ZAGREB, April 9, 2020 - The government on Thursday redistributed budget funds in the amount of HRK 2.1 billion to address the consequences of the outbreak of COVID-19, and the most of those funds would be used for the government's measure to help employers to retain their workers.

Finance Minister Zdravko Marić informed the cabinet that a new round of the redistribution of the funds would soon ensue.

The lion's share, that is HRK 1.87 billion of the reallocated funds, will be set aside for the government's measure designed to keep jobs and ensure funds to employers whose businesses are hard hit by the corona crisis.

The Croatian liquidity guarantee scheme for export-oriented companies, which has been prepared by the Croatian Bank for Reconstruction and Development (HBOR), can count on 80 million kuna.

For instance, the government also has set aside 53 million kuna to fund the procurement of new equipment for microbiological diagnosis of the infection with coronavirus.

The funds have been ensured through austerity measures made by the ministries.

The infrastructure and transport ministry, for instance, has ensured 305 million kuna through cost-cutting plan.

The education and science ministry has provided HRK 294.8 million through its austerity measures, and the regional development and EU funds ministry 152.9 million. Other ministries have also made savings by cutting their costs.

More budget news can be found in the Business section.

ZAGREB, April 8, 2020 - Finance Minister Zdravko Marić said in an interview with the N1 commercial broadcaster on Wednesday that in the current circumstances, the state's outlays in the next three months were estimated at 65-70 billion kuna. He said that during the government's meeting on Thursday, the cabinet would discuss how to redistribute the budget allocations in order to ensure funds for addressing the consequences of the coronavirus epidemic.

Marić recalled that some of the austerity measures had been already taken.

He added that for the monthly functioning of the expenditure side of the state budget, it was necessary to provide 13-15 billion kuna, including HRK 3.5 billion for pension allowances.

Asked how he intended to cover the budget gap and fund the government's rescue package for the economy in the corona crisis, Marić said that the budget must show its strength in responding to all challenges for the functioning of the state. "In these circumstances, nothing is easy, but mechanisms do exist," Marić said.

Considering the issue of borrowing, Marić said that currently the authorities would tap domestic markets. In parallel, steps are being taken on international markets, including contacts with partner financial institutions such as the European Investment Bank (EIB) and the World Bank.

According to some previous announcements, Croatia could count on tapping more than a billion euros from European Union funds to narrow the budget gap in the coming months.

Asked whether it would be inevitable to cut wages in the public sector, the minister said that it was necessary to pursue a dialogue with the social partners "There are several proposals in the pipeline," he added.

He said that the government was preparing a third package of measures designed to help sustain the economy during this crisis.

The minister underscored that the response of the government that has already prepared two sets of measures that are being implemented was adequate and timely when it came to the corona crisis.

The Fitch credit ratings agency, which on 1 April revised its outlook on Croatia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to stable from positive and affirmed the IDR at 'BBB-', envisaged that Croatia's economy would contract by 5.5% in 2020, from a growth of 2.9% in 2019, due to the impact of the COVID-19 pandemic and that economic activity was expected to rebound in 2021.

Fitch believes the financial sector is in a better position to weather the crisis than in 2008-09, supported by a liquid, profitable and highly capitalised banking sector that is less reliant on cross-border lending. The capital adequacy ratio was 23.2% at end-2019 versus 15.1% at end-2008, while liquid assets to total assets were close to 35% at end-Q319.

The National Bank of Croatia (HNB) has taken a number of steps to support the currency regime, maintain liquidity in the financial system, and provide some relief to the corporate sector, says Fitch.

"The HNB has abundant foreign reserves (USD21 billion in January; 35% of 2019 GDP) and a long-track record of maintaining exchange-rate stability to help the economy withstand shocks. Moreover, inflation is low (1.5% in February) and will remain very low this and next year (averaging 0.7%)," it says among other things.

More economic news can be found in the Business section.

ZAGREB, March 10, 2020 - Prime Minister Andrej Plenković said on Monday that there was no need for now to review the state budget in light of increased costs caused by the coronavirus outbreak.

Plenković said that the situation regarding the new coronavirus is being followed, with concrete measures being taken to ensure the safety of citizens in public health and monitor the possible impact on the economy, finances and tourism.

