ZAGREB, 30 Sept 2021 - The government on Thursday sent a bill on the Croatian Science Foundation into the parliamentary procedure, proposing that the Foundation, which currently has the status of a non-profit organization, acquire the status of a state budget user.

The Foundation was established in 2001, and the new bill was sent to the parliament since the existing legislation is outdated and does not regulate the system for funding science in a way that would be in line with all demands of the current Croatian and European research area.

"The new bill is a key point for the implementation of reforms planned in the National Recovery and Resilience Plan (NPOO), with the aim of raising Croatia's research and innovation activities and potential," Science and Education Minister Radovan Fuchs said.

In order to boost the efficiency and functionality of investments in science projects and enable the implementation of programs planned within the NPOO, he said, it was proposed that the exact names of programs be deleted.

"In this regard, and in order to make the programs easier to adapt to the framework of financing research, development and innovation, it has been proposed that the types of programs be determined by the Foundation's general acts," the minister explained.

The new bill also regulates issues that are not currently regulated, for example, that the Ministry of Science and Education be in charge of the founder's rights and obligations, as well as the supervision over the legality of the Foundation's work and actions.

In order to improve the quality and transparency of financing science projects and programs, it has been proposed that a new expert body of the Foundation is established, a complaints commission and that the possibility of objection is defined, which has not been possible until now. Also, the principles of the work of the Foundation have been clearly defined, and the definition of the Foundation's users has been changed.

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ZAGREB, 23 Sept 2021 - The government on Thursday sent a referendum bill to parliament with the aim to improve the vague referendum legislation, notably concerning referendum petitions by people's initiatives.

The bill aligns the legal aspects of referendums with the constitution, removes the shortcomings and vagueness of the current law, and ensures referendum transparency and openness, as well as a more effective influence of citizens in political decision making, Justice, and Public Administration Minister Ivan Malenica, said at a cabinet meeting.

The bill incorporates recommendations from the Council of Europe Venice Commission, he added.

For the first time, the bill systematically regulates the institute of referendum questions, including which legal prerequisites they must meet, of which the State Election Commission (DIP) will be in charge.

The bill regulates the establishment of a referendum initiative's organizing committee and the obligation to register the initiative with DIP.

Signature collection extended from 15 to 30 days

The bill extends the period for collecting signatures petitioning for a referendum from 15 to 30 days and regulates the number of locations where they can be collected. The number will be decided by local government, depending on the population.

The bill defines what a voter signature is and which signatures are considered valid as well as the signature verification procedure. The number of valid signatures will be published by DIP 30 days since their submission to parliament.

The bill also defines the deadline for calling a referendum. Parliament will be obliged to do so within 30 days of DIP's publication that enough signatures have been collected.

Counterproposal to referendum question will be possible

Following the Swiss model, the bill introduces direct and indirect proposals by the representative body as a result of which parliament, at the proposal of its constitution and political system committee, will be able to initiate within 30 days the formulation of a counterproposal to the referendum question, Malenica said.

For the first time, in line with Venice Commission recommendations, the bill defines who the participants in the referendum activity are and which actions are considered referendum activity.

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September the 14th, 2021 - The Croatian Government has launched a project to comprehensively renovate Banski dvori, the project comes with a hefty price tag valued at a massive 155.1 million kuna.

As Poslovni Dnevnik writes, given the fact that Banski dvori is a protected cultural asset, the Croatian Government used the opportunity to co-finance part of the renovation of the building with money from the European Union Solidarity Fund, which are funds available to the Republic of Croatia to help restore the earthquake-damaged cultural heritage.

The government has initiated the procedure of the public procurement of project-technical documentation and the complete renovation of Banski dvori, and it is clear from the tender documentation that the renovation project is being divided into two phases.

In the first phase, which will last for half a year, works on the construction of Banski dvori will be carried out and that part of the project will be co-financed by grants from the European Solidarity Fund. The second phase of the renovation of the Government headquarters building will last for two years from the date of signing the contract with the contractors engaged for the job.

