November the 21st, 2020 - The famous 22 billion euros from Brussels has an additional sum attached to it in the shape of aid for the negative consequences caused by the ongoing coronavirus pandemic, and this marks a truly historic chance for the Croatian economy.

As Poslovni Dnevnik/Iva Boban Valecic writes, after two months of painstaking negotiations at a summit in the Belgian capital, Plenkovic announced that 22 billion euros will flow into Croatia when the new seven-year EU budget was finally agreed in July.

In addition to this budget, a fund has been agreed from which the financing of the consequences of the coronavirus crisis will be financed. The total value of both documents are eyewatering amounts, but what made this deal be immediately referred to as historic is not the dizzying amount itself, but the fact that massive joint EU borrowing was agreed for the first time.

In the arduous negotiations that preceded this agreement, the frugal quartet, Austria, the Netherlands, Denmark and Sweden, which were called European misers for opposing joint borrowing, had to be broken.

At the insistence of these countries, the ratio between grants and loans that will be available to EU member states in favour of borrowing has changed, so about half of the total money to overcome the economic, health and other consequences of the coronavirus crisis will be allocated non-refundable funds and half soaked up by borrowing.

Almost 6 billion euros in grants and another 2.35 billion euros in soft loans will be available to Croatia from the new recovery instrument, which is an unpecedented opportunity for the Croatian economy. The good news for Croatia was also brought about by the agreement on this new financial perspective.

Over the next seven years, additional money is planned for less developed regions and rural areas, but also for demographics, which Croatia insisted on during the negotiations. An additional benefit is that the earlier rate of the co-financing of projects from the European budget of 85 percent for less developed regions has survived, although some countries have insisted that it be reduced and the national component raised to 30 percent. According to some calculations, Croatia will therefore save 6 billion kuna over the next seven years.

There is also the famous "N + 3" rule, according to which money can be absorbed three years after the year in which the budget commitments are made, which also goes in the Croatian economy's favour.

The realisation of this agreement, however, is going through difficult trials. The final adoption of the package in the European Parliament is currently being blocked by Hungary and Poland, dissatisfied with the fact that project funding is linked to the rule of law in EU member states.

The realisation of the European budget will probably be delayed because of that, but there is no doubt that an agreement will be reached in the end.

In the meantime, it is important for Croatia to prepare well for the withdrawal of money that should be available to it, because this very generous envelope requires additional effort from the usually ill-prepared domestic administration, which must work on concluding projects from the financial perspective and prepare strategic documents for withdrawing money from the Mechanism for recovery, as well as 12.7 billion euros from the EU budget.

As a first precondition for withdrawing this money, the Croatian Government recently identified a proposal for a National Development Strategy for the next ten years.

The National Recovery Plan, which will enable the withdrawal of money from the Recovery Mechanism, should also be based on this strategy. It should be borne in mind that such plans will also be adopted by other member states, and large and economically developed countries will certainly incorporate the interests of their own producers.

Although agreement at EU level is largely in favour of less developed members, their technological backwardness is a burden, especially given that a high share of green and digital transformation projects will be required from projects in the Recovery Mechanism.

Therefore, as economist Zeljko Lovrincevic recently warned, the Croatian economy is threatened by a scenario in which as much as two thirds of that withdrawn money could flow to the west through technology, and to the east through labour, which is also very much insufficient in Croatia.

The government will therefore have to take care to support the interests of the Croatian economy as much as possible through the National Recovery Plan and the policies that will result from it, because the historic chance that Croatia has through these mechanisms could otherwise turn into yet another historic fiasco.

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As Novac/Gojko Drljaca writes on the 16th of November, 2020, any raise in a credit rating in a situation where much of Europe is sliding towards a new recession carries with it some extreme weight. This is Moody's message that comes with the fact that Croatia has managed to improve its unenviable previous position. What does this raise say, or not, about Croatian economic success?

