The Croatian government on Friday decided to dissolve or merge with other bodies 14 agencies, institutes and centres, thus reducing their number to three legal entities.

It also sent to parliament a bill on the management of state property which envisages the merging of the three institutions currently managing state property - the Croatian Privatisation Fund, the Central State Office for the Management of State Property and the Real Estate Agency - into a single institution - the Agency for the Management of State Property.

The government's decision to reduce the number of government agencies and institutes refers to 14 legal entities with 962 employees. The government annually pays more than HRK 110 million for the salaries of those employees, more than 10 million kuna is paid for the lease and maintenance of those institutions' offices, their phone bills amount to more than four million kuna, and intellectual and other services they use annually cost in excess of 32 million kuna, said Prime Minister Jadranka Kosor.

By dissolving or merging those agencies, institutes, offices and centres, their number will be reduced to three, and the ministries and other agencies that will take over their tasks will also take over their employees, said Kosor.

Under the proposed decision on the reorganisation of government agencies, institutes and centres, employees taken over by other agencies will be offered new work contracts, while surplus employees will be laid off with severance pay.

The transfer of employees working in an agency to a body of state administration will be regulated by a law under which employees who have been reassigned will become government employees, while those without new assignment will be made available to the government. During the time of their standing at the government's disposal, they will have the right to a salary and once that period expires, they will receive severance pay.

The government entrusted ministries to submit to it within 15 days bills regulating the cessation of work of agencies and institutes, and it instructed the Finance Ministry to make an estimate of funds to be saved by cutting the existing number of agencies and institutes.

Administration Minister Davorin Mlakar said that this was the first stage of rationalisation and that the second stage would determine which agencies had been established as a precondition for the completion of Croatia's EU entry talks.

Among the institutions to be dissolved are also the Croatian Privatisation Fund (HFP), the Central State Office for the Management of State Property and the Real Estate Agency, which are to be merged into a single institution - the Agency for the Management of State Property.

The Agency will manage state-owned real estate and shares, as well as real estate and interests in the HFP. PM Kosor said the new model of management of state property would ensure transparency and greater efficiency.

The state currently holds interests in 774 companies. In 484 of those companies it can manage its shares, in 241 companies this is not possible because those shares are reserved, and 49 companies are no longer active, the PM said.

The nominal value of shares in the 484 companies in which the government can freely manage its shares is around HRK 11 billion, which is the best proof of the need to adopt this law and sort out that system so that those 11 billion kuna, or eventually much more, could be activated to the benefit of Croatian citizens, said Kosor.

The government-sponsored bill on the management of state property envisages three important documents concerning the management of state property - a three-year management strategy to be adopted by the parliament at the government's proposal; an annual programme to be adopted by the government on the basis of that strategy; and a code of management of companies that would define the conduct of representatives of the state in those companies.