January the 18th, 2021 - The Croatian Government has taken steps to determine the largest amount of state aid which can be paid out to individual companies located/headquartered in the earthquake-stricken areas of central Croatia, more specifically Sisak-Moslavina County.

As Poslovni Dnevnik/Marija Brnic writes, with two decisions, the Croatian Government recently took the first steps towards the preparation of a long-term reconstruction of the earthquake-affected areas of Sisak-Moslavina County. At the suggestion of the Minister of Physical Planning, Construction and State Property, Darko Horvat, the renovation of buildings in these areas will be included in the law on reconstruction of Zagreb. As for the second part, which regards the re-design, preservation and restoration of economic life, which should go hand in hand with reconstruction of properties, will be in the hands of a special working group which will develop programmes for the social and economic revitalisation of the quake-affected areas.

The aforementioned working group is headed by Minister of Regional Development and EU Funds, Natasa Tramisak, and the Minister of Economy and Sustainable Development, Tomislav Coric. This government team will work to unite all competent departments from the Croatian Government, as well as all other actors, including the likes of the Croatian Employers' Association.

Minister Coric believes that the documentation that the working group will produce will provide a vision for the continued development of the area, which is necessary after the first measures that seek to lend a hand to those business owners who have suffered the most damage behgin. The priority of all of the measures, he says, will be to create a basis for people to stay in the affected area. Since the working group is yet to be formed, it is only known that the revitalisation programme will determine specific measures and projects, as well as who will be responsible for their implementation, and who will determine the method of financing all of the reconstruction measures.

The deadline for drafting this comprehensive reconstruction concept isn't actually stated in the Croatian Government's decision, but it is obvious that it will take months for this work to be carried out. For now, the Ministry of Economy is coming out with two "fire-fighting" instruments that it can provide first-hand to affected entities, especially small ones, to cover the most necessary costs of repairing the damage and to continue operating.

The first measure with the implementation of which his Ministry will start in ten days is the publication of a call for the allocation of ten million kuna. These are grants that were provided, as confirmed by the Ministry, with a recent aid package for the affected area through the Environmental Protection Fund. It isn't really a large fund that would cover all of the needs of business owners who suffered damage, and Minister Coric estimates that this could cover the most necessary costs of repairing machinery and business premises as well as other necessary expenses of small business owners from Glina, Petrinja and Sisak.

According to him, several hundred such business owners can count on this assistance from the available fund, and the largest individual amount of assistance will be 30,000 kuna. The significant package of 1.5 billion kuna of non-refundable aid intended for the increase of production capacities, procurement of equipment and digitalisation has been being prepared for months and isn't actually directly related to the rehabilitation of earthquake-affected areas. However, Minister Coric has since announced that business owners from the Banovina area will be able to count on a kind of advantage, since they come from an area with ​​a lower development index, which will be "especially valued".

The conditions that interested business owners from the quake-stricken area need to meet and the programmes they can apply for, and the criteria for that programme that will be implemented through Hamag-Bicro, are all still being adjusted. The maximum amount that business owners, micro, small and medium, will be able to withdraw from this grant scheme under the project isn't yet known, but the assumption is that, judging by previous similar programmes, the range could be from 1 million to 15 million kuna.

According to the latest data, 750 craft (obrt) owners and 850 other companies have reported earthquake damage so far, and from yesterday's statements of the competent ministers, it is evident that it is still not possible to get to a definitive figure and add up the total damage caused by the devastating earthquake.

Therefore, the measures that will be comprehensive are yet to come to the table, and the ministers say that Sisak-Moslavina County has an important place. In the next phase, the preparation of a special tax model for the Banovina region has been announced, in order to encourage the maintenance and development of the economy in the area. The Croatian Government expects the maximum engagement of local companies, and the Minister of Economy has stated that when it comes to investments, "the readiness of a number of countries on a bilateral basis related to the recovery and reconstruction of infrastructure" in the affected area is present.

For more on the Petrinja earthquake, follow our dedicated section.

January the 7th, 2021 - The Croatian Government has a lot on its plate, but one pressing question comes from the owners of catering and hospitality establishments who have suffered enormous losses until now. Their one single question is: When can we start working again?

As Poslovni Dnevnik wrires, although the current epidemiological measures which were adopted at the end of last year will cease in a few days, when it comes to precisely what will happen next, no one knows.