Since Moody's kept Croatia at Ba1, which is the highest so-called non-investment rating, one should remain realistic and say that this rating improvement is not a message that the country has suddenly become an investment paradise in which it is wise to invest huge money. Croatia remains a country with a rating level that indicates very high risks for investors, but improving that outlook at the hands of a very conservative agency is a sign that Prime Minister Andrej Plenkovic's government has weighed up key public policies quite well. That's excellent, but in fact ,nothing significant has happened yet where it should have, and that is with the economy.

Persistence in joining the Eurozone, joining the European Exchange Rate Mechanism, announcements of reforms, preparations for the banking union, followed by a few more announcements about reforms… doesn't sound particularly exciting, but it is important proof that the Croatian authorities haven't lost their orientation in this unexplored territory of increasingly difficult economic challenges. Croatia has been a part of Europe struggling with low growth potential since the 2008-2009 crisis. The crisis caused by the 2020 pandemic has only exposed the structural problems of a number of European economies that have been accumulating over the last 20-30 years. If, from these perspectives, you get a thumbs up for current economic and financial policy, it means that, fortunately, we live in a country that will remain manageable even after the pandemic enters the history books.

It seems, and let's emphasise it again, that the improvement in Croatia's rating shouldn't be attibuted so much due to some sort of concrete Croatian economic success but to the fact that two Croatian institutions, the Ministry of Finance and the Croatian National Bank, have garnered a critical level of expertise over the years which has allowed us, if nothing else, to sell a sustainable story about Croatia's plans for the future to the European Commission, all relevant bodies of the Union, as well as credit agencies. However, the persuasiveness and professionalism of the Ministry and the CNB is not in itself a guarantee of success.

The second wave of the pandemic has already stopped any economic recovery in a situation when the country's GDP in the first nine months is a huge 8.3 percent lower than it was last year with general government debt of 82.5 percent of GDP, which, for a country like Croatia, is simply too much.

Although the Croatian Government expects huge sums of money from the EU's recovery fund, as well as from the medium-term financial framework, the consequences of the crisis caused by the pandemic will be a challenge we have not yet faced. Many forget that our European environment has changed dramatically and that in 2021 we could see a fierce struggle for economic survival. In such a situation, a high level of professionalism in the Ministry and the CNB will not be enough for agencies and investors to look favourably upon a small country with some kind of perspective.

For example, if Greece is currently preparing amendments to its tax laws that will make it a more attractive destination for living and investing, Croatia can no longer afford to maintain the misconception that we can count on high growth rates with this level of tax pressure.

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As Poslovni Dnevnik writes on the 12th of November, 2020, more than 12,000 Croatian employers, employing around 60,000 workers, have so far applied for the Croatian Government's economic measures to preserve jobs, and those numbers are expected to grow, Labour Minister Josip Aladrovic said recently. Just how long can the Croatian economy survive with this ''tempo'' of coronavirus spread?

The Croatian Employment Service (CES) has so far received requests for the use of money from the government's package of measures, which is in force until the end of the year for, as stated, more than 60,000 workers and 12,000 employers, Aladrovic said after a cabinet session.

These figures refer to grants for the month of October, which will continue being received until the 25th of November. He added that he "expects an influx of requests according to the planned figures" and announced the probable continuation of aid measures until after the new year.

However, given the concerning epidemiological situation regarding the speed of coronavirus spread across the country, he expects that the number of beneficiaries of government measures will be slightly higher than expected and planned, but points out that enough money has been provided in the state budget revision and that it is estimated that a certain amount should be provided in next year's budget on top of that.

"In this way, the government will help employers and employees by the end of the year, and most likely after that, in order to preserve jobs," Aladrovic said.

"As things currently stand, we're quite convinced that next year we'll have to still have certain measures in place in order to protect employment and jobs," he added. He also noted that the measures of the government from March "preserved the labour market" and he expects that it will be the same in the future.

Asked how long Croatia can withstand this rate of coronavirus spread economically, Minister Josip Aladrovic answered that it can certainly endure the situation until the end of this year, and into the beginning of next year too.

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November the 3rd, 2020 - Just how has the ongoing Croatian economic crisis caused by the coronavirus pandemic affected one of Croatia's largest and most successful companies? There's a mixed bag of results.

