August 28, 2020 - On Thursday, the government accepted and sent to the parliamentary procedure amendments to the Law on Identity Cards and the Law on Foreigners, which should also regulate the temporary stay of digital nomads.

Novi List reports that according to the draft proposal for amendments to the Identity Card Act, which will be applied from August next year, in accordance with the European Parliament regulation on strengthening the security of Union citizens, the new identity cards will contain biometric identifiers in the form of faces and two fingerprints in interoperable digital formats.

Deputy Prime Minister and Minister of the Interior Davor Bozinovic reported that the age limit for issuing permanent identity cards has also been changed. It has been raised from the age of 65 to 70, while the identity card for citizens from the age of 70 will be issued with a validity period of five years.

Amendments to the law also prescribe the obligation to withdraw from the use of identity cards issued without a validity period that do not meet the minimum security standards. In addition, the new ID card will contain a two-letter Croatian mark printed on the front in a blue rectangle surrounded by 12 yellow stars.

"Apart from the amendments made to harmonize with the Regulation, the proposed amendments to the law would enable the use of electronic ID cards on mobile devices, and not only on personal computers as before. Citizens are given the opportunity to access electronic services and validly electronically sign documents using mobile phones or tablets. Citizens will not pay extra for the use of the appropriate software solution for mobile devices," specified Bozinovic.

The Minister added that these amendments stipulate the obligation for persons who have reached the age of 16 and who have been allowed by a court in a non-contentious procedure to marry in accordance with the provisions of the Family Law and have entered into marriage, to obtain an identity card if they reside in Croatia.

On Thursday, Bozinovic also presented a proposal for the Law on Foreigners, which stipulates that the Government no longer makes a decision on determining the annual quota of permits for employment of foreigners, but employers are already obliged to request the Croatian Employment Service to conduct a labor market test before applying for a residence and work permit for foreigners.

"If it is determined that there are no unemployed persons in the Republic of Croatia who meet the requirements of employers, employers should submit a request for a residence and work permit to the Ministry of Interior, which will ex officio ask the Croatian Employment Service for an opinion on the employment of a foreigner with a Croatian employer. The procedure for issuing residence and work permits, including the implementation of the labor market test, can take a maximum of 30 days," explained Bozinovic.

The Minister added that the bill prescribes exceptions to the implementation of the labor market test related to occupations such as carpenters, masons, waiters, butchers, and in the case of seasonal work up to 90 days in agriculture, forestry, catering, and tourism.

In order for the Government not to be obliged to re-issue the Decision on determining the annual quota of permits for the employment of foreigners, it is prescribed that the Law on Foreigners enters into force on 1 January 2021.

According to the proposal of the new law, a new institute of long-term visa is introduced, the so-called D visa, in case a third-country national is granted temporary residence due to work, family reunification, study, research, and secondary education.

Furthermore, the novelty is the prescribing and more favorable regulation of temporary and permanent residence for members of the Croatian people with foreign citizenship or statelessness, who have a certificate from the Central State Office for Croats outside the Republic of Croatia.

In addition, under more favorable conditions, family members of a Croatian citizen can acquire permanent residence, as well as foreign minor children who have been granted temporary residence for three years, and one of the parents has been granted permanent residence or long-term residence.

Bozinovic also announced a novelty which prescribes the possibility of regulating the temporary residence of digital nomads, i.e., foreigners who perform jobs digitally for foreign employers.

For the latest travel info, bookmark our main travel info article, which is updated daily. 

Read the Croatian Travel Update in your language - now available in 24 languages

Join the Total Croatia Travel INFO Viber community.

The new Croatian Government, at the head of which Andrej Plenkovic remains, has a historic chance to finally put Croatian tourism's ''house'' in order, but with so much on its plate, will it do so?

As Poslovni Dnevnik/Marija Crnjak writes on the 24th of August, 2020, it has become clear that this year's tourist season in Croatia is already over. When the last Germans, Slovenes, and Austrians have packed up and gone home, most tourist facilities have little to no choice but to close their doors prematurely until next spring and throw themselves into preparation for next season.