''In any case, the Croatian Government must adopt quality economic measures as soon as possible, because the problems we've been talking about for months haven't just disappeared,'' writes the Association of Entrepreneurs.

''Recently, the Voice of the Entrepreneurs (Glas Poduzetnika) Association sent a letter to the Croatian Government and the National Civil Protection Headquarters, in which we asked them to inform business owners about further economic and epidemiological measures as soon as possible. Namely, it was announced that the measures will last until January the 8th, 2021, of which we're not far away from. Business owners and artisans who had to close their doors now don't know when they'll be able to continue doing business at all.

There is no information on whether such people will be able to continue working or whether the restrictive measures will be extended. We consider that to be inadmissible.

We believe that the Croatian Government and the National Civil Protection Headquarters should inform business owners and craftsmen about further steps as soon as possible. Uncertainty has been going on for more than nine months for many and the situation is getting worse. Moreover, we still don't have an answer to the question about compensation for activities that are prevented from operating due to the measures. Business owners are interested in whether the Croatian Government will compensate them for the huge losses incurred due to business restrictions? Furthermore, many activities that aren't formally closed, such as passenger transport and travel agencies, are failing. Unfortunately, more and more people end up at the Croatian Employment Service, and we currently have 160,000 unemployed people. We believe that this trend will continue if quality economic measures aren't adopted soon.

We're fully aware of the new crisis we're experiencing, and we've transferred our available resources to help Sisak-Moslavina County, but the problems caused by the coronavirus crisis that brought tens of thousands of companies to their knees haven't simply disappeared. As a reminder, job preservation grants aren't an aid measure for business owners. In addition, this measure won't save the business of companies nor will it enable the recovery of the economy.

Many UGP committees sent out letters proposing measures that would allow companies and crafts to survive, however, they never received any responses. Business owners are being left to fend for themselves again, without any information on when they'll be able to resume work. We appeal to the Croatian Government to make decisions on the measures as soon as possible and to inform those affected about this.

Business owners showed care and solidarity in the period following the earthquake in Petrinja, and by working out in the field and donating goods and money, they came to the aid of the victims, but soon they will have to start thinking about their own survival again,'' reads the letter from the aforementioned association.

"We hope that the Croatian Government has an agenda and that in the next few months it will make sure that business owners and entrepreneurship don't enter even more troubled waters, and that the proper conditions for survival in this situation are provided. Legal changes, write-offs of taxes and contributions for the affected areas and the abolition of VAT payments for donated goods are necessary. Instead, the Croatian Government is proposing new commitments and various unnecessary Regulations on monitoring and reporting on the effects of the coronavirus pandemic and measures to help the economy. In that way, it's merely createing yet more new and unnecessary paperwork, while the number of failing companies and the number of unemployed people is growing unstoppably day by day,'' said Drazen Orescanin, the executive director of the association.

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ZAGREB, 4 January, 2021 - The Croatian government on Monday decided to declare 5 January a day of mourning for eight young people who died of asphyxia on New Year's Eve in Posusje, southern Bosnia and Herzegovina.

Four young men and women aged between 18 and 20 presumably died as a result of asphyxiation in Tribistovo, not far from Posusje in the night between 31 December and 1 January.

Unofficial sources have said that their death was most probably due to asphyxiation caused by a gas-powered generator unit that supplied electricity to the house where they were staying.

Prime Minister Andrej Plenkovic said today that observing a day of mourning for those young victims was a sign of solidarity. He added that the decision on the day of mourning was supported by President Zoran Milanovic and Parliament Speaker Gordan Jandrokovic.

Croatia's top officials earlier sent condolences to the families of the victims and the local authorities.

ZAGREB, Dec 14, 2020 -The government on Monday approved state aid for the national flag carrier, Croatia Airlines amounting to HRK 600 million, HRK 350 million of which refers to investing fresh capital in the company and HRK 250 million as an equity loan.

The decision was made in line with the European Commission's temporary framework allowing member states to provide additional support to the business sector due to the COVID-19 pandemic. Thus, CA has been given support in an effort to resolve the its liquidity problems and to boost its capital.

Transport and Infrastructure Minister Oleg Butkovic said that the pandemic has had and still has a destructive impact on the global airline industry which is faced with the most difficult crisis ever.