During the works, all installations will be reconstructed (electrical installations, plumbing, sewerage…), the kitchen and restaurant on the ground floor of the building will be renovated, as will some of the ceremonial halls located on the first floor, and office spaces will be arranged in the attic. The Banski dvori building will also finally be fully adapted for people with mobility difficulties, which has been a long time coming.

Sanitary facilities adapted for people with disabilities will be properly and fully arranged, additional elevators will be installed, and the entrance part of the building will be adapted for people with mobility issues, as will all other parts of the renovated Banski dvori.

During the renovation process, the inner courtyard of the palace will be arranged, an irrigation system for the garden will be introduced, the fountain will be repaired, and wooden structures at the ceremonial entrance to the Palace will be restored, Jutarnji list writes.

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ZAGREB, 13 Sept 2021 - Prime Minister Andrej Plenković said on Monday he was confident Croatia would be ready to enter the euro area on 1 January 2023.

Speaking at the 11th meeting of the national council for the introduction of the euro as Croatia's official currency, Plenković said Croatia had the full support of the European Commission and the European Central Bank to join the euro area.

"We approached this process in a very structured way, carefully. We believe we will fulfill in time all the commitments we undertook by entering the Exchange Rate Mechanism."

He said the government regularly discussed reform implementation in money laundering prevention, the business environment, public administration management, and the justice system, adding that he was confident all the ministries involved would fulfill what had been agreed.

Highly euroized economy

Plenković reiterated that over 60% of Croatia's export was to EU member states, over 60% of tourists in Croatia came from the euro area, over two-thirds of savings and half the loans in Croatia were in euros and that Croatia was already a highly euroized economy.

The experience of the countries which joined the euro area shows that it benefitted both their citizens and economies. Entering the euro area will eliminate the currency risk and exchange costs, reduce interest rates, boost foreign investment, and increase the possibility of financing on the capital market, which we are sure will have an additional effect on our credit rating, Plenković said.

That will also facilitate exports and tourist arrivals, he added.

By comparing pay and price trends in new member states, one can conclude that gross wages increased considerably in relation to price growth, he said. "Living standards increased considerably after the introduction of the euro."

Plenković reiterated that Croatia would have €25 billion in EU funds at its disposal in the years ahead.

"We expect an advance of €818 million could arrive in Croatia in the weeks ahead and, with the GDP growth we saw in the second quarter and which, after such a successful tourism season, will certainly be such in the third quarter as well, to embark on strong economic recovery, strengthening the resilience of the Croatian economy, quality of life, and raising the standard of our fellow citizens."

Dombrovskis: EC strongly supports Croatia's work and ambition to join the euro area

The European Commission Executive Vice President of for an Economy that Works for People Valdis Dombrovskis said at the meeting the Croatian government had shown a strong political will and set ambitious goals.

The Commission strongly supports the work and ambitions of the government and other Croatian institutions to join the euro area, which requires meeting all Maastricht criteria, he added.

Your economy is recovering well and will receive support via the recovery and resilience plan. Croatia is the biggest recipient of EU funds. 11.6% of GDP has been allocated to Croatia in grants, he said.

Dombrovskis said taking the euro path was worth it as it would lead to a more prosperous economy.

Asked by the press about the current inflationary pressures and if prices would go up once Croatia joined the euro area, the Commissioner said one should carefully monitor the impact of introducing the euro on prices also while preparing to introduce it in order to prevent significant price growth.

He said that when the euro was being introduced, product prices were being monitored in two currencies, among other things so that citizens could get used to prices in euros.

The relevant authorities will also have to monitor prices. Latvia, for example, where Dombrovskis was prime minister, conducted a campaign for a fair and equitable introduction of the euro.

Everything that was necessary was done to prevent the introduction of the euro from being used to raise prices, and even retail chains took part in the campaign, he said.

He added that no significant price increase was registered in the Baltic countries that entered the euro area last.