Despite the fact that it enjoyed a far lower income than it did last year, the season went better than most had hoped and expected. Tourists showed great confidence in terms of their safety in Croatia and the whole system, loyalty to the hosts with whom they spend their summers, and their passion for a summer holiday wasn't particularly shaken by the atmosphere of coronavirus-induced fear that has dominated 2020 so far.

We should thank them and congratulate them on this, just as we should with the very many enterprises operating in Croatian tourism who were in a constant state of crisis management this entire summer. It took courage to open a facility at all with the risk of booking cancellations. For them to organise their business in a completely different way than usual and continue to smile at guests from whom they are unlikely to make any profit is admirable. Many are now somewhat relieved.

Not everyone was equal, and not everyone will survive this year, however. The most serious situation is currently taking place within tourism agencies, which didn't even rise above 10 percent of last year's turnover, as well as the organisers of small cruises.

Despite serious preparations and the application of strict infection protection protocols, which cost them a lot, Croatia's hotels have, on average, drawn the short straw in terms of accommodation. Camps, for which Croatia is known throughout Europe, fared much better, even with the smallest of price corrections. Private accommodation, although statistics show that there were plenty of overnight stays realised, will still have only a slim income as there were plenty of discounts and hosting friends filling gaps in the market.

Data on fiscalisation shows that caterers and hospitality facilities on the Croatian Adriatic operated fairly decently, and additional staff were even sought throughout the summer, despite the huge economic issues which swept the country back in spring. Maritime transport also proved to be quite resilient.

What's next? By all accounts, a very modest congressional fall, as most events have been cancelled or postponed until next year. In that sense, Dubrovnik, Opatija, and Zagreb, which is the weakest city in terms of tourism this year due to the earthquake, will suffer the most, at perhaps a quarter of last year's traffic, if that.

The attention of every serious player in Croatian tourism is therefore on next year, in which things should be better. In that sense, every smile and every gesture which made a tourist think of returning in 2021 counts. This certainly includes the decision of hotel companies to finance their guests' test for coronavirus before departing.

In this way, hotels made life a lot easier for their guests and showed them that they really value their money and the fact that they chose Croatia during such circumstances. Such moves are not forgotten and hotels can count on some of these guests to come back at the first possible opportunity or recommend them.

However, it will take several years for Croatian tourism to fully recover, and those years should be used very wisely. The picture of Croatian tourism has never been clearer than it is now, and Croatia has never had a better opportunity to improve that picture. We have more than enough people in Croatia to move things forward, but we need the political will in order to go full steam ahead.

The new government headed by PM Andrej Plenkovic to rethink the way Croatia ''does'' tourism and come up with a more sustainable way of doing things. If this extremely harsh year has highlighted anything, it is that we need a rethink - and now.

There is an urgent need to stop the devastation of certain coastal areas and the seemingly constant construction of new apartments, which continued even this year, and to once and for all stop bowing down to the interests of certain unsavoury individuals, from local sheriffs to other powerful people who hold entire destinations in their grasp.

Croatian tourism needs to modernise its promotion system at all possible levels, and use technology that can do market research and promotion for less of a cost. Measures for all this exist and there is money available to engage in the process, but whether the will is there and whether or not lessons have actually been learned is yet to be seen.

For more on Croatian tourism in the coronavirus era, follow our travel page.

For the latest travel info, bookmark our main travel info article, which is updated daily. 

Read the Croatian Travel Update in your language - now available in 24 languages

Join the Total Croatia Travel INFO Viber community.

As Novac writes on the 23rd of August, 2020, the Voice of Entrepreneurs Association (Glas Udruga Poduzetnika) recently issued the warning that the subsidies for preserving jobs for businesses, issued as a welcome move by the Croatian Government as a packet of economic measures, haven't been paid for as many as two thirds of Croatian companies for July, and for some didn't even receive payments for June.