Croatia Airlines is not an exception, said Butkovic, explaining that other airlines have recorded a decrease in traffic of 65% to 90% compared to 2019.

The national flag carrier has a strategic role in Croatia's transport infrastructure which was evident in these times of crisis.

The government's decision resolves the company's urgent problems, adding that money for this was ensured in this year's budget revision.

Finance Minister Zdravko Maric said that this model of injecting fresh capital and providing an equity loan will financially stabilise the CA airline.

The government authorised Minister Butkovic to increase the airline's stock capital at a meeting of the shareholders' general assembly.

An extraordinary general assembly was convened today for shareholders to decide on increasing the company's stock capital by HRK 350 million by issuing shares and that the state would participate in that. That would increase the airline's equity from HRK 277.88 million to HRK 627.88 million by releasing 35 million new ordinary shares at a nominal price of HRK 10.

The equity loan of HRK 250 million should stabilise the airline's business operations and prevent negative consequences to the population and economy, which will be felt directly by the airline and tourism sectors and indirectly by other economic branches, the government said.

(€1 = HRK 7.542016

ZAGREB December 2, 2020 – Croatia is a completely safe country, according to the latest figures from the Global Terrorism Index

According to the Global Terrorism Index, Croatia is a completely safe country. Their findings are reported annually by the Institute for Economy and Peace. In their most recent report (published late November 2020), from the year beginning 2018 and ending in 2019, Croatia scored an index rating of 0.0 on the impact of terrorism. This means that, in regards to the threat of and the fallout from terrorism, Croatia is a completely safe country.

In the report, terrorism affects most the citizens of three countries: Afghanistan, Iraq and Nigeria. Terrorist groups are powerful and active in these three nations. On a daily basis, they affect and change the lives of all the people who live in these countries, particularly those who inhabit larger population centres.

The situation is particularly tragic in Afghanistan (with an index rating of 9.5). 41% of all fatal victims of terrorist globally live in that one country alone. The second country most-affected on the list is Nigeria with 9%. Afghanistan and Nigeria were the only two countries which each suffered more than 1,000 deaths from terrorism.

A map showing the impact of terrorism globally. The figures were compiled in a one year period between 2018 and 2019, published as an annual report in late November 2020 © Institute for Economy and Peace (IEP)

Globally deaths from terrorism fell for the fifth consecutive year in 2019 to 13,826, a 15 per cent decrease from the prior year. The peak of deaths from terrorism occurred in 2014 and this coincides with the high point of influence of the Islamic State of Iraq and the Levant (ISIS or ISIL). The figures from 2019 show a decrease of 59% since then.

A total of 63 countries recorded at least one death from terrorism in the most recent report. Although dismal reading, this is in fact the lowest number of countries to have reported such since 2013.

The global economic impact of terrorism was US$16.4 billion in the twelve-month period covered by the report, a decrease of 25 per cent from the previous year. However, the true economic impact of terrorism is much higher as these figures do not account for the indirect impact on business, investment, and the costs associated with security agencies in countering terrorism.

ISIS (or ISIL)'s centre of activity has been shown to have moved to sub-Saharan Africa in the period. Total deaths by ISIL in the region have increased by 67%. ISIL and their affiliates were also responsible for attacks in 27 countries in the year period ending 2019.

© Institute for Economy and Peace (IEP)

The GTI uses a number of factors to calculate its score, including the number of incidences, fatalities, injuries and property damage. The Taliban remained the world's deadliest terrorist group in 2019; however, terrorist deaths attributed to the group declined by 18%. ISIL's strength and influence also continued to decline. For the first time since the group became active, it was responsible for less than a thousand deaths throughout the year.

It is not yet known whether the attack on government buildings in Zagreb in 2020 will affect Croatia's rating on the index published next year. Although a lone endeavour, Croatian Prime Minister Andrej Plenković is the most high-profile commentator (of many) to have said the attack had elements of terrorism. The global increase in threat from domestic attacks is clearly evident within the rest of the most recent report.

In North America, Western Europe and Oceania, terrorist attacks by groups or individuals involved in far-right politics have increased by 250 per cent since 2014. They are now higher than at any time in the last 50 years. There were 89 deaths attributed to far-right terrorists in 2019. In the USA, white supremacists and other rightwing extremists have been responsible for 67% of domestic terror attacks and plots so far this year.

