CROATIAN PRIME MINISTER PRESENTS DRAFT 1996 BUDGET

ZAGREB, Jan 19 (Hina) - The Croatian Parliament's House of Representatives on Monday began a discussion on the draft 1996 state budget with reports by Prime Minister Zlatko Matesa and Finance Minister Bozo Prka. The 1996 budget was set at about 35 billion kuna (DM 9.45 billion), of which 33 billion kuna (DM 8.9 billion) would be secured from budgetary revenues and nett debts, while the remaining 2 billion kuna (DM 540 million) would be ensured by foreign loans. In drafting the budget, the government took into account a change in the geopolitical position of Croatia in the post-Dayton period and a peaceful reintegration of the Croatian Danubian area which is still under Serb occupation, Matesa said. The budget also envisaged cuts in government spending at all levels and the reduction of current outlays to the benefit of capital investment, he added. Matesa stressed that capital investments would be directed at the construction of road infrastructure and reconstruction in general, since Croatia was entering a new economic cycle after a drop in production was stopped two years ago. By 1998, the government expected a strong influx of investment capital from abroad and an increase in the gross domestic product by 6-7 percent. Defence spending was reduced from 10.1 billion kuna (DM 2.7 billion) last year to 8.7 billion kuna (DM 2.3 billion), or 15 percent. Prka said that the budget was aimed at achieving macroeconomic stability and keeping a low rate of inflation as basic preconditions for economic growth and reconstruction. (hina) vm jn 191358 MET jan 96