As Novac writes, during the first three quarters of 2020, Valamar Riviera, the largest Croatian tourist company, generated 2.2 million overnight stays and total revenues in the amount of HRK 673 million, equal to 33 percent of the previous year's revenues.

At the level of the business year, Valamar Riviera expects to make a net loss, but also achieve a positive cash flow with an operating profit in the range of HRK 100 to 115 million. Valamar emphasises that they have been actively managing the situation caused by the Croatian economic crisis and the balance with the enfeebled tourist season since the very beginning of the pandemic. In March alone, the decision to pay a dividend for 2019 was revoked, members of the Supervisory Board waived their fees, and management gave up around 30 percent of salaries.

There was no contagion in their hotels

In parallel with austerity measures and increased liquidity, Valamar actively prepared for the season and modified its products and services to welcome guests safely and securely. This season, 24 hotels and resorts were opened, as well as all 15 camping resorts in eight Adriatic destinations, which employed more than 4,400 employees. Although the tourist season started at the end of June and during July, travel restrictions to Croatia caused a sharp decline in the second part of August and during the off-season. However, since the beginning of the pandemic, almost 300,000 guests have stayed in Valamar's facilities, and no cases of transmission of the infection have been recorded in any of the company's hotels and resorts. The planned investment projects for 2020 in the total amount of HRK 800 million have been partially reallocated for implementation in a period of two years. During the autumn and winter, the reconstruction of the Valamar Parentino Hotel in Porec and the Valamar Meteor Hotel in Makarska will be completed. In the next 12-24 months, all other large investments will be put on pause, including works on the construction of the Valamar Pinea Hotel in Porec, otherwise the largest tourism project in Croatia, carrying an impressive total value of HRK 790 million.

"The Croatian economic crisis has shown that systems that have previously strived for excellence and cared for all stakeholders will do so even more during times of crisis, in order to maintain the confidence of their stakeholders and be ready for a recovery period. Valamar actively managed the crisis throughout 2020 and ensured its strong position to continue development during 2021 and 2022, when business normalisation is expected. We'd like to thank all of our stakeholders, especially our employees, shareholders, suppliers, builders, banks and the Croatian Government, who partnered with Valamar in this demanding business year,'' Zeljko Kukurin, President of the Management Board of Valamar Riviera, pointed out in a statement.

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As Poslovni Dnevnik/Jadranka Dozan writes on the 1st of November, 2020, in an environment dominated by the unpredictable course of the ongoing coronavirus pandemic, it's very difficult to predict and plan, so even with the state budget proposal for next year adopted yesterday, the Government session strongly pointed out that it reflects only the basic scenario. Do EU funds provide the answer to Croatian recovery?

The government has more or less remained on the trail of macroeconomic assumptions from the September Budget Guidelines, based on the epidemiological picture from the end of August, which has meanwhile deteriorated globally. However, the assumptions in the budgeting reflect the expectation of a return to last year's level of economic activity at the end of 2022.

After this year's 8 percent drop in GDP, a growth rate of 5 percent is expected in 2021, and then Croatian recovery and economic growth of 3.4 percent and 3.1 percent over the next two years, respectively. The biggest contribution to growth next year should come from the recovery of exports of goods and services (primarily tourism), which, like this year's decline, should be in the double digits.

However, as imports are expected to grow at the same time, the contribution of net exports to Croatia's enfeebled GDP growth will ultimately be lower than what is expected from personal consumption. Household spending is expected to rise 4.5 percent next year after falling 6.3 percent this year, according to government expectations.

When it comes to investing, the expectations are somewhat more modest; after an estimate of the decline for this year, the expectation for 2021 is growth of less than four percent.

The total budget revenues for 2021 are planned at 147.3 billion kuna or 12.3 percent more than the new plan for this year. When compared to last year, it's been eventually reduced by almost nine billion, as a result of 12 billion kuna less revenue from taxes and contributions, but with a simultaneous increase in revenues owing to very welcome EU assistance.

On the other hand, total expenditures from all sources are planned for less than 158 billion kuna next year, which is an increase of two billion or 1.3 percent more than the rebalanced plan for 2020.