Saint Mark's Square in Zagreb, scene of a shooting in 2020, perpetrated by a Croatian citizen © Marc Rowlands

There have so far not been any terrorist actions attributable to fundamentalist Islamic groups in Croatia, unlike other European countries such as Spain, Germany, France and the UK. Eastern and southern Europe have experienced more civil unrest in direct correlation with the rise of far-right politics in the region. The popularity of far-right politics has risen ever since the 2008 financial crisis and has continued through the economic recession which followed.

Such trends are expected to continue because of the anticipated and extended economic downturn caused by COVID-19, which is likely to increase political instability and violence. Since COVID-19 was declared a global pandemic by the World Health Organization (WHO) in March 2020, preliminary data suggests a decline in both incidents and deaths from terrorism in most regions in the world. However, it is expected that the pandemic is likely to present new and distinct counter-terrorism challenges.

Of Croatia's neighbours, Bosnia and Herzegovina recorded the largest improvement in the whole of Europe with their 2019 index rating (followed by Austria and Sweden). Only two terrorist attacks were recorded in the country in 2019, compared to six the previous year. Slovenia also scored a 0.0 rating, meaning it can say that it, like Croatia is a completely safe country.

November 30, 2020 - At today's government session, which Prime Minister Andrej Plenkovic led from home in self-isolation, the fines for violating measures in Croatia were announced. They have yet to be confirmed by parliament.

Index.hr reports that Minister Beros read the proposal of new fines. Thus, a natural person can be fined HRK 500 for non-compliance with the prescribed measures, i.e. the obligation to properly wear a face mask or medical mask.

A fine of HRK 5,000 to 10,000 is prescribed for the owner of private property if they organize or allow a private gathering against the provisions of the law.

Bozinovic also announced new measures at the borders, and Maric, Aladrovic, and Coric presented new measures to help entrepreneurs.

In the beginning, Plenkovic expressed regret over the incident in Vukovar.

"As for the pandemic, the numbers are still high today. Unfortunately, 74 people have died, the most so far, due to the high numbers in recent weeks. We are still in a very serious phase of the epidemic, I call everyone to be responsible, so we have taken restrictive measures," he said.

He then said he would discuss amending the Infectious Diseases Protection Act so that fines for individuals could be defined.

"We have based our fight against coronavirus on trust between citizens and the state. We are convinced that most fellow citizens understand the circumstances, but we also think that such a tool is necessary given that certain irresponsible individuals endanger the health of others. That is why we will propose changes to the law to the parliament," said Plenkovic, who chaired the government session via a video link from self-isolation.

Furthermore, Plenkovic revealed details of new measures for entrepreneurs.

"The new package of measures to help the part of the economy whose activities have been suspended because of COVID-19 will amount to HRK 2.1 billion, and will include subsidies for salaries, fixed costs and COVID loans," said Plenkovic.

These measures, he said, are in line with the policy of preserving jobs in the private sector. He claimed that the government has so far preserved 630,000 jobs and helped 107,000 companies, paying a total of HRK 7.4 billion.

He announced the continuation of support of HRK 4,000 for workers' salaries during the suspension of operations, with the exemption from paying contributions. This is a total net amount of HRK 320 million, and when the contributions are added up, it is HRK 470 million.

The government will also cover part or all of the fixed costs during the suspension of the sectors affected by the measures, if their turnover in December falls by at least 60 percent compared to last December. According to government estimates, the measure should cost HRK 250 million. In addition, he added, in cooperation with HAMAG-BICRO, a new package of COVID loans was prepared in the total amount of HRK 1.3 billion.

"We base our support for the private sector on these three points, i.e., those affected by the anti-epidemic measures currently in force. All in all, the package will amount to HRK 2.1 billion," Plenkovic said.

"In this way, the government meets the needs of the economy, entrepreneurs and employees and strives, as before, to help citizens, the economy and entrepreneurs in the very specific year of 2020," he added.

Minister Beros read the statistics on the number infected.

"The Ministry of Health called on the Headquarters to submit amended plans for the care of people suffering from COVID-19, as well as a notification on additional care," Beros said.

“Everything we do will not yield results if the personal responsibility of each individual remains,” he said, adding that the HQ’s measures are there for a reason.

Bozinovic reiterated the latest measures taken this weekend.