"When the time comes, we will know what measures to introduce. We are conducting all processes responsibly and soberly," he said.

Earlier in the day Plenković held a video conference with the president of Cyprus and the prime ministers of Austria, Bulgaria, Hungary, Israel, Italy and Romania on possible joint activities in containing the spread of the coronavirus. He will conduct a similar conference on Tuesday with EU heads of state.

"We have to find a common European response considering the global and European nature of this case," he said.

Court decision on my complaint against the Conflict of Interest Commission delivered in legally prescribed time

Reporters also asked Plenković whether he was surprised with the speedy decision by the Zagreb Administrative Court regarding his complaint against the Conflict of Interest Commission, to which Plenković said that the decision was delivered within the legally prescribed time.

I would never put any private interest before the interests of the country and its citizens or the professional and legal conduct of my duties. I have the right, just like any other citizen, to legal protection and legal remedy against decisions by government institutions which from my point of view have caused injustice or political damage to me, Plenković explained.

Asked to comment on a drop in the Croatian Democratic Union's approval rating, Plenković said that the party's rating is stable and has fallen only insignificantly.

More coronavirus news can be found in the Lifestyle section.

ZAGREB, January 22, 2020 - The Ministry of the Interior on Wednesday presented its financial plan for this year, worth 5.9 billion kuna, and signed about 30 contracts with domestic companies which will deliver their products to police and civil protection forces this year.

The financial plan is 228.3 million kuna or 4% higher than last year, it was said at the presentation.

The increase refers mostly to salary expenditures, funds for Croatia's EU presidency and the procurement of police equipment.

Assistant Minister Cvjetko Obradović warned about a decrease in the share of salary expenditures in the ministry budget.

"Salaries accounted for as much as 76% of the ministry budget in the previous period, last year they accounted for 66.13% and this year they are expected to account for 65.69%," he said.

Obradović said that the ministry's priorities included raising the quality of accommodation for police officers, energy renovation of buildings used by police and raising the quality of police work.

1.6 billion kuna of the 2020 ministry budget is intended for public procurement, mostly of equipment for police and civil protection units, mine removal and road safety.

Minister of the Interior Davor Božinović signed contracts with some 30 domestic companies for the procurement of equipment for police and civil protection units, equipment for EU presidency, equipment envisaged by EU projects, and mine removal. The total value of the contracts exceeds 289 million kuna.

More news about Interior Ministry can be found in the Politics section.

ZAGREB, November 14, 2019 - The Croatian parliament on Thursday adopted the state budget for 2020 with 80 lawmakers voting in favour, 41 against and one abstention.

The budget, proposed by the government, plans 145 billion kuna on the revenue side and 147 billion kuna on the expenditure side, and a majority of government departments can expect a rise in their funding from the state budget.

The budget has been prepared with the assumption that Croatia's economy will grow 2.5% in 2020.

The government plans 6.7% higher revenues in comparison to the original 2019 plans, that is 5.4% more in comparison to the revised budget which was also adopted by the parliament today.

The expenses in the next year's budget are higher by five percent, that is by seven billion kuna, in comparison to this year, and by 8.3 billion kuna in comparison to the revised budget in 2019

As a result, the projected budget gap in 2020 is put at 2.15 billion kuna, accounting for 0.5% of Gross Domestic Product.

HDZ party whip Branko Bačić said on Thursday that the vote on the state budget earlier in the day showed how strong the ruling majority in the parliament was, stressing that he did not share the view that the budget did not include striking teachers' demands.

"The documents that had to be adopted were adopted by a majority of more than 80 votes, which proves the strength of the ruling coalition and the HDZ group. I don't think that the budget does not include education-sector workers' demands for a six percent wage increase because the government did secure funds for that increase. You would not be able to tell from the budget if it refers to an increase in the base wage or an increase in the job complexity index because the total amount of the increase is as demanded by the education-sector unions and next year each teacher and employee in the education sector will get a wage increase as demanded by the unions," said Bačić, adding that therefore there was no longer any reason for the unions to continue striking.