"In the survey we conducted among our members, as many as 76 percent of them pointed out that they haven't yet received government support for July, while 8 percent of them haven't even received support for June. We're really talking about a large percentage here, and what's even more worrying is the fact that there are funds for it! Namely, Finance Minister Zdravko Maric says as much in the media, but the money obviously isn't reaching the addresses of the users. The Minister is just transfering inquiries into the matter to the Croatian Employment Service (CES),'' stated the aforementioned association.

They also pointed out that the director of the CES states in the media that the grants for June will be paid out as of August the 20th, and so he doesn't see the problem of it being a month late. He explains this by saying that CES employees had to coordinate their vacations themselves.

"It's inadmissible, obviously due to annual leave, to leave the beneficiaries of measures without any funds for the payment of salaries. In this crisis situation, the CES must adjust its resources and the way it works. In this way, an additional gap is created between the public and private sectors, because while some are on paid vacations, others have absolutely nothing,'' they stated.

The association also warned that Croatian companies and other business entitites, who have sent inquiries and complaints to the CES, have been waiting for an answer for more than a month now.

"At a time when they need information more than ever, they can't get it. There are, of course, exceptions, but it seems that the organisation within the CES itself has failed. Recently, on behalf of our members, we sent an inquiry on this topic to the Ministry of Labour. We're waiting for an answer,'' it states in the association's announcement.

For more on Croatian companies, follow our business page.

For the latest travel info, bookmark our main travel info article, which is updated daily. 

Read the Croatian Travel Update in your language - now available in 24 languages

Join the Total Croatia Travel INFO Viber community.

ZAGREB, Aug 14, 2020 - Istria County and Istrian cities called on the Croatian government on Friday to immediately send a request to the Italian government to carry out the obligation to test all arrivals from Croatia selectively, in accordance with the real epidemiological situation in different parts of Croatia.

They called for the same request to also be sent to the Slovenian government, which had announced that entire Croatia could be put on the red list of epidemiologically unsafe countries.

"We are sure that you yourself understand that such a unilateral move by Italy, as well as announcements from Slovenia, are seriously jeopardising the tourist season, especially at a time when tourist arrivals are most numerous and a large proportion of guests are from Italy and Slovenia themselves," representatives of Istria county and cities said.

They underscored that Istria was keeping the health situation under control, just as it had been in the previous months, and that it had great results in tourism and the biggest portion of Croatia's overall tourism turnover, as a result of great effort and responsibility of all Istrians.

"Our county is safe health-wise and successful in tourism - we call on you to enable it to stay that way," Istrian officials said, noting that the state budget, which had already suffered a massive blow because of the crisis caused by the coronavirus, also depends on the results of the tourist season.

They, therefore, request that at the moment when Dalmatia's epidemiological situation has significantly worse, it should be made possible for Istria, as a safe destination, to save Croatia's this year's tourism results.

A prompt reaction by the government, the Foreign and European Affairs Ministry and the Tourism Ministry to Italy's decision and Slovenia's announcement has also been requested by the Istrian Democratic Party (IDS).

"Italy's decisions has far-reaching negative consequences for the Croatian economy and requires maximum engagement of all relevant institutions. Croatia must use all available diplomatic channels, extremely well-developed bilateral relations with Italy and diplomatic channels at the EU level to revise Italy's decision," IDS said.

The coronavirus pandemic saw the Croatian Government place strict controls on the prices of certain items, and while some remain in place, others have now been lifted...

As Poslovni Dnevnik writes on the 30th of July, 2020, about fifteen basic food products and hygienic and cosmetic products intended for everyday use (such as detergents, soap, baby diapers) are no longer under the measures of intensified control ordered by the Croatian Government, but control will continue to be in place for medicines, disinfectants and protective masks and equipment.

As stated, when the outbreak of the coronavirus epidemic in Croatia began, the Croatian Government, among other things, passed a decision in March on exceptional price control measures for certain products. After supplementing that same decision with the then established list of 28 products back in April, which involved limiting the prices of face masks, at today's session, a number of products were removed from the list of products whose prices are under the government's radar.

