ZAGREB, August 6 (Hina) - The Executive Committee of the International Monetary Fund on Monday night, Croatian time, discussed a report on annual consultations which an IMF delegation conducted with the Croatian authorities at the end
of May and the start of June this year in compliance with Article IV of the IMF Statue.
ZAGREB, August 6 (Hina) - The Executive Committee of the
International Monetary Fund on Monday night, Croatian time,
discussed a report on annual consultations which an IMF delegation
conducted with the Croatian authorities at the end of May and the
start of June this year in compliance with Article IV of the IMF
Statue. #L#
According to the report compiled by the delegation, in the past two
years, significant growth has been marked however, unemployment is
still high...short-term prospects for further growth are
favourable although unsure, the Croatian National Bank stated on
Tuesday.
This is followed by estimates that the stability of the exchange
rate and structural changes have contributed to decreasing
inflation to a level lower than in the Euro zone; despite
rehabilitation of private investments and the commencement of
major public works but thanks to the growth in personal savings, the
deficit in the current account is quite low; monetary policies are
adapted to conditions of low inflation and the appreciation of the
exchange rate, motivated by capital inflow, the report said adding
that despite the attack on the third largest bank, the bank system
remained stable.
The fiscal deficit has fallen from 7.4 per cent of the GDP in 1999 to
5.4 per cent last year.
It is foreseen that this year this could be decreased to 4.25 per
cent however, the achievement of that objective could be negatively
affected by a stagnation in the implementation of certain measures
in economic policies at the beginning the year, the IMF believes.
Structural reforms are a determinant of medium-term strategies of
the Croatian authorities and are directed to decreasing
unemployment and raising the standard of living. So far the
slowness in this progress is interpreted by the IMF as a consequence
of the difficulty in obtaining consensus in the coalition and
resistance from social partners.
The most significant advancement was realised in the
rationalisation of social transfers, the pension system, the
system of allowances in the public sector as well as in the police
and defence sectors.
Fiscal decentralisation has commenced, a single account for the
State Treasury has been introduced and the legal framework for the
financial sector has been strengthened.
Reforms in health, the judiciary and education systems as well as
reforms on the labour market, the IMF believes, are not occurring
with the expected dynamics.
(hina) sp ms