US embassy cable - 05ZAGREB356

UNCLAS ZAGREB 000356 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, EAID, HR 
SUBJECT: CROATIAN MINISTRY OF FINANCE SKEPTICAL OF BOTH 
U.S. AND BRITISH INITIATIVES FOR POOREST COUNTRIES 
 
REF: STATE 31823 
 
1.  Econoff passed reftel Fact Sheet to A/M of Finance, Ana 
Hrastovic, on February 28, and met to discuss the U.S. 
initiative March 3.  Hrastovic expressed concerns about 
aspects of the U.S. proposal, saying that she believed that 
poor countries would ultimately get less money.  They would 
also go to private markets to finance investment, at 
disadvantageous conditions.  They might even resort to 
raising money unsustainably on domestic markets.  She felt 
that it would be hard for the international community to 
monitor export credit agencies and banks to prevent buildups 
of new debt. 
 
2.  Hrastovic did not appear to be familiar with the British 
IFF (International Finance Facility) initiative.  Upon 
hearing about the proposal to front-load assistance by 
"borrowing" against future aid flows, Hrastovic expressed 
skepticism about the poorest countries' ability to absorb 
additional aid in a shorter time period.  She felt that HIPC 
was quite an accomplishment and that, for the time being at 
least, the international community should perhaps concentrate 
on implementing that program. 
 
3.  Note: before returning to the Ministry in 2004, Hrastovic 
worked for the World Bank on the HIPC (Heavily Indebted Poor 
Countries) initiative.  Her first hand experience with 
assistance issues obviously influences her opinions. 
Hrastovic noted it had been very difficult to keep donors' 
attention on HIPC as the process dragged out -- thus she had 
a reflexive resistance to introducing new and potentially 
complex additional initiatives. 
FRANK 
 
 
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