Commenting on the European People's Party (EPP) decision not to hold sessions of its Presidency and Political Assembly in the Croatian Parliament on November 20 and 21, as originally planned, but at a different venue in Zagreb, Bačić said that the EPP did not want to cause any inconvenience either to its members or the HDZ, and that it wanted to avoid creating the impression that the Croatian Parliament was leased to a political group.

Bačić said this was not about giving in to demands by the opposition in the Croatian Parliament but about a proposal and decision by the EPP, made in agreement with the HDZ, so that the planned political event could be held in a pressure-free atmosphere.

The EPP, the strongest political group in the European Parliament, will for the first time hold its electoral congress in Zagreb on November 20-21. The event is hosted by HDZ leader and Prime Minister Andrej Plenković and EPP President Joseph Daul. More than 2,000 delegates from some 40 countries will be discussing current European policies. The EPP congress will elect a new EPP leadership.

More budget news can be found in the Politics section.

ZAGREB, November 7, 2019 - Anka Mrak Taritaš (GLAS) said in parliament on Wednesday that the 2019 budget revision was a real picture of the government - it looked nice from the outside but lacked any serious reform, with citizens not feeling any progress despite good economic indicators.

Tax revenues have increased but only owing to an increase in consumption and imports and not owing to an increase in production. The growth of exports has been slowing down for the second year in a row while EU funds are not being sufficiently used, Mrak Taritaš warned in a parliamentary debate on the budget revision.

She also warned about growing imports of labour.

All kinds of pensions fall under the pension system, both privileged and unearned, while people who have really earned their pensions through work barely make ends meet, she said.

Social Democrat Branko Grčić said that tax revenues exceeded the government's projections by 3.1 billion kuna but that the question was how that money had been spent.

Tax revenues have increased but owing to a growth in consumption. That shows that tax reliefs are just a cosmetic measure because the share of tax revenues in GDP in 2019 has not changed significantly compared to the term of the SDP-led government, standing at 20.4%, Grčić said.

As for budget expenditure, the item of EU funds has been corrected because plans are not being realised - the item has been reduced from 10.8 to 8.1 and then to 7.5 billion kuna, said Grčić, adding that when Croatia's payment into the EU budget of 3.5 billion kuna was deducted from that amount, the effect of EU funds was 4 billion kuna or only 1% of GDP.

He also noted that the announced increase of non-taxable income from 3,800 to 4,kuna 000 would mean a wage increase of 52 kuna at the most, which he said was negligible.

Božo Petrov of the MOST party warned that the state was consuming two-thirds of economic growth, which he described as politically and socially irresponsible, recalling that in the period from 2016 to 2019 additional revenues of 3 billion kuna had been earned but that more than that had been spent.

"Where has that money gone? Because citizens' living standards are still poor," he wondered.

Petrov said that the amount of money absorbed from EU funds was 2.2 billion kuna less than planned and that emigrants' remittances amounted to 18 billion kuna annually, which, he said, meant that without that money, Croatia would be in the red and in a deep recession.

The state's spending has been inflated by 30 billion kuna and an additional 3 billion kuna has been taken from citizens' income, Petrov said, wondering what message this was sending to citizens and adding that there could be no reduction of the tax burden without cutting the state's spending .

Independent MP Hrvoje Zekanović asked why Croatia was borrowing money if it had a budget surplus.

The report on the budget revision makes no mention of demography and the government has not managed to find an economic model to keep young people in the country, Zekanović said, describing PM Andrej Plenković's economic policy as a failure.

More budget news can be found in the Politics section.

ZAGREB, November 6, 2019 - During a debate in parliament on Wednesday about amendments to this year's budget, Finance Minister Zdravko Marić boasted about responsible management of state finances while the opposition had a different view.

"Croatia has a balanced budget. For four years in a row we have not crossed the originally defined limit. We are acting in line with our financial capacity," Marić said presenting the amendments to the most important financial document for the state.

The amendments foresee an increase in revenues of 1.6 billion kuna or 1.2% to 137.7 billion kuna while overall expenditure is being decreased by 1.3 billion kuna, from 140.3 billion kuna to 139 billion kuna.

Referring to macroeconomic indicators, Marić underscored that it was clearly visible that economic activity was growing, that positive trends had been identified in some economic sectors but that certain challenges were also visible.