Namely, about fifteen basic food products and hygienic and cosmetic products which are generally considered under the ''everyday use'' label (detergents, soap, baby diapers) are no longer under the measures of intensified control.

In the explanation of the change of the decision from the Croatian Government, they point out that today, the supplies of the population through retail chains is regular and there are no shortages of such products on the market anymore. They also noted that the purpose of the decision from March (as well as the subsequent April amendment) was to protect consumers and "prevent the negative effects of changes in certain product prices, and thus the possibility of the monopolistic pricing of products in the circumstances caused by the coronavirus epidemic."

The loosening of the Croatian Government's decision and the return to the normal and full functioning of the market were also demanded by numerous economic associations, primarily those working closely with and in the trade and food industry associations.

As the threat did not cease, it was justified to conclude that the decision on special control measures should continue to be applied to ten product categories, from medicines, medical products and protective masks to protective clothing and equipment, as well as the much sought-after disinfectants.

For more, follow our lifestyle page.

As Poslovni Dnevnik/Jadranka Dozan writes on the 24th of July, 2020, the fifteenth Croatian Government, and the second one under Andrej Plenković, promised to do a lot in its programme by the end of its mandate; from creating the conditions for the bringing to life of as many as 100,000 new jobs, raising the average salary to 7,600 kuna and the minimum one to 4,250 kuna, to ten percent higher pensions and more generous social benefits.

The new-old prime minister sees the main lever for achieving these programme goals and economic recovery in the full utilisation of the now somewhat (in)famous 22 billion euros from the European Recovery Fund and the seven-year EU budget. This is obviously an important stronghold for the further tax relief that has since been announced.

Another day or two after the election victory, Plenković said that we don't have time to celebrate, and among the first moves he announced were cuts in income and profit taxes, as well as a reduction in VAT on food in some products.

In the meantime, the statements of the equally new-old Minister of Finance, Zdravko Marić, suggested that this wouldn't be a package, especially not in terms of the beginning of the application of lower rates in general.

Lowering the 36 and 24 percent income tax rate to 34 and 20 percent is likely to take place before the reduction of corporate income tax for companies with an income of up to 7.5 million kuna from 12 to 10 percent. It's also likely to happen before looking into reducing VAT in the aforementioned segment.

Some economists believe that in terms of the timing of this so-called VAT intervention, this isn't a mere matter of it being common practice to introduce such changes at the beginning of the calendar year. The coronavirus crisis has trampled all over many common practices, with as many as eleven European governments deciding to respond to the pandemic's shockwaves by temporarily lowering VAT rates over recent months, and not just in terms of more flexible collection models.

Even among those eleven nations, only Germany has resorted to indiscriminate VAT cuts. As of this month, it has lowered the general rate from 19 down to 16 percent. Most others opted for targeted selective reductions targeted at individual sectors, products and services.

The Croatian Government's package of assistance to the economy was one of the most generous in the entire EU (when measured in relation to GDP), but in the field of VAT, which in our budget carries revenue of as much as 13-14 percent of GDP, anti-crisis measures remained, allowing business owners the ability to pay VAT only after collection, and not upon issuing invoices. This eased their liquidity situation.

Numerous variants of flexibility of rules in the VAT system were also used by countries that also reduced the rate of that tax on certain products and services for a period of time. According to Avalar VATlive, a global specialist for these taxes, their focus was mainly on the hospitality and tourism sector, transport, cultural events, books, publishing and the like.

In adopting measures during the coronavirus crisis, governments have generally followed what other countries were doing very closely, so this sort of perpetual intervention in VAT rates was introduced in early July and is set to last until the end of the year.

Norway, however, which isn't an EU member state and is known for smart moves, was much quicker than most others. The non-EU Northern European nation halved VAT on public transport, hotels and cinemas from 12 percent to 6 percent in early April for a period of seven months. The Turks, who also aren't EU members, also started with their interventions in April, but they decided to almost completely give up on the idea of VAT (slashing it from 18 to 1 percent) on domestic flights and accommodation, for a period of eight months.