However, Minister Zdravko Maric emphasised that expenditures financed from sources that affect the deficit (from general revenues and receipts) are planned at 118.4 billion, which is 3.6 billion kuna less than the new plan for 2020.

Unlike this year, when 5.4 billion of payments under coronavirus measures 5.4 were financed from sources that affect the deficit, according to the plan for next year, 2.1 billion kuna under these measures are planned to be financed from EU funds (React EU), and from sources that affect the deficit - only 100 million.

Katanciceva also calculated that, when the impact of the government's coronavirus measures is excluded from the expenditures, total expenditures financed from general revenues and receipts of the general government budget will increase by 1.7 billion kuna or 1.5 percent next year.

''The further deepening of the coronavirus crisis represents a great risk that is currently difficult to assess, and it would have a negative impact on budget revenues as well as on the needs of the economy for additional measures,'' pointed out the Minister of Finance, Zdravko Maric.

In the planning of the state budget, Maric explained that the goal remains the sustainability of public finances, with the control of expenditures and continued tax relief. In terms of Croatian recovery, European Union funds are generally gaining in importance.

In addition to the EU budget in the coming years, these funds which will greatly aid Croatian recovery as a whole include a combination of grants and loans from the recovery fund under the EU Next Generation instrument, and in the Croatian case there are significant funds from the Solidarity Fund for Post-Earthquake Reconstruction available.

Croatia will thus have a total of 23.5 billion euros or about 176.3 billion kuna available for strategic, development and reform projects at its disposal, while it can count on 5.1 billion kuna from the Solidarity Fund for the reconstruction of earthquake-damaged areas.

The baseline scenario of macroeconomic and budgetary developments should also result in a return of the level of public debt and deficit to a downward trajectory.

When it comes to budget expenditures that affect the fiscal balance, the largest increases next year (compared to the rebalanced plan for this) are expected as a result of tax relief in income tax, the effect of which is estimated at two billion kuna.

Therefore, the budget envisages 1.5 billion kuna more in the name of compensation to local and regional self-government units.

Expenditures for employees (including education) are planned to increase by almost half a billion (493 billion kuna) next year, with these expenditures being increased by approximately the same amount as part of this year's rebalance. A little less than 435 million kuna increase refers to participations for EU aid.

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As Poslovni Dnevnik writes on the 23rd of October, 2020, the ongoing coronavirus crisis could accelerate the integration of capital markets across the European Union in order to encourage the recovery of small and medium-sized enterprises as soon as possible through alternative sources of financing. What does this mean for Croatia and Eurozone entry, exactly?

Capital market integration should also make it easier for banks and financial investors to invest in the capital of companies that strive for sustainable operations and in line with the European Union's green agenda. New ideas are constantly being sought during these truly unprecedented times in which the coronavirus pandemic brought the world the greatest global economic crisis since World War II. The significant levels of uncertainty and the impossibility of clearly estimating how long it will all last are accelerating various innovative solutions.

Shortly after the crisis caused by the COVID-19 pandemic began, it became clear that its impact on the Croatian financial services sector could be strong and far-reaching. With Croatia's Eurozone entry plans, it was unclear at first what effect the economic woes would have.

However, despite the severity of the unpredictable situation, the Croatian Financial Services Supervisory Agency (Hanfa) believes that we're at a turning point that - if we prepare well - might accelerate our stronger recovery in the capital market.

There are a number of challenges facing the financial sector in the future, from a number of geopolitical tensions, such as trade wars, growing economic and political instability, climate change and rising premium risks to the sustainability of public debt. It's also worth emphasising the problem of corporate liquidity due to the tightening of financing conditions - a pressing solvency problem that will only manifest itself after the expiration of assistance from national governments - which will lead to a possible increase in stress levels across financial markets.

In light of Croatia's economic recovery, especially after the coronavirus crisis passes, a very ambitious European Union plan to establish a Capital Markets Union is of high importance for Croatia, according to Ante Zigman, President of the Hanfa Board, who spoke on the matter during a recent presentation.