"As far as supervision is concerned, inspectors and the police have made over 4,000 inspections, they have issued 605 warnings. Forty-four misdemeanor orders have been or will be submitted," Bozinovic read.

"A new decision has been made on border crossings, and it is tied to European regions. Passengers coming from EU green areas do not need a PCR test or any other condition to enter Croatia. All others need a negative PCR test that is not older than 48 hours or are tested on arrival in Croatia and in self-isolation to await the test result.

But at the moment, the only green region in the EU is the island of Fasta in Finland," Bozinovic said.

“As for third-country nationals, they can cross the border with a negative PCR test,” he said. "EU citizens coming from third countries can enter Croatia with a negative PCR test," Bozinovic added.

Entry without a negative PCR test for EU citizens is allowed, for example, for seafarers and workers in the transport sector, transport providers, diplomats, staff of international organizations, persons traveling for urgent reasons, passengers in transit with the obligation to leave the country within 12 hours and patients traveling for necessary health reasons.

Border health workers, pupils, students and interns who travel every day do not have to have a negative PCR test, provided that they do not stay inside or outside Croatia for more than 12 hours.

Beros continued on fines for violating the measures.

"The bill prescribes a new security measure of the obligation to wear a face mask or medical mask properly, a ban or restriction on holding public events and gatherings, and a ban or restriction on holding private gatherings," Beros said at the government session.

The amendment to the law points out that according to the current course of COVID-19, the need to properly wear face masks or medical masks so as to cover the mouth and nose is unequivocally indicated, which reduces the possible risk of transmission. Proper use of masks is most important when people are indoors and when social distancing is difficult to implement or maintain.

The bill stipulates that the implementation of supervision over the application of safety measures for the protection of the population from infectious diseases is also carried out by police officers, inspectors of state administration bodies responsible for civil protection, inspectors of the State Inspectorate and inspectors of other state administration bodies.

Also, a fine for misdemeanors is prescribed for legal entities in the amount of HRK 10,000 to HRK 40,000 in case of non-compliance with measures prescribed by law, i.e., if they do not respect the ban or restriction on holding public events and gatherings or disrespect the ban or restriction on private gatherings.

A fine of HRK 5,000 to 10,000 is prescribed for misdemeanors of a responsible person in a legal entity, as well as craftspeople and natural persons who perform other independent activities.

For a misdemeanor of a natural person, a fine of HRK 500 is prescribed in case of non-compliance with the prescribed measures, or the obligation to properly wear a face mask or medical mask.

A fine of HRK 5,000 to 10,000 is prescribed for the private property owner if they organize or allow a private gathering against the provisions of the law.

Also, the provision on collecting fines at the place where the misdemeanor was committed is changed in accordance with the provisions of the Misdemeanor Law. Thus, the fine may be collected at the place where the offense was committed by a person authorized to supervise the implementation of safety measures to protect the population from infectious diseases.

To read more about coronavirus in Croatia, follow TCN's dedicated page.

ZAGREB, November 12, 2020 - The Croatian government on Thursday nominated Dr Alemka Markotic as a member of the European Union's future scientific advisory platform on COVID-19.

Markotic is the head of Zagreb's Fran Mihaljevic hospital for infectious diseases, a professor at the School of Medicine in Rijeka and a member of the national COVID-19 crisis management team.

The platform will soon be set up at the proposal of European Commission President Ursula von der Leyen.

The platform will include a group of respectable doctors and researchers from all EU member states whose task will be to ensure a better, faster and coordinated exchange of scientific data and expert opinions as well as practical experience at the EU level.

As Poslovni Dnevnik writes on the 30th of September, 2020, Croatian citizens have made it quite clear that they trust the various EU institutions more than they trust the actual Croatian Government, according to a survey conducted by Eurofound which is based in the Irish city of Dublin. Eurofound is otherwise Europe's leading NGO for labour market and quality of life research, Vecernji list reported.

On a scale of one to ten, Croatian citizens rated their government at a somewhat unimpressive 2.9, while giving the leadership of the European Union a significantly higher (although still not high in itself) score of 4.2. At the beginning of the coronavirus pandemic in Croatia back in April, PM Andrej Plenkovic's team was rated four, but by July that trust had been lost.

The aforementioned Croatian publication reminds us of the fact that in that period, HDZ confirmed its mandate, and Andrej Plenkovic won a significant number of votes. Only those in power in Poland did worse than the Croatian Government in this particular Eurofound survey, with Polish citizens rating their government at just 2.4 on the scale.

