ZAGREB, 20 October, 2021 - When Croatia joins the euro area, its citizens can expect a drop in interest rates on new loans and on loans with variable interest, owing to lower risks, primarily lower exchange rate risks, while holders of fixed interest loans will be able to refinance them if new terms and conditions are more favourable to them.

The issue of interest rates on household loans in the coming period has come to the front burner, alongside expectations of the start of the normalisation of the European Central Bank's monetary policy amidst the rise in inflation. Holders of loans with variable interest rates are particularly interested in future developments.

At the same time, Croatia is making preparations for joining the euro area, which is likely to happen in early 2023.

The euro changeover is expected to have a positive impact on the price of money and loan interest rates, as the euro adoption will lead to the reduction of risk premium in Croatia. The Fitch ratings agency has said that the introduction of the euro in Croatia as the sole legal tender will raise the country's credit rating by two notches  and consequently lead to a drop in the risk premium and interest rates.

Currently, commercial lenders in Croatia already offer lower interest rates for euro-indexed loans compared to loans denominated in the national currency, the kuna. Moreover, interest rates on newly approved euro and kuna loans are very close.

The data provided by the Croatian National Bank (HNB) shows that the average interest rate on the  kuna mortgages approved in August was 2.86%, while the euro loans, issued at the same time, had the average interest rate of 2.71%.

A small difference between the interest rates is to a considerable extent a consequence of Croatia's progress towards euro area membership, the HNB says.

Switching to the euro also means that there is no longer an exchange rate risk for loan holders, and this risk has to date been expressed in higher loan interest rates.

This August, a total of HRK 141 billion was placed in household loans. Of them, 39% were approved at variable interest rates,  8% were loans with fixed rates over a period of up to three years, 15% were loans with fixed rates over a period longer than three years and shorter than loan maturity, and 38% were loans with fixed interest rates.

At the end of August, the kuna loans totalled HRK 78 billion, and 33% of them had variable interest rates, 52% had fixed interest rates, and 5% had interest rates fixed up to three years, 10% were with interest rates fixed for a period longer than three years and shorter than loan maturity.

The conversion of loans after the country's admission to the euro area will be regulated in detail by a law on the euro, which is being prepared and is expected to be adopted in the first half of 2022, according to the HNB.

ZAGREB, 20 October, 2021 - Health Minister Vili Beroš said on Wednesday that the surge in new coronavirus cases was concerning, but not surprising given the insufficient vaccination rate.

"This is the conclusion of medical professionals at all levels, including the World Health Organisation. The low vaccination rate has a direct impact on the course of this epidemic," Beroš said on Twitter.

The course of the fourth wave of the epidemic is determined by citizens who still have doubts about science and the medical profession, Beroš said. "Their decision affects not just individuals but all of us. Let us follow the example of highly vaccinated countries and head towards a safe health future."

The national COVID-19 response team on Wednesday reported 3,162 new coronavirus cases and 23 related deaths in the last 24 hours. The number of new infections was more than 50 percent higher than last Wednesday, when 2,022 new cases were reported, while two weeks ago 1,925 cases were confirmed. The last time more than 3,000 cases were registered in a single day was April.

ZAGREB, 20 October, 2021 - The reform of local government through functional mergers of municipalities with poor administrative and fiscal capacities is a measure that has been announced for years in different electoral and government programmes, Večernji List newspaper said on Wednesday.

The idea is for several smaller municipalities to combine the work they would have difficulty financing by themselves and manage it from a single shared office. But first it should be seen for which municipalities and which types of work this would be cost-effective, the newspaper said.

For this purpose, the Ministry of Public Administration signed an agreement with the Ministry of European Funds in 2018 to analyse the capacities of the municipalities and the work they do. The project, called "Optimisation of the local and regional self-government system", should have been completed before the end of 2020, but it was not. It received a fresh impetus from the National Recovery and Resilience Plan, for which Croatia received an advance payment of HRK 6.14 billion from the EU for reform processes, including those in public administration.

The Ministry of Justice and Public Administration has announced that the public procurement procedure for the implementation of this project will be completed soon.