As he pointed out, with Croatian Eurozone entry, the continuation of the integration of the capital market into the EU is of significance for the Croatian economy. After the first one back in 2015, in September this year, the European Commission issued a new action plan which by the end of 2022 is divided into three basic goals through as many as 16 different measures. The first goal is to support green, digital, sustainable economic recovery by providing more affordable financing to European companies.

Digitalisation has come into focus because digital changes in the way we pay for things and provide financial services are changing even faster with this crisis forcing our hands. According to the market capitalisation of the 500 largest financial service providers in the world, the rapid growth of the share of the financial payments industry and fintech companies is obvious, and banks are finally losing their dominance in the financial world.

Croatia already has a basis for the growth of new digital financial companies due to changes in methods of payment, where transactions via the Internet and mobile banking are growing rapidly. The growth of young digital fintech competition has some major advantages, such as stronger market competition and lower service prices, reduced market concentration, greater transparency and better access to financial services in general.

The second is to make the European Union an even safer place to save and make long-term investments, and the third is to integrate national capital markets into what would truly be one single market.

In the long run, this should focus more on financing from the banking to the non-banking sector, enable the easier and cheaper financing of sustainable companies that currently don't have access to recover their equity through banks and traditional lending, and the easier transition of the economy to sustainable and environmentally friendly business within a constructive Union-wide plan.

The proposed plan doesn't diminish the importance of national stock markets, but connects them so that through future uniformed and harmonised regulations, investors can find good opportunities for cross-border investment, that large and small investors can more easily invest and that tax treatment of such investments is equalised throughout the EU.

In addition to strengthening new investments, the plan also includes financial literacy of the aging European population as well as the growth of their investments for pensions.

The plan defines the intention to alleviate the tax burden in cross-border investments, standardises bankruptcy proceedings between EU member states in order to protect all types of investments, unambiguously defines the concept of shareholders across the EU to harmonise rules governing the relationship between investors, intermediaries and issuers, and foresees all barriers to the use of new digital technologies in all capital markets being removed in the long run.

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As Tomislav Pili/Poslovni Dnevnik writes on the 27th of September, 2020, the European economy, and thus the enfeebled Croatian economy, can expect another recessionary blow at the end of the year, and how much space the government will have for additional measures to support the economy amid the ongoing crisis depends on the decision to enter the Eurozone, Croatian economists estimate.

After the Eurozone economy sank by 11.8 percent in the second quarter, economic analysts and Croatian economists initially forecasted a far better situation in the second half of the year given the significant easing of coronavirus control measures in most countries.

However, the resurgence of epidemiological measures due to the jump in the number of patients in the UK, France and Spain has prompted foreign economists to revise forecasts for the fourth quarter. As of September the 22nd, Europe has 2.9 million people infected, and in Spain and France there are more than 10,000 patients a day, according to data from the European Centre for Disease Prevention and Control.

"The probability of a double decline, ie another contraction in the fourth quarter, has increased significantly," Carsten Brzeski, chief economist at ING, told CNBC. The fact that the situation is deteriorating was signaled by the data published on Wednesday on the value of the IHS Markita purchasing manager index for September, which, with 50.1 points, suggests that the European economy has practically stalled.

Economist Zeljko Lovrincevic thinks that the recovery, if it continues, will be slower than expected. "It's hard to say how much slower it will be. However, it's likely that the result for the third quarter will be better than the fourth ", he believes. The most difficult situation is expected in Spain and France, while the British economy, in addition to their poor epidemiological picture, will additionally be burdened by the multitude of issues surrounding Brexit.

"I expect the least problems in the Scandinavian countries. As for Germany as the engine of the European economy, the most important thing for the economy there is the recovery in China and the outcome of the US presidential election,'' points out the analyst of the Economic Institute. He believes that the Croatian economy will share the same fate of the rest of the Mediterranean, which will fare worse than the EU average.

"How much additional fiscal space Croatia has to mitigate the effects of the crisis depends on when it wants to introduce the euro. If the goal is rapid introduction, as early as 2023, then there's no fiscal space. If this isn't a set point in time, in that case, the government will give up one of the anchors of its economic policy,'' claims Lovrincevic.