The Austrians halved their VAT rates on alcoholic beverages (from 20 to 10 percent), and further reduced it (from 10 to 5 percent) for restaurants, cafes, culture, and for part of the Austrian press.

Since July, the Czech Republic has reduced the levy on sports and cultural activities and accommodation services (from 15 to 10 percent), while Greece has temporarily eased the levy on taxis, ferries and other public transport, among other things. The option for the partial reduction of VAT has been being discussed in Ireland over recent days as well.

European announcements regarding reforms...

Spanish Prime Minister Pedro Sanchez recently announced fiscal reforms for Spain, but in the direction of tax increases, aimed primarily at the higher taxation of large companies.

In this regard, the media especially emphasise that one of the targets could be American technology companies. Sanchez is also announcing the acceleration of the introduction of new environmental taxes. This issue will surely come to the forefront in other EU member states in the foreseeable future as well, both due to the green strategic orientation of the EU and owing to the fact that the huge "umbrella" borrowing to finance the recovery plan of the economies affected by the coronavirus crisis will need to be repaid at some point.

There are no such tax announcements in the Croatian Government's programme, so it remains to be seen whether they will be imposed during the mandate or not.

The reduction of tax revenues

At the moment, the focus lies primarily on tax relief, whenever that might actually start. Since in the first half of the year, tax revenues were reduced by between 13 and 15 percent or about 5-6 billion kuna (only in the second half was it close to 7 billion kuna), it is understandable that in the plans for further relief in the eyes of the Croatian Government, things rely heavily on the use of European Union money which should be available to Croatia in the coming years.

For more on the Croatian Government, follow our politics section.

ZAGREB, July 23, 2020 - Creating 100,000 jobs, increasing the average and minimum wages and further tax cuts are some of the goals of the programme of the new Croatian government that will be presented in parliament on Thursday.

The programme covers five main areas: social security, a prosperous future, economic sovereignty, stronger statehood and global recognisability.

The new government of Prime Minister Andrej Plenkovic aims to spend HRK 10 billion in creating conditions for opening 100,000 jobs and ensure an average monthly salary of HRK 7,600 and a minimum wage of at least HRK 4,250 by the end of the term.

It plans to spend HRK 3 billion in modernising the healthcare system, build a national children's hospital in Zagreb, revitalise the Institute of Immunology, and increase pensions by at least 10%.

Further tax cuts are also planned. The VAT rate on all food will be reduced from 25% to 13%, and income and profit taxes will also be reduced.

The education reform and digitalisation will continue. HRK 5 billion will be invested in modernising the education system and providing 50,000 scholarships.

Another HRK 5 billion will be invested in innovation, entrepreneurship and new products for the purposes of digital transformation of industry and increasing exports. Investment in research and development will be increased from the present 1% to 2.5% of GDP, and creative industries will be developed.

To promote demographic revitalisation and improve the status of families, the government will subsidise 20,000 housing loans for young families, provide a parental allowance in the amount of a full monthly salary, extend opening hours for another 200 kindergartens and regulate Sunday work.

The coronavirus pandemic and disruptions in the supply chain in the globalised economy have confirmed the need for self-sufficiency in food and energy production in order to achieve economic sovereignty.

To that effect, the government plans to increase agricultural production by 30% to HRK 22 billion, build 20 regional fruit and vegetable centres, double the area of land under irrigation, and adopt a new strategy for development of sustainable tourism.

With the number of cabinet ministries already reduced, the government aims to halve the number of local government officials and ensure the functional linking of municipalities. It will continue the judicial reform, adopt a new enforcement law and continue the uncompromising fight against corruption.

The government will insist on balanced regional development, planning to invest HRK 30 billion for that purpose.

In cooperation with the City of Zagreb and adjacent counties, the government will continue to address the consequences of the March 22 earthquake and adopt an effective legislative framework for reconstruction with the aid of domestic and international financing sources.

The government pledged to continue working on the political positioning and economic strengthening of Croatia. It will promote the national interests, protect the dignity of the Homeland War and veterans, and strengthen the Croatian military and police.