Bulgarians, Hungarians, Slovenes, Romanians, Czechs and Belgians are at the back end of the list too, while the Scandinavians, Germans, Irish, Portuguese and Austrians have the greatest confidence in the moves of their respective national authorities according to this Eurofound study.

Confidence in leadership was just one of the topics of a survey of quality of life and the labour market conducted among nearly 90,000 respondents across EU member states.

Young people, women and the unemployed lost the most due to the ongoing coronavirus crisis across all of the European Union's member states. Many countries have invested a significant amount of funds to save employment, but that money has clearly not saved the most vulnerable population, reports Vecernji list.

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As Poslovni Dnevnik/Darko Bicak writes on the 7th of September, 2020, among the countries that have assessed that they don't need to maintain a jet air force are Slovenia, Iceland, Ireland, Luxembourg, Estonia, Lithuania, Latvia and others. But what of the seemingly endless saga surrounding Croatia's fighter jet purchase?

Although only ten days ago it seemed that Croatia had officially given up on the fighter jet purchase, it has become a top political and media topic over recent days yet again. Namely, after the failure of the deal to procure the somewhat infamous F-16 Barak from Israel earlier this year, the plan was to select the best bidder in May, and then sign a contract with the best bidder until the planned parliamentary elections in late autumn, at least in theory. However, the coronavirus crisis and the consequent economic issues which are still developing initially extinguished such plans, and in April, due to the intervention budget revision, the Government announced that it was giving up on continuing the VBA procurement process ''for now''.

The situation with the fighter jet purchase and the saga which goes with it hasn't disappeared entirely, especially not after former and current Prime Minister Andrej Plenkovic took an unexpectedly high victory in the early parliamentary elections. The position of Minister of Defense was taken up by the relatively unknown Mario Banozic, instead of retired General Damir Krsticevic, who went into political isolation. Namely, in his inaugural speech at the end of July, Banozic pointed out that he expects that by the end of the mandate of this government, ie in mid-2024, a decision will be made on the best fighter aircraft bidder.

An agreement has already been signed with neighbouring Hungary, which protects the Croatian skies at night with its Gripen, because Croatia's MiG-21s allegedly cannot fly at night. In the event that Croatia can no longer have this performed, this more or less formal task at the request of NATO, the Hungarians, and perhaps some other allies, primarily the Italians, would take over the daily surveillance of Croatian airspace.

This principle of Allied assistance for air policing, free of charge based on the principle of solidarity, is applied by about 10 smaller, not necessarily poorer, NATO members who have assessed that it is too expensive or unnecessary for them to maintain a jet air force - Slovenia, Iceland, Ireland, Luxembourg, Estonia, Lithuania, Latvia, Albania, Montenegro, and North Macedonia.

In August, news arrived that the National Assembly in France was discussing aid to its military industry Dassault and where, among other things, it was mentioned that France would deliver a number of its used Rafale fighters to Croatia. The news was received globally with astonishment because the French hadn't sold a used Rafale to anyone so far, and the aircraft has been operational since back in 2000. The fact that France is serious about the expansion of its faltering aviation industry was shown last week when, due to the latest Greek-Turkish crisis, an offer came from Paris to deliver 18 Rafales, 10 of them newly produced, as well as eight used ones would come as a donation. Knowing about the pro-European orientation and ambitions of Croatian Prime Minister Plenkovic, to many this option with the French didn't seem like mission impossible at all.

An unimaginable investment

However, last week, the Croatian public was further agitated by the news that an unknown American company had offered Croatia used American F-16s at a "reasonable" price of about 10 million dollars per piece and the possibility of an advanced upgrade, for which they allegedly have all US government approvals.

These are relatively old 1990s Block 20 aircraft that were certainly made for Taiwan, 150 of them, because no one else used the Block 20, but which are supposedly in solid condition and could be upgraded to the Block 50 standard. / 52. The offer provides the possibility of purchasing 12 to 30 aircraft. It isn't entirely clear whether this offer really arrived in such a form, but the fact that things are indeed happening here has been confirmed by the nervous appearance of Minister Banozic, who didn't deny the news but attacked its source, the Obris portal and its owner Igor Tabak, whom he described as " a self-proclaimed military analyst'', among other things.

