IMF approves $141 million credit for Croatia

Thu Aug 5, 2004

WASHINGTON, Aug 5 (Reuters) - The International Monetary Fund said on Thursday it had approved a 20 month standby credit facility for Croatia worth $141 million, replacing a deal that lapsed earlier this year.

"The Croatian authorities intend to treat the arrangement as precautionary and are not planning to draw funds under the credit," the IMF said in a statement.

The facility replaces a deal for $146 million, which expired on April 2, 2004, after the previous center-left cabinet and the central bank missed key fiscal and monetary targets.

But Croatia's parliament in July approved a revised budget keeping its fiscal deficit at 4.5 percent of gross domestic product, as agreed to with the IMF.

"The total fiscal and quasi-fiscal adjustment of 2-3/4 percentage points of GDP targeted for 2004-05 is ambitious," IMF Deputy Managing Director Takatoshi Kato said.

"But given the uncertainties surrounding the short-term outlook, the authorities should stand ready to adjust fiscal targets as needed to secure the macroeconomic objectives of the program," he said.

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