The achievement of the strategic goals - accession to the Schengen area, euro area and OECD - will make the national sovereignty and influence of Croatia in Europe and the world stronger, the government said in its programme, pledging further support for the Croatian diaspora.

The government said it was aware of the challenges facing it over the next four years, including the economic recovery from the consequences of the coronavirus pandemic, the post-earthquake reconstruction of Zagreb and its environs, and the transformation of the national economy.

The government's priority will be to use the €22 billion from the new EU budget and the New Generation EU instrument for a speedy recovery of the economy and for investment in the priority areas defined by its programme.

(€1 = HRK 7.527377)

July 26, 2020 - A lot is already publicly known about the new Croatian government, although its ministers are yet to be officially announced. Who will be the new ministers? 

From what we've been able to read in the media so far, the new government will have three first-time ministers, people less known to the Croatian public as they haven't been in the political spotlight in the previous administrations. Jutarnji list writes about those three new ministers in Andrej Plenković's government: Nikolina Brnjac, Boris Milošević, Nataša Tramišak. Let's find out more about them, as the final preparations for Andrej Plenković's meeting with President Zoran Milanović take place. In that meeting, the President will give Plenković the mandate to form the new government. 

There was a lot of talk about Nikolina Brnjac as a minister in the Croatian government whenever there were any changes at any number of ministries since Plenković has been in charge. It's often said that she's one of "his people," and the fact that she joined the Croatian Democratic Union (HDZ) when he became President in 2016 confirms the bond between them. She's been the state secretary in two different ministries in the previous term: Ministry of the sea, traffic and infrastructure, where she left because of numerous disagreements with minister Butković, and after that, she went to the Foreign Ministry, where she was given an essential diplomatic role during the Croatian presidency, although she had no diplomatic experience. She was born in 1979, has a Ph.D. in traffic sciences. She is expected to head the newly-formed Ministry of tourism, youth, and sports. She held the eighth position on the HDZ slate for the elections, in IV election district, and got 552 preferential votes there, not winning a Parliament seat. 

We've gotten used to the minority representatives in Croatia supporting whoever is forming the government, and once in a while, they even get a seat at the big table. This Andrej Plenković cabinet will be such a cabinet, with the position of Deputy Prime Minister for social activity and human rights created just to seat a minority representative. Boris Milošević will get that position, an experienced politician, born in 1974 in Šibenik, a representative for the Serbian minority. He's a lawyer who's already served in two administrations, both time as deputy Minister of Public Administration (interesting tidbit: once in an SDP government, and once in HDZ-Most government). He's also the President of the Serbian National Council, where he took over after 22 years of Milorad Pupovac's presidency. He got 7.715 votes at the election. 

The least known to the general public among the three is Nataša Tramišak, a 38-year-old lawyer from Osijek, who's spent most of her career working in regional development and EU funds, so it's highly appropriate that she's about to become a minister dealing with these topics. She hasn't always been an HDZ member; before she joined, she ran for Antunović municipality position as a member of heavily right-wing HSP in 2009, along with Ivan Anušić, who has since become an HDZ vice-president. She's worked in Osijek-Baranja County as a person in charge of investments and EU funds, where she's proven herself to be a very successful workaholic, always on top of any project she's in charge of.

If it turns out someone else is named to the Government position for the first time, we will update this article with information about the other new minister (there is still uncertainty on who will be the next Education and Science Minister).

July 16, 2020 - The new government of Andrej Plenkovic should have 16 departments, and it will have four vice presidents in addition to the prime minister. The new government will also be much younger, with an average age of 46. 

Jutarnji List reports that the youngest ministers will be Ivan Malenica, who has not yet turned 35, and Josip Aladrovic (35), while the oldest is Gordan Grlic Radman, who is 62 years old. There will be at least four women in the government.

Davor Bozinovic will continue being Deputy Prime Minister and Minister of the Interior, and Zdravko Maric Minister of Finance. The new vice president for national security will be Croatian Defense Minister Tomo Medved.