Alen Kovac, the director of the Erste Economic Research Office, pointed out that it has been certain for some time that the so-called scenario V recovery won't come to pass.

"Although the decline in most EU countries this year will be somewhat shallower than expected immediately after the crisis broke out, it's becoming increasingly clear that a full recovery will take at least another two years. Our expectations are that the Eurozone will record a decline of 7.6 percent this year, which should be followed by a recovery of 5.4 percent next year. Expectations for the domestic economy are only slightly worse, mainly as a result of greater dependence on the disadvantaged tourism sector. Thus, we expect a fall in GDP around the level of 9 percent and a recovery of just over 5 percent in 2021,'' said Kovac.

He added that the arrival of colder months could worsen the epidemiological picture, but the closures we've witnessed in the spring months don't seem likely, with a relatively strong consensus on this within the entire EU.

Hrvoje Japuncic, a financial and business advisor, doesn't doubt the possibility of an economic slowdown for the enfeebled Croatian economy at the end of the year, but he believes that positive news about the results of clinical trials of several vaccine candidates will be published in October or November.

"It will bring about psychological relief to households, banks and companies. Therefore, in the first quarter of next year, I expect the growth of the European economy to accelerate,'' emphasised Japuncic.

Optimism still hasn't left the government with Prime Minister Andrej Plenkovic at its helm, judging by the guidelines for drafting the state budget adopted at yesterday's session. They project a decline for the Croatian economy for this year of eight percent and growth in 2021 by five percent.

At the beginning of the Government session, Prime Minister Andrej Plenkovic assessed the projected decline in GDP in 2020 of 8 percent as "good", which is less than the previously projected 9.4 percent. Interlocutors note that in the second wave of the pandemic, the services sector will be hit hardest, due to its characteristic of direct contact with consumers.

"The kind of separation we're witnessing suggests that most of the state's fiscal support in the period ahead will be directed precisely towards the services sector, with the aim of preserving jobs. In that context, we don't expect significant turbulence, but the epidemiological picture will certainly affect the chances that the decline will be slightly higher or lower than the aforementioned nine percent,'' said Alen Kovac.

Hrvoje Japuncic stated that the third quarter is the most important in the Croatian economy due to the results of the tourist season, and in October and November there is usually a slowdown in economic activities anyway.

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As Novac writes on the 25th of September, 2020, in addition to Croatian economic recovery, the withdrawal of money from European Union funds, including the new New Generation instrument, will have a decisive impact on budget movements, not only next year, but throughout the projected period until 2023. Will EU cash be the saviour in this crisis situation? Probably.

The total budget revenues, as stated in the guidelines for drafting the budget presented by the Minister of Finance Zdravko Maric, will amount to 147.1 billion kuna next year, which is 25 billion kuna more than this year. Compared to back in 2019, they increased by seven billion kuna. Revenues from aid are growing the most, and they're mostly related to EU cash: they will amount to 25.1 billion kuna, 7 billion kuna more than this year, and compared to 2019, they will increase by as much as 10.3 billion kuna. Of the other revenues, the level from last year, also known as the pre-crisis year, should almost reach the revenues from the VAT, with a growth of 23.9 percent and will amount to 54.1 billion kuna, only 700 million kuna less than last year.

Mainly due to the increased withdrawal of money from EU funds and the availability of that EU cash, the Croatian Government will be able to afford an increase in expenditures of 10.4 billion kuna (7.1 percent), so it will amount to a total of 157.6 billion kuna. Expenditures for material things will grow the most, by 16.6 percent or 2.3 billion kuna, and most of this increase will be financed from EU cash. For these needs, 9.1 billion kuna will be withdrawn, 1.8 billion kuna more than this year, and it will be used for "repairing the damage caused by the Zagreb earthquake and on material expenditures in state-owned health care institutions", as well as on other projects and activities within the Competitiveness and Cohesion Operational Programme.

Another important expense for the state budget is the compensation of revenues to local units due to the reduction of income tax. The government has earmarked 2.2 billion kuna for this purpose. A total of 33.6 billion kuna will be spent on budget aid next year, which is 6.5 billion kuna more than this year. In addition to assistance to local units, this increase includes additional allocations for contributions to the EU budget, then equalisation funds for decentralised county functions, as well as expenditures for employees, and it will increase by 377.7 million kuna when compared to 2020.

