Croatian Prime Minister Tihomir Oreskovic and Deputy Director-General of the European Commission’s Directorate-General for Economic and Financial Affairs, Servaas Deroose, met in Zagreb on Tuesday to talk about fiscal consolidation and structural reforms Croatia needs to implement.
After the meeting, Finance Minister Zdravko Maric told reporters the talks focused on drafting a budget for 2016 and on two reports Croatia is expected to submit to the European Commission in late April — the reform plan and the convergence plan.
At the end of this month, the Commission is expected to release a report on Croatia which will describe and explain in detail the areas in which certain progress has been made, namely those possibly lacking progress.
“This visit has put an emphasis on certain structural steps forward and structural measures Croatia needs to implement, namely how they (the Commission) see it — to stabilise the situation with the budgetary deficit and the public debt on the one hand and to create room for economic activity and encourage economic growth on the other. This is also in accordance with what the government has been saying and underlining, namely what must be done to make certain structural headway … so that the public debt could be slowed down and stabilised,” Maric said.
The minister reiterated that it was the government’s plan to boost the economic activity, investments, competitiveness and productivity of Croatia’s economy.
Asked to comment about the pace of fiscal consolidation, the minister said “certain structural progress is necessary so that public finances and the budget, not only for this year but for the entire medium-term period, would have a balance between consolidation and the overall growth, in a way so that we would not undermine the growth.”
He also announced the government would adopt guidelines for the economic and fiscal policy which would not include too optimistic but realistic projections of growth and certain macroeconomic indicators for this year.
The Governor of the Croatian National Bank (HNB), Boris Vujcic, also said that today’s talks focused on fiscal consolidation and structural reforms.
“Structural reforms have been emphasised as crucial for Croatia to improve labour productivity which in Croatia in the period between 2002 and 2014 was on average the lowest in central and eastern Europe,” Vujcic said.
Commenting on the monetary policy, Vujcic reiterated the European Commission supported a stable exchange rate of the Croatian national currency, as this was a prerequisite for the financial stability.
The governor reiterated that the character of the monetary policy remained expansionary, recalling that the central bank today announced the beginning of structural repo auctions so as to secure long-term kuna liquidity for banks and enable them to increase lending to citizens and entrepreneurs. Vujcic added that the labour market had positively reacted to an increased GDP growth rate in 2015, which resulted in employment growth. The governor said he expected the same trend to continue in 2016.