"A contract with a selected bidder should be signed within no later than a month, and it will then have six months to analyse and draw up a catalogue of jobs in local government," the ministry told Večernji List. The plan is not to analyse the business performance of all 555 local government units but to select a sample of 40 smaller municipalities and see which services they could provide together.

The ministry is expected to finalise guidelines for the merging of local government units based on good practice in the EU before the end of 2023, while the entire system of support to functional mergers should be completed by June 2025, Večernji List said.

ZAGREB, 20 October, 2021 - Croatian Public Health Institute director Krunoslav Capak said after a meeting of the Scientific Council on Tuesday that they did not discuss extending the use of COVID certificates to other sectors of society, but that the matter was likely to be addressed because of neighbouring countries.

"We did not discuss that, there is no plan about that. But if you look at the countries around us, western European countries, you will see that they are increasingly using COVID certificates as a form of relative pressure on persons who are not vaccinated, because people who have been vaccinated have certain advantages in using services, visiting cultural institutions, restaurants," Capak told a press conference.

"Right now we do not have any plan, but it is very likely that we will discuss the matter soon," he added.

Capak said that the introduction of COVID certificates in the healthcare and social welfare systems was successful. "I would say that there will soon come a time when we will start discussing a possible extension of this measure."

As for the possibility of measures being tightened because of the rise in new COVID-19 cases, Capak said they think that a balanced approach is the best.

Health Minister Vili Beroš said that the meeting mostly discussed the administration of a third dose of a COVID-19 vaccine, adding that all members of the Scientific Council agreed that the third dose should be administered to immunocompromised persons and to health and welfare workers.

"All scientists are unanimous in the opinion that the third dose is absolutely acceptable and that it will help us in fighting this epidemic. They are also of the view that differences in interpretation and giving recommendations for vaccination should be reduced," Beroš said.

Beroš said that he would get the third dose. "The first dose I received was AstraZeneca, and the position of medical professionals is that a mRNA vaccine should be used for revaccination. I have no doubts, I will get the third dose and it will most likely be Pfizer or another mRNA vaccine."

Beroš said that 78.2 percent of medical workers had been vaccinated against COVID-19, including 89.81 percent of doctors and 76.36 percent of nurses, as well as 72 percent of citizens aged above 65. He appealed to people who did not get vaccinated to do so. 

October the 20th, 2021 - The Croatian eWyse e-learning company has been doing excellently, with a massive 97 percent of its revenue being earned on foreign markets.

As Poslovni Dnevnik/Lucija Spiljak writes, Martina Osmak, the operations director of the Croatian eWyse e-learning company explained that up until fairly recently, digital learning was considered for use only for occupational training and the like, but people are becoming more and more aware of the need for this form of training for new employees, the transfer of knowledge about products and/or services, and even for the purpose of making sales (in the sense of educating customers).

For the second time, the Croatian eWyse e-learning company has been placed on the list of the best companies in the world for the development of digital learning content for 2022. They have been recognised as one of the best providers of customised content for e-learning, which is just one in a series of worldwide accolades over the past four years.

The company was founded 12 years ago

The company was founded back in 2009 by Mario Buljan, who at the time worked as a business coach with clients from all over the Republic of Croatia. Until 2015, the company dealt exclusively with the training of its working team, but Buljan then noticed that the world of education was moving in a much more digital direction.

The main activity of the company today is the production of e-learning content (digital education) and the development of courses for major global brands, and they're distinguished from the competition by their different sort of approach, claims Martina Osmak.

“We put a lot of effort into the very presentation of our content - through trends such as storytelling, gamification, game-based learning, including the use of animation, multimedia and professional narrators with acting experience, we create content that is both interesting and instructive and achieves its goal, which is knowledge transfer.

In addition to the courses themselves, we also work on the platforms on which these courses are located (learning management system), we produce various educational and marketing videos and animations, we make accompanying educational materials (workbooks, brochures, etc.), we develop strategies for the client (an application of blended learning - part live, part digital), and more or less everything that has to do with education.