When it comes to staff expenditures, the government is clearly counting on successful negotiations with the unions. These expenditures are planned in the amount of 23.6 billion kuna, which is 1.3 billion kuna more than this year.

Expenditures for pensions, as a result of regular adjustment, will increase by 1.2 billion kuna, and social assistance funds will increase by 407.5 million kuna.

Having in mind the experience from the past few years, which shows that the withdrawal of EU cash is significantly less than planned in the end, the question arises as to how realistic it is to expect that the government will manage to achieve these rather ambitious announcements in 2021. Danijel Nestic from the Institute of Economics says that there is indeed a systemic problem in budget planning and that revenues from European Union funds are constantly overestimated.

''As these revenues are lower than planned in the end, the expenditures for which they're planned are also reduced. This doesn't affect the increase of the deficit, which is certainly very important for the Ministry of Finance, but the fact is that better planning is necessary in case of withdrawal of EU cash,'' explained Nestic, adding that he isn't ruling out the possibility that the planning for such things has been improved.

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As Poslovni Dnevnik/Suzana Varosanec writes on the 23rd of September, 2020, the domestic economy achieved great results in 2019 - growth in income, profits, investments, employees, wages, all these are indicators of its strength until the outbreak of the current coronavirus pandemic, which creates pressure and additional challenges to overcome this truly unprecedented crisis.

Expectations for next year speak of growth for the domestic economy, but it won't be enough to compensate for this year's concerning decline. The crisis is, in addition to its devastation, perhaps a much needed chance to reform the domestic economy. This is part of the message of the Minister of Finance Zdravko Maric at a recent award ceremony of the 12th Golden Balance organised by Fina and under the auspices of the Government, in which he discussed the Government's assistance measures, including support for preserving jobs.

The Golden Balance - the award of the Financial Agency (Fina) to the most successful enterprises operating in a particular industry, according to indicators of profitability, liquidity, indebtedness, activity and economy, was awarded for the first time recently by digital video streaming on Fina's website.

The overall winner was the Importanne Resort from Dubrovnik, a company owned by Zagreb's Importanne, ie entrepreneur Ciril Zovko, who, in addition to two shopping centres in Zagreb, also owns five Dubrovnik hotels - Ariston, Royal Princess, Royal Palm, Neptun and Royal Blue. The Dubrovnik company, with 136 million kuna in total revenue last year, 42.7 million kuna in net profit and 182 employees is the winner of the Golden Balance for the most successful enterprise according to the financial rating in 2019, as well as the Golden Balance for the most successful company in 2019 in the field of accommodation and the provision of services.

At the end of 2019, the company had zero kuna in financial liabilities to banks, while it has a high level of equity and has remained financially stable in the long run, even under the influence of the crisis caused by the coronavirus pandemic. Last year, they completed a three-year investment cycle worth 70 million kuna in the new Royal Blue five-star hotel, and plans for new investments are estimated to stand at around 124 million kuna.

Rijeka's Ugor was the most successful company in 2019 in the field of agriculture, forestry and fishing with 15.6 million kuna in total revenue, 2.9 million kuna in net profit and 43 employees.

In the field of mining and quarrying, the laureate is the company Radlovac from Orahovica, which earned 71 million kuna and had a net profit of 11.5 million kuna last year. It boasted 79 employees.

The Karlovac-based HS Produkt, the overall winner in 2018, was the most successful in the manufacturing industry last year: it had 377.9 million kuna in total revenue, 77.8 million kuna in profit and 1,377 employees.

Hep Proizvodnja, the most successful company in 2019 in the activity of electricity, gas, steam and air conditioning supply, earned 4.2 billion kuna in total revenue, 457 million kuna in profit and boasted 1,961 employees.

Rijeka's Jadranska vrata, the most successful company in 2019 in the activity of transport and storage, earned 143 million kuna, and with 181 employees they made a profit of 35.8 million kuna.