In addition to the above, Vecernji list failed to get specific information from the US Embassy in Zagreb on the topic of the fighter jet purchase. It is certain that something serious is being prepared in regard to the aircraft and it is possible that sme decisions may have already been made, although they have of course not publicly disclosed. In true Croatian fashion, we have once again come full circle and returned more or less back to the very beginning of the fighter jet purchase saga which seems to just keep getting more and more chapters to it.

Just who will pay for all of it and with what money in a situation like this? Croatia is preparing for a major or minor economic collapse that will mean a 15-20 percent drop in GDP per quarter, tens and maybe hundreds of thousands of laid off workers, a health care system that is bursting at the seams because of the pandemic and debts measured in billions of kuna, not to mention the earthquake which has forced many Zagreb residents to live in demolished or dilapidated apartments waiting for help and reconstruction.

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As Novac/Goran Penic/Marina Klepo writes on the 29th of August, 2020, the worst coronavirus-dominated economic forecasts have unfortunately come true: Croatia's GDP sank 15.1 percent in the second quarter, and among EU countries, according to the data released so far, Croatia recorded the fifth worst result, after Spain, France, Italy and Portugal. The Croatian Government has some tricks up its sleeve.

Historically, Croatia has never seen such a sharp decline in its economy, and CBS data from 1996 shows that the biggest quarterly decline so far was at the beginning of 2009, at the outbreak of the financial crisis, which stood at 8.8 percent. The lockdown to curb the spread of the new coronavirus has resulted in a much worse drop.

Due to the absence of the pre-season, CBS data shows that export of services fell by as much as 67.4 percent. The export of goods, meanwhile, fell 10.4 percent, household consumption fell by 14 percent and investment fell by 14.7 percent. The fact that household consumption was reduced during quarantine doesn't come as a surprise, but investments have sunk more than expected. Of the total investments in the country, as was explained by the Minister of Finance, Zdravko Maric, 52 percent refers to construction, and it recorded a slight plus.

Big challenges lie ahead according to Zdravko Maric...

''We believe that the procurement of equipment led to the fact that total investments fell more than expected. We also had a physical barrier regarding the procurement of equipment due to the pandemic,'' said Maric, saying at the same time that "challenges lie ahead". Of all the components of GDP, the only exception in terms of the drop is government spending, which increased by 0.7 percent.

Goran Saravanja, the director of the Imelum consulting company, pointed out that the worst is over, although the recovery will be long and uncertain, and he expects GDP decline this year to be less than 10 percent "due to a better tourist season than what was expected". But he doesn't expect a more pronounced recovery in terms of personal consumption. Zrinka Zivkovic-Matijevic, an RBA analyst, has more pessimistic expectations, believing that the latest announcement confirms that the fall in GDP will be above 10 percent this year, and growth of only three percent can be expected next year.

If we want to mitigate the economic downturn and prevent significant layoffs, the finance minister said, the government faces major challenges. Although it launched a very generous job preservation package in the spring, there is a real danger that many will find themselves in a thankless situation after the measures expire. When asked what he thinks the government could or should do to prevent the worst-case scenario, Zivkovic-Matijevic singles out "working on strengthening the institutional capacity to withdraw the planned European Union funds'' as something of significance.

The first payments of the agreed 22 billion euros from the EU are expected this autumn, and that money should mitigate the consequences of the coronavirus crisis, accelerate domestic economic growth and make things a bit more sustainable. But to what extent Croatia will be able to offer quality programmes in order to make really good use of the large amount is still something which is yet to be seen.

According to Saravanja, the Croatian Government would mitigate the decline in domestic demand the most if it could accelerate the start of infrastructure projects, ie capital investments that are in a high stage of preparation, especially projects with an EU financial component. He adds that those in charge should absolutely not lose focus on structural reforms.

The third quarter

Croatia's GDP, when viewed over the first turbulent six months of 2020, fell by 7.8 percent, which is actually slightly better than the EU average where the decline stood at 8.3 percent. Owing to the fact that Croatia had a slightly better first quarter, and since Croatia recorded 53 percent of overnight stays in tourism compared to last year until this August, and planned for a massive 70 percent decline, the Government expects that in the third quarter, the predicted decline will be slightly lower, and ultimately at the end of the year - GDP decline will be slightly less than planned.