Plenković told the press there was no need for a referendum on euro adoption, explaining that during its referendum on its European Union's admission, Croatia also assumed the obligation to enter the euro area.

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ZAGREB, 2 Sept 2021 - The Croatian government on Thursday agreed on amendments to the Consumer Protection Act and sent them to parliament for consideration.

Under the proposal, consumers will be able to address their comments and objections to retailers via chat, and retailers will be required to display both reduced prices during discount sales and the lowest price of the same product that applied 30 days before the discount sale.

The proposal also extended the list of circumstances constituting unfair commercial practices, including dual quality of products.

Bill ratifying guarantee agreement with IBRD

Also sent to parliament was the bill ratifying a guarantee agreement with the International Bank for Reconstruction and Development to provide Croatian companies with liquidity. The agreement was signed on 7 June this year, along with a loan agreement between the International Bank for Reconstruction and Development and the Croatian Bank for Reconstruction and Development for this project.

The purpose of the €200 million loans is to provide funding for private companies, for permanent working capital and financial restructuring of exporters, for companies with limited access to financial services, and for underdeveloped regions. The repayment period is 15 years, including a 4.5-year grace period, and the interest rate is the 6-month Euribor plus a variable interest margin.

Amendments to Micro and Small Loans for Rural Development scheme

The government also adopted amendments to the Micro and Small Loans for Rural Development scheme, increasing the amount available for financing small loans from the present €50,000 to 100,000. The aim of the amendments is to alleviate the difficulties faced by final recipients in the agriculture, processing, and forestry sectors in accessing capital.

Small Loan for Rural Development is the most sought-after financial instrument under the Rural Development Programme, Economy Minister Tomislav Ćorić said.

From its launch in September 2018 to the end of June 2021, a total of 1,137 applications for financing had been received, of which 721 applications, worth HRK 240.6 million, had been granted, he said, adding that new applications were being received and processed on an ongoing basis.

(€1 = HRK 7.5)

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ZAGREB, 22 July 2021 - The government on Thursday adopted the draft bill on adult education which will introduce significant changes in the adult education system, especially in terms of harmonizing education programs with the needs of the labor market and the quality of implementation of education programs.

Adult education in Croatia should be regulated in accordance with recent strategic documents adopted at the level of the European Union which underscore a significant role of the adult education system in the process of recovery and of the green and digital transition.

Key changes introduced by the new law include the recognition of non-formal and informal acquisition of knowledge and skills, financing lifelong learning through the Croatian Qualifications Framework Act with the aim of raising the quality and relevance of education programs, said Science and Education Minister Radovan Fuchs.

HRK 300 million to be made available for the education of 30,000 adults by 2026

A total of HRK 300 million has been earmarked for the education of 30,000 adults by 2026. The intention is to reach the EU average by 2030 because we are now at 3.5% in adult education, while the EU average is 10.8%.

Changes to the law are needed to better respond to the needs of the labor market and to help citizens gain a better social status through adult education, Fuchs said.

Also, the inclusion of low-skilled adults in lifelong learning is envisaged, as is the introduction of a system for ensuring the quality of adult education institutions.

(€1= HRK 7.5)

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ZAGREB, 14 July, 2021 - The government said on Wednesday it had authorised its representative in Parliament to give the green light for the adoption of an amendment to the bill amending the Pension Insurance Act, put forward by Croatian Pensioners Party (HSU) MP Silvano Hrelja.

In Parliament on Wednesday, the government representative accepted the Hrelja amendment, under which recipients of the lowest pension allowance will be allowed to work up to four hours a day without having their pension reduced.

The aim of the amendment is to encourage people entitled to old-age, early old-age, disability or family pension to return to the labour market after retirement and to improve their financial situation.

The bill will be put to a vote on Thursday, Parliament's last sitting day before the summer recess.