H&M Hennes & Mauritz from Zagreb are the most successful company in 2019 in the activity of wholesale and retail trade; the repair of motor vehicles and motorcycles, with 511 million kuna in revenue, 35.8 million kuna in profit and 181 employees. Iver from Cepin, as the most successful company in 2019 in the construction division, earned 38 million kuna in revenue, 27.7 million kuna in profit and had 343 employees.

Spectra - Media from Zagreb - the most successful company in 2019 in the field of water supply; wastewater disposal, waste management and environmental remediation activities, earned 75 million kuna, and had a profit of 26.3 million kuna and 201 employees.

Microsoft Croatia, as the most successful company last year in the information and communication business, earned 145 million kuna, had a net deduction of 21.2 and 45 employees. Zagrebinspekt, as the most successful company in 2019 in the field of professional, scientific and technical activities, had 21 million kuna in revenue, 4.2 million kuna in net profit and 75 employees.

The awards were given to 4 new categories: for the most successful long-term enterprise in 2019 (the winner being Atlantic Grupa/Group), for the largest enterprise in total revenue (INA), the most successful bank in 2019 (PBZ) and in the category of the most successful new entrepreneur in 2019, the Karlovac-based MV Reconnect took the title.

The domestic economy, much like the global one, has been shaken considerably by the ongoing coronavirus pandemic, and while the above results showcase the success of the companies operating in Croatia outside of tourism, the impact the crisis has had on Croatia's most important economic branch might mean it is finally time to rethink the domestic economy and everything it is based on.

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As Poslovni Dnevnik writes on the 18th of September, 2020, at its recent session, the Croatian Employment Service's Governing Board made a decision on changes and amendments to the conditions and manner of using funds for the implementation of active employment policy measures in 2020. Applications for Croatian job preservation grants for September have begun and will run until October the 15th, 2020.

Applications for Croatian job preservation grants for economic activities affected by the coronavirus pandemic and those for micro-enterprises will continue in the period from September to December this year, the statement said.

Croatian job preservation grants for those affected by the ongoing coronavirus pandemic includes all of the same economic activities which were listed before, such as passenger transport, accommodation, food and beverage preparation, the event industry, etc., which will continue to be allowed to use of the support up to 4,000 kuna per worker if they can prove a drop in income of at least 60 percent.

As for support for micro-enterprises, these Croatian job preservation grants continue to include the amount of up to 2,000 per worker kuna for employers who employ up to 10 workers, provided that their income has fallen by at least 50 percent.

The Croatian job preservation grants can also be used by those facilities which are closed due to the measures implemented by the National Civil Protection Headquarters.

The CES emphasised that all employers, regardless of their activity, who cannot operate or whose work is restricted in any way, will be able to use these measures in accordance with the decisions of the National Civil Protection Headquarters, provided that those who have had their work restricted owing to a decision made by the headquarters (such as reduced working hours, a reduced number of visitors, etc.) if necessary, they'll have to prove that they are having difficulties in doing business (such as proving a recorded drop in revenue by 60 and 50 percent, respectively).

Last week, Prime Minister Andrej Plenkovic announced that the CES would make decisions on the continuation of measures to help the economy due to the coronavirus crisis, meaning that the measure of co-financing part-time work of a maximum of 2,000 kuna per worker will continue until December. The measure for micro-enterprises, which also amounts to 2,000 per worker kuna will also continue if the enterprise had a drop in turnover of more than 50 percent. This measure applies to all sectors of the economy and includes the write-off of all related contributions.

For activities that are particularly vulnerable, the support of 4,000 kuna per worker will also continue until December the 31st this year, with Plenkovic listing the sectors of passenger transport, catering and hospitality, tour operators and enterprises working in the field of recreation, cultural, business and sporting events, and in the event that they had a drop in turnover of more than 60 per cent. These Croatian job preservation grants also include the write-off of all contributions.

According to Plenkovic, all of these Croatian job preservation grants and similar measures will cost around 800 million kuna by the end of the year and will be financed from the state budget, but part of the funds will be compensated from European Union (EU) funds.

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