In the first half of the year, economic growth was 3.1% with a strong contribution from personal consumption, the minister said, adding that the government was glad about increased investments and that the export of commodities and services had continued to grow, albeit not at the rates recorded in previous years.

Bridge MP Miro Bulj accused Minister Marić of boasting about the budget revision but that he did not present the "most important truth."

"The most educated Croats have emigrated and last year made remittances in the amount of 5% of GDP or 2.4 billion euro, that is a disastrous policy," Bulj said.

Emigration and demography are aspects that go beyond a one-year budget, Marić retorted.

"You were one of those who raised their hand to reduce teachers' salaries," Marić responded to MP Gordan Maras (SDP) who asked where (Marić) had managed to find 120 million kuna he was now offering education-sector workers and why there was no money to meet their demands worth 400 million kuna yet there was 280 million kuna to buy out the APIS IT - Information System and Information Technologies Support Agency, which is owned by the City of Zagreb.

"Are you buying (Zagreb) Mayor (Milan) Bandić's support?" Maras asked.

"Your government reduced job complexity indices and wages, while this government has raised wages by 18.3% without any tax changes," Minister Marić responded.

"Next year's budget foresees a 2+2+2% (wage increase), but the additional 120 million kuna, to be secured if the regulation on job complexity indices is not defined, is not foreseen by the 2020 budget. Neither was an additional 2 percent foreseen for this year, yet we managed to come up with those funds through redistribution," Marić said.

More budget news can be found in the Business section.

ZAGREB, November 1, 2019 - A 2020 draft budget, outlined by the government on Thursday, plans 145.1 billion kuna on the revenue side and 147.3 billion kuna on the expenditure side, and a majority of government departments can expect a rise in their funding from the state budget.

The largest individual outlay from the next year's budget, 47.8 billion kuna, is planned for the ministry of labour and pension system, which means that it will get 4.7% or 2.1 billion kuna more than in 2019.

Finance Minister Zdravko Marić explained that 42.6 billion kuna would be set aside for pensions in 2020.

The second biggest recipient is the finance ministry, 43.6 billion kuna, or 4.4% more than what it received from the original budget for 2019.

The budget outlays for the science and education ministry are budgeted at 18.6 billion kuna in 2020, up by 7.6% or by 1.3 billion kuna in comparison to the original budget for 2019.

The health ministry is to get 12.4 billion kunminia, which is a rise of 5 percent compared to its budget funding in 2019.

The projected budget outlays for the ministries of defence and interior stand at 5.3 billion kuna (up 5%) and 5.9 billion kuna respectively.

The tourism ministry can expect the biggest increase, 29%, in the funding which is budgeted at 258 million kuna in 2020.

One of the few ministerial departments with a drop in the funding from the state budget is the agriculture ministry, and it can expect the lowering of its sum by 4% to 7.4 billion kuna. The ministry for the management of state property can expect a 10-percent decline in the funds from the state budget to 72.1 million kuna.

The government plans 6.7% higher revenues in the draft 2020 budget in comparison to the original 2019 budget, that is 5.4% more in comparison to the revised 2019 budget, which was also tabled to the parliament on Thursday.

The expenses in next year's budget are higher by 5%, that is by 7 billion kuna, in comparison to this year.

More budget news can be found in the Politics section.

ZAGREB, October 31, 2019 - The Croatian government on Thursday sent to the parliament a draft budget for 2020, envisaging 145.1 billion kuna on the revenue side and 147.3 billion kuna on the expenditure side.

Thus, the government plans 6.7% higher revenues in comparison to the original 2019 budget, that is 5.4% more in comparison to the revised budget which was also tabled to the parliament today.

The expenses in the next year's budget are higher by five percent, that is by seven billion kuna, in comparison to this year.

As a result, the projected budget gap in 2020 is put at 2.15 billion kuna, accounting for 0.5% of Gross Domestic Product.

However, trends in extra-budgetary users' accounts and in local authorities' accounts as well as the consolidation of the necessary adjustments for next year makes way for the projection of a surplus of the consolidated general government at 0.2% of GDP, Finance Minister Zdravko Marić said.

The draft budget has been prepared with the assumption that Croatia's economy will grow 2.5% in 2020, Marić said.