''Even under the theoretical assumption that by the end of the year we have no more tourists, overnight stays will be at over 40 percent of what was recorded last year, which will reflect GDP trends and a correction of the fall in the third quarter and by the end of the year,'' said the Prime Minister's Adviser for Economic Affairs, Zvonimir Savic. When it comes to further measures to mitigate the consequences of the ongoing coronavirus crisis, the Croatian Government is counting on generous funds from the EU for liquidity of the economy, the preservation of jobs, as well as for reforms and investments.

A few days ago, we received confirmation that we will have one billion euros of soft loans from the SURE programme at our disposal, with which the government will compensate the current cost for co-financing salaries during the lockdown, but also for further measures. According to Savic, the measures will be targeted towards activities that are the most affected by the coronavirus crisis, in the sectors of tourism, catering and transport. This money will then be used to finance the measure of a shortened working week and other things. The tourism sector is demanding that the measures last until the beginning of next season.

The second thing that is planned, according to Savic, is to maintain the liquidity of the real sector through favourable loans from HAMAG BICRO and HBOR for small and medium-sized enterprises.

''The concept of the Covid loan goes further with a grace period, five years of repayment and an interest rate of 0.25 percent. It is estimated that this year alone, we'll have 100 to 200 million euros, and in two years a total of 700 to 800 million euros,'' added Savic.

The most significant funds lie in the mechanism for recovery and resilience of the economy - over 6 billion euros that can be used over the next three years. EU countries must draw up national recovery plans in the next three months, and through this mechanism, all reforms and investments related to strengthening the economy in the pandemic can be financed. These are projects for environmental protection, infrastructure, digitalisation and the reform of public administration, the judiciary, and as has since been found out, Croatia has negotiated that the funds be used for the reconstruction and construction of school buildings after the Zagreb earthquake, and the same is being negotiated for health and cultural facilities.

Wage growth

''These are non-refundable funds with which we can renovate public buildings, and this is then an opportunity for the construction sector, but also for companies that will equip schools and hospitals. We can also justify the costs of distance education,'' said Savic, noting that the programme has been in force since back in February. There is also a tax relief that will come into force next year, and which, through a reduction in income and profit taxes, will bring citizens higher salaries and business owners higher incomes, which should encourage more consumption.

The Croatian Government is also counting on negotiations with the unions about the agreed increase in salaries in the public and state sector. As we have learned, the dynamics of wage growth will be negotiated with regard to the situation. There will be either a delay for a while (for two years, for example) or a slowdown in growth (minor increases) on the table. The government wants a compromise, it doesn't want to cause friction, and it hopes that the unions are on the same wavelength as them in terms of awareness of the velocity of the coronavirus crisis we're all trying to wade through together.

It wants to speed up investments as well. At the moment, over 20 billion kuna are involved in various projects financed from the EU, and state-owned companies are expected to invest more.

Urgent moves by the Croatian Government to get out of the coronavirus crisis are as follows:

1. A shortened working week

The government will help activities in tourism, catering and hospitality and transport with co-financing of 2000 kuna per worker for a shortened working week. The criteria and duration of this measure are still being agreed on.

2. Favourable loans for business owners

HAMAG BICRO and HBOR will continue to provide loans with interest rates of 0.25 percent to maintain the company's liquidity.

3. The construction of schools and hospitals in Zagreb

Croatia has 6 billion euros of grants at its disposal that can be used for various projects which involve environmental protection, infrastructure, digitalisation and the reform of public administration, the judiciary and so on. The funds will be used for the reconstruction and equipping of schools, as well as health and cultural facilities after the Zagreb earthquake, which will boost the construction sector.

4. Tax relief

A new tax reform will take effect on January the 1st, 2021, reducing income tax rates from 24 to 20 percent and from 36 to 30 percent, as well as income tax from 12 to 10 percent for small and medium-sized enterprises. Salaries should thus increase by 100 to 800 kuna. The Croatian Government once again wants to encourage consumption.

5. Negotiations with trade unions on the increase of salaries

The Croatian Government wants a compromise to either freeze the agreed wage increase until GDP starts to rise, or to make the increases smaller than agreed.

6. Investments

It wants to accelerate investments financed from EU funds, as well as payments from the EU budget, and encourage state-owned companies to have more investments.

For more on the Croatian Government's moves during the coronavirus pandemic, follow our politics section.

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