From the national minorities, which with their eight deputies are the second strongest partner in the new ruling majority, SDSS's Boris Milosevic is coming as Deputy Prime Minister for Social Affairs and Human Rights.

All the ministers who remain without positions in the Government, namely Vesna Bedekovic, Marko Pavic, Gari Cappelli and Drazen Bosnjakovic, will be members of Parliament.

As Jutarnji already unofficially announced, the Ministry of Demography, Family, Youth and Social Policy could be divided between three departments. The Ministry of Health, which will continue to be headed by Vili Beros, could be joined by the Ministry of Social Policy, while the current Ministry of Labor and Pension System, headed by Josip Aladrovic, should be joined by a section covering family and demography. However, this is not yet the final decision because Aladrovic may eventually have the social welfare department.

The 'new' Ministry of Tourism should be called the Ministry of Tourism, Youth and Sports, and it will be headed by Nikolina Brnjac.

Brnjac was also mentioned as a possible candidate for the Ministry of Regional Development and EU Funds, but in the end, it was decided that Natasa Tramisak, the current head of the Administrative Department for Investments, Development Projects and EU Funds in Osijek-Baranja County, should take over from Marko Pavic. She is also the only candidate of Slavonian HDZ members who had to get at least one ministry, considering their result in the elections in Slavonia.

Either the Ministry of Regional Development or the Ministry of Agriculture is in the game, which will continue to be led by Marija Vuckovic.

Mario Banozic will no longer be the Minister of State Property but will become the new Minister of Defense after Damir Krsticevic resigned, while the department of state property will be merged with the Ministry of Construction and Physical Planning, headed by the current Minister of Economy, Entrepreneurship and Crafts, Darko Horvat.

The Department of Economy will merge with the Department of Energy and Environmental Protection. Tomislav Coric will be the head of this mega-ministry.

The departments of justice and administration will also merge. The new Ministry of Justice and Administration will be headed by the current Minister of Administration, Ivan Malenica. Gordan Grlic Radman is the new-old Minister of Foreign and European Affairs, Oleg Butkovic remains in the position of Minister of the Sea, Transport and Infrastructure, while Nina Obuljen Korzinek will continue to head the Ministry of Culture.

Only the question of the new Minister of Science and Education remains open. It was speculated that Radovan Fuchs would take over the ministry, then that it might be led by the current assistant Ivana Franic. HDZ/EPP MEP Tomislav Sokol was mentioned as a possible candidate, and the latest information is that it could be Mato Njavro, vice dean of the Zagreb School of Economics and Management.

But all these speculations were unofficially denied by the Government, and that remains the only open question.

On Wednesday, Andrej Plenkovic and his HDZ associates held a working lunch at the well-known Zagreb restaurant Baltazar with the new ruling majority. All representatives of minorities were present at lunch - the president of HSLS Dario Hrebak, the president of HNS Predrag Stromar and the president of the Reformists Radimir Cacic.

The last meeting in Baltazar in a similar composition was held in September last year when Milan Bandic threatened not to support the budget, and even then, the Prime Minister said that he would like to continue cooperation in the next term with those who enter Parliament. 

At the working lunch, the Prime Minister spoke to the partners about the new architecture of the Government, presented the further dynamics of events until the constitution of the Parliament and the new Government, and about the Government's program. Namely, separate agreements will not be signed with the coalition partners, but their ideas and demands will be heard and what is logical will be incorporated into the joint program of the Government.

"The conversation took place in an excellent atmosphere and we talked about the cooperation so far and everything we have achieved together in the first term. I also presented the dynamics of this and next week. After the official election results are announced on Thursday, I will have a meeting with the President of the Republic, and after I get the mandate to form the Government, he and the Speaker of Parliament will agree on the first constituent session scheduled for next week," said Plenkovic after lunch. He added that it is first a matter of voting on systemic laws on the new government, and then a vote of confidence in the government. The constituent session of the Parliament is planned for July 22 in the Parliament building, and the next day, Thursday, a vote of confidence in the Government will be held. There will be no parliamentary sessions on Friday.