Almost all of our clients start with onboarding as the first topic. This topic is particularly important in industries where there is a constant large influx of new employees (eg the hotel and hospitality and catering industries). Then comes a wide range of various other topics such as product knowledge, legal issues, compliance and more,'' says Osmak, who notes that the demand for digital education is growing among Croatian companies.

It is interesting, she says, that they first broke through and proved themselves in the world, and only now is it Croatia's turn. Owing to that fact, more than 97 percent of their revenue comes from abroad, and only about three percent from here on the domestic market.

"We're very glad that we've positioned ourselves so well out there on the foreign market because it gives us financial security, and at the same time it's a confirmation of our quality, because the competition abroad is huge. Despite this, we'd certainly like to increase the number of clients here on the domestic market. After all of our successful projects for foreign clients, we know that we can give world quality through out company. We're just starting a project with a client from Washington whose goal is to help young people from vulnerable groups (poverty, discrimination, family issues) to choose the path of education and to direct them in time in a good way, so as not to end up in correctional facilities or prison. It isn't a small thing to work on a project that aims to save lives and that's why we're all really delighted with this,'' said the Croatian eWyse e-learning company's chief operating officer.

Among the more interesting and award-winning projects of this company is Revival, which entered the global Adobe competition where they won third place in a competition of about 50 other projects worldwide. The project is cooperation between Croatia and Italy, and is sponsored by the European Union.

"The desire is to revitalise, that is, to revive old and forgotten buildings that were previously important to their communities. That’s why we opted for 360 access (virtual reality) to allow people to ''walk'' virtually through these old and abandoned buildings. In addition, we're pleased that we really cover all industries, and soon all continents of the world. Our projects are from the fields of finance, hotel industry, religion, pharmaceuticals, telecommunications, the fashion industry, production facilities,'' stated Osmak.

For more, make sure to check out Made in Croatia.

October the 20th, 2021 - Croatian fiscalised receipts and their amounts have provided much more than a mere glimmer of hope following an uncertain and difficult economic period, with the values exceeding that of pre-pandemic, record 2019.

As Poslovni Dnevnik writes, the total value of Croatian fiscalised receipts last week exceeded four billion kuna (4.1), which improved the amount from the same period last year by 22 percent or 743.7 million kuna. Data from the Tax Administration also shows that in the period from the 11th to the 17th of October, when compared to the same week back in 2020, the number of Croatian fiscalised receipts (43.6 million) was 18 percent higher.

In the trade sector, the total amount of Croatian fiscalised receipts issued last week amounted to 2.8 billion kuna, while in catering and tourism, ie accommodation and food preparation and service activities, receipts with a 66 percent higher value were issued, reaching an impressive 365 million kuna last week.

If we compare last week's situation with that from the pre-crisis year of 2019, known as being a record one, fewer actual receipts were issued, but their value increased. In particular, there were 4 percent fewer fiscalised receipts issued and a nine percent increase in their value.

A cumulative review of fiscalisation for the period from February the 22nd to October the 17th this year compared to last year (from the period of February the 4th to October the 18th, shows that in 2021, the number of issued receipts grew by 24 percent and in value by 27 percent.

"Across all economic activities, a total of 1.5 billion Croatian fiscalised receipts were issued, in the total amount of 143.8 billion kuna, which increases the value of those receipts by 30.4 billion kuna annually," reads the analysis of the Tax Administration.

In the wholesale and retail trade, the repair of motor vehicles and motorcycles, the number of receipts issued in the period from February the 22nd to October the 17th, 2021 compared to February the 25th to October the 20th, 2019 saw one percent fewer invoices, but their value increased by six percent.

The hospitality and tourism sector, on the other hand, recorded 30 percent less receipts issued as well as a six percent lower amount of these receipts when compared to the pre-pandemic year of 2019, according to a cumulative review of fiscalisation.

For more, follow our business section.

October the 20th, 2021 - The Croatian State Attorney's Office's indictment against former Agrokor boss Ivica Todoric, as well as fourteen of his former accomplices, remains unconfirmed to this day.

