatia's economy can service the debt without any significant
problems, but everybody is agreed that the debt must not continue to
grow at the pace at which it had increased so far, Dalic said. She
added that the deficit in the state budget and other sectors should be
reduced to stabilise the share of the foreign debt in GDP.
Dalic said that Croatian officials and World Bank representatives were
discussing relations and World Bank assistance in the period from
2004 to 2007. This includes a so-called PAL loan for support to
structural adjustment and reform to be implemented in years to come.
Croatian Reconstruction and Development Bank (HBOR) director Anton
Kovacev and World Bank officials discussed projects which are under
way as well as new projects, including investments into the
improvement of water supply systems and sewerage in the areas of
Split, Kastel, Solin and Trogir, and a project for Pula.
The World Bank has granted Croatia a EUR33-million loan for the
project, which should be completed in three years.
Croatia and the World Bank are also negotiating a new project to
regulate sewage systems in major cities along the Adriatic coast and
islands, which is aimed at protecting the Adriatic against pollution.
So far, the World Bank has participated in 23 projects in Croatia with
loans totalling 1.226 billion dollars and has donated 20 million
dollars.
(Hina) rml