The revision of the 2019 budget, which was sent today into parliamentary procedure, reads that total revenues would increase by 1.6 billion kuna (1.2%) to 137.7 billion kuna, whereas the expenditure side would be reduced by 1.3 billion from 140.3 billion kuna to 139 billion.

As regards the expenditure side, this reduction is mainly on the back of the savings on the interest rates, as 796.9 million kuna has been saved that way.

The biggest rise in the expenditure side has come from outlays for employees, and 849.6 million rise in the outlays for pensions.

The government also set aside 350 million kuna for the first stage of the construction of the future LNG terminal on the island of Krk.

More budget news can be found in the Politics section.

ZAGREB, October 31, 2019 - Croatian Parliament Speaker and HDZ party secretary-general Gordan Jandroković said on Wednesday that the ruling coalition had agreed on five important issues, and that agreement had been reached with representatives of the HNS party on the budget as proposed by the government as well as that a government regulation on job complexity indices would be finalised by June 30.

The five issues are a budget revision for this year, a budget for 2020, a set of tax laws, the minimum wage and a law on holidays, said Jandroković.

"We have agreed on what the prime minister announced, 2+2+2 (percent increase) for next year, as well as that the issue of job complexity indices be resolved," said Jandroković.

"Unless the regulation on job complexity indices is adopted by June 30, we will opt for a 2% increase for those sectors that are estimated to be underpaid," Jandroković said, adding that this referred to police and the education sector.

He stressed that talks with unions were yet to be held.

"I believe that this is a good offer, that the unions will get the six percent they wanted," Jandroković said, adding that work was underway on the regulation on job complexity indices.

As an additional safeguard, we are offering the 2% after June 30, he said.

He said that the government proposed that foreign experts be involved in the analysis of job complexity indices so that a fair regulation on indices was defined and so that indices were regulated in the best possible way.

Jandroković said that domestic experts and all those who were interested should be involved in efforts regarding the analysis of job complexity indices as well.

The regulation on job complexity indices should be finalised by June 30, 2020, according to Jandroković.

"We have to approach the job seriously because the wage system for the government and public service sectors was not defined properly in the past 30 years," said Jandroković.

He stressed that the government had at no time contested the unions' right to strike.

He noted that the HDZ and HNS parties today reached an agreement on the adoption of both the budget revision for this year and the budget for 2020.

Ivan Vrdoljak, leader of the Croatian People's Party (HNS), said on Wednesday that aside from a 6% increase in the base pay in 2020 (based on a 2+2+2 model), job complexity indices in the education sector would go up by two percent as of June 30 if until that time a comprehensive solution to job complexity indices was not found and an analysis of wages was not completed.

"We did not insist on a regulation to that effect to be adopted tomorrow before a discussion on the budget, but that is our political agreement that will be made public and presented to unions because the dialogue will be restored," Vrdoljak said after meeting with the prime minister and leader of the HDZ party, Andrej Plenković.

"Aside from the base pay rise, we now have an increase in the indices of two percent," Vrdoljak said, adding that he would propose to members of the HNS leadership to accept the prime minister's proposal and attend the government session on Thursday.

Vrdoljak said that he believed the proposal would also refer to police officers.

He recalled that the HNS had been in charge of the education reform for the past two and a half years and that after the latest talks the prime minister offered a solution which he believed was a basis for continuing the dialogue with trade unions, carrying on with the education reform and putting an end to the ongoing teachers' strike.

"This is a message of trust to both teachers and parents. I still believe in the education reform and look forward to what lies ahead - what we promised to carry out two and a half years ago," Vrdoljak said ahead of a meeting of his party leadership.

Asked if unions would be satisfied, he said that he was the leader of the HNS party and a coalition partner and not a unionist.

"As far as I understand, the unions wanted a wage rise through indices of 6.11%," he said, adding that the final result in 2020 would be an increase in wages of 8.12%, which is how much wages would grow in absolute terms. He also said that work was underway on correcting the index and that a regulation to that effect would take into account the need to rectify injustices.

Asked if this was a victory for the HNS, he said that this was an agreement on the budget.

"This was an agreement on the budget, I would not call it that (victory). No one should feel blackmailed or underestimated," Vrdoljak said.

More politics news can be found in the dedicated section.