As Poslovni Dnevnik writes, the indictment of the State Attorney's Office in the Agrokor case against the former owner Ivica Todoric and fourteen other defendants charged with varying forms of abuse of the former company worth hundreds of millions of kuna has not been confirmed yet, and now it has become questionable whether the key evidence is even legal, as reported by Jutarnji list.

The High Criminal Court Chamber, chaired by Judge Ivan Turudic, partially upheld the defense's appeals over key evidence in the Agrokor case - a bookkeeping (financial) finding prepared by KPMG's Polish subsidiary. The defense argues that this evidence is actually illegal.

As to the legality of the expertise, the High Criminal Court considers that it cannot examine the decisive facts at all or determine whether there are reasons to single out this evidence as illegal in itself. According to the court, it is disputable that it isn't clear who (and indeed to what extent) participated in the preparation of the expert report in question, and therefore it wasn't possible to verify whether the persons who participated in the preparation of the findings and opinions were in conflict of interest. If that is the case, it could well be a legal reason for exemption.

Namely, although the accounting and financial expertise has been signed by Ismet Kamal, an employee of the Polish branch of KPMG, the defense pointed out that KMPG Hrvatska also worked on it, which, given that it was hired by the then extraordinary management of Agrokor, and that there was a conflict of interest. Therefore, the expertise is considered illegal.

Expert witness Kamal pointed out that he was responsible for the finding and opinion, and that he couldn't disclose information about the persons who helped him due to the signed statement of confidentiality under GDPR. The County Court also received such an answer from KPMG's branch in Poland. That was enough for the Indictment Chamber to reject the motion to separate the expertise as illegal evidence in the case against ex-Agrokor boss Ivica Todoric.

This was not the case, however, for the High Criminal Court, which gave the Indictment Chamber of the County Court a clear instruction to conduct the so-called trial on the legality of the evidence, call Ismet Kamal as a witness, determine who participated in the preparation of the accounting and financial expertise and work out whether or not he was in a conflict of interest.

For more, make sure to check out our politics section.

ZAGREB, 20 October, 2021 - PM Andrej Plenković and the Deputy Chairman of the House of Peoples of the Parliament of Bosnia and Herzegovina (BiH), Dragan Čović, agreed at a meeting in Zagreb on Tuesday it was necessary to change BiH's electoral law to ensure legitimate representation and equality of the constituent peoples.

They discussed BiH's path to European Union membership, cooperation between Croatia and BiH in fighting the COVID-19 pandemic, changes to BiH's electoral legislation and successfully completed projects, such as the recently opened Svilaj bridge and the Gradiška bridge, Plenković's office said in a press release.

"The electoral law of Bosnia and Herzegovina must resolve the present situation in which political representatives are imposed, especially at the level of the Presidency and the House of Peoples of the Federation of Bosnia and Herzegovina, and ensure legitimate representation of all three constituent peoples in an equal way while ensuring full active and passive voting rights for all citizens of Bosnia and Herzegovina," Čović said.

He said that the solutions he had proposed at previous meetings with political stakeholders in BiH and representatives of the international community fully incorporated the relevant rulings by the BiH Constitutional Court and the European Court of Human Rights.

These solutions are based on the principle which both rulings describe as the foundation of the constitutional system, and that is the constitutiveness of the peoples, he added.

Plenković said that changes to electoral legislation should be the result of an agreement involving all political stakeholders in BiH, observing the spirit and letter of the Dayton/Paris peace agreement and the legitimate representation of all three constituent peoples in BiH.

"Our position is very clear - we want the anomaly that puts the Croats in an unfair position rectified. It is not good that one constituent people, in this case the Croats, do not feel good and do not feel represented," Plenković said.

He reiterated that Croatia is the strongest advocate of Bosnia and Herzegovina's EU membership bid, noting that the EU is the only guarantor of the country's reform and development process.

Following Čović's recent visit to the earthquake-ravaged town of Petrinja, Plenković thanked the BiH Croats for their donations and assistance in the reconstruction process.