SEC President Đuro Sessa will bring the final results of the presidential election to Pantovcak on Thursday at 11 am, and then at 11:30 am, Plenkovic will come with 76 signatures, and the President will entrust him with the mandate to form the Government at around 12 noon.

The Prime Minister said that on Thursday he would announce the structure of the new government and the number of ministries, and on Monday, after the session of the HDZ Presidency, he would also announce the names of the new-old ministers.

"We have drafted the Government's program based on our "Safe Croatia" program, we will consult with partners to see what their programs are and we will incorporate all this into the joint program of the Government," said Plenkovic.

He also said that the partners would participate in the form of state secretaries in the government.

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

As Novac writes on the 12th of June, 2020, when panic broke out over the outbreak of the coronavirus pandemic, the Croatian Government and more specifically the Minister of Finance found themselves in the most difficult situation imaginable: an incalculable abyss opened up in the budget and in just a few days, the good fiscal results that had been worked on for years were quite simply kicked to the dust and erased by the consequences of the virus.

However, if we can even dare to begin talking about a V-shaped recovery at this moment in time, then the closest to it is fiscal policy. Minister Zdravko Maric first reported that revenues in May were about 50 percent lower than they were during the same month last year, which is an enormous and concerning drop, but it was still much smaller than what was originally expected - a drop of up to 70 percent was expected. Further improvement is expected in June. Then came the positive reports from various credit rating agencies, and finally, very successful borrowing on the international capital market began.

On Wednesday, the finance ministry issued two billion euros worth of bonds for a period of eleven years and an interest rate of 1.5 percent (a yield of 1,643 percent), which is "as much as 45 basis points lower than the initially announced price."

The interest of the investment community, they say from the Ministry of Finance, "was exceptional", about 400 investors came forward, including those who invest exclusively in investment credit rating bonds. Their demand was 8.45 billion euros, about 4.2 times the nominal amount of the issue.

Financial analyst Andrej Grubisic says that Minister Maric is just doing his job, and he expects nothing but good results from him because he has been in the Ministry of Finance for years "and belongs to the category of the best to have done that job".

Although he doesn't dispute his expertise and the results achieved by the Croatian Government, and once again with an emphasis precisely on Zdravko Maric, he points out that the circumstances also helped him out a little. This, above all, refers to the large inflow of money which results in low interest rates. However, it also carries a certain danger that a large amount of money in circulation will raise inflation.

The Ministry of Finance plans to use this borrowed money to refinance the 1.25 billion US dollar bond, which matures in mid-July this year and was issued back in 2010 at a price of 6.625 percent. This also means that the new indebtedness brings budget savings of around 360 million kuna for the Croatian Government. The remaining 750 million US dollars, according to the Treasury, "will be used to fund measures to help the economy affected by the coronavirus pandemic, as envisaged in the amendments to the state budget for this year."

With the latest borrowing on the international market, the Ministry of Finance has largely solved this year's financial needs of the budget, which, due to the coronavirus pandemic, increased from 30.5 billion kuna to a massive 63.4 billion kuna. With the budget revision back in May, the Croatian Government has significantly reduced expected budget revenues this year (by around fifteen per cent) and it expects a general government deficit of 6.8 percent of GDP, after last year’s surplus of 0.4 percent.

Agencies that have assessed Croatia's creditworthiness in recent weeks expect that the situation could return to the much talked about Maastricht framework as soon as next year, with a budget deficit of 2.7 percent of GDP. As a positive aspect of the fiscal situation, Fitch states that the needs for the financing of the budget in the medium term are moderate, given that the extended maturity of bonds is close to six years, and it assesses that "debt management is prudent".

An additional mitigating circumstance in the coming years should be favourable financing conditions and less need for borrowing on the market, as Croatia could become one of the biggest winners of the European aid programme, which regards around 10 billion euros in the period from 2021 to 2027, with 7.3 billion euros set aside for grants.

For more, follow our lifestyle page.