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ZAGREB, 6 July, 2021 - The Croatian Pension Insurance Institute (HZMO) said on Tuesday that the number of pension insurance contributions had been on the rise for five months in a row, and the number of insurees was higher by 3.54% at the end of this June compared to June 2020.

The government-sponsored amendments were forwarded to the parliament at the session of the Andrej Plenković cabinet on 1 July.

In May, there were 216,000 family pension beneficiaries, and most of them were surviving spouses whose average monthly pension allowance was HRK 2,096, which was below the average pension. For instance, in May, pension associations reported that the average pension paid out  for February stood at HRK 2,567.

The budget allocation for this purpose has been ensured for 2022 and 2023.

According to the government's estimates, this year, an estimated 1,100 recipients of family pensions can exercise this right to work part-time and continue receiving family pensions. In 2022, the numbers can rise to 3,200 and in 2023 to 4,100 beneficiaries.

(€1 = HRK 7.484635)

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June the 22nd, 2021 - The highly unpopular topic of Croatian property tax might soon raise its ugly head again. The first time it was suggested a few years ago saw huge public pushback and it was since put back on the shelf, but never entirely scrapped.

As Novac/Marina Klepo writes, in order to secure revenues for local self-government units, Slavko Kojic, the former head of finance in the City of Zagreb, said recently, the tax system needs to be revised and the dreaded Croatian property tax needs to be introduced. He isn't the only one who is calling for that particular tax, the introduction of which in Croatia has failed twice, and ingloriously.

The ongoing coronavirus pandemic has sharply increased everyone's budget deficits, so, with the introduction of a global corporate tax rate, property taxation is most often mentioned as a desirable way to increase revenue. Whether or not that is a good idea is in the title of a recently published work by the ECB. An analysis considered by 23 countries shows that the contribution of property taxes to total budget revenues is small, averaging about six percent at most. It is higher in countries with higher tax rates (such as the UK and the USA), at about ten percent, and Croatia is among the countries where it is below two percent.

In the decade after 2007, the share of these revenues increased in 12 countries, mostly in Greece, from about one percent, to more than five percent. Croatia is among the countries where there has been no increase in these revenues.

“In general, property taxes to governments can be an effective means of increasing revenue and managing public finances, and increasing the effective tax rate and base can offset other taxes,” authors Marta Rodriguez-Vives and Miguel Angel Gavilan-Rubio believe.

The European Commission, the OECD and the ECB have long recommended that countries shift from labour taxation to a property tax, which is less detrimental to growth. Among other things, it results in greater investment in more productive sectors than the construction of houses and apartments. Previous research has shown that developing countries could collect an additional amount of about two percent of GDP from property taxation.

Whether, when and in what form the topic of Croatian property tax will be on the agenda again remains unknown. The last time the government tried to introduce it was back in 2017, but under pressure from the public, especially from the Lipa Association, which began collecting signatures against and threatening a referendum, it was shelved and the government eventually gave up.

The main argument of the opponents of Croatian property tax is that the tax pressure in Croatia is already too high and that it will affect the broadest sections of the population, given that 88 percent of Croatian households live in their own properties. However, the point of the tax isn't to cover the poor, but the richer sections of the population who have more at their disposal.

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ZAGREB, 2 June, 2021 - The budget revision, proposed by the government today, keeps Croatia in a safe financial zone, Finance Minister Zdravko Marić said after the cabinet's meeting on Wednesday.

The proposed budget changes set the general government deficit at 3.8% of GDP, and the government believes that this increase still keeps Croatia in a safe zone in terms of economic and other activities as well as in terms of the opinion of credit rating agencies and the European Commission, he added.

The government is committed to reducing the public debt from 88.7% to 86.6% of GDP, this year, Marić said, announcing one more revision of this year's budget.

The proposed revision, adopted today, will probably be on the government's agenda next week.

The minister said that he was looking forward to a meeting with Zagreb's new mayor Tomislav Tomašević, and that he and his team would be at the disposal of the newly elected local authorities.

"As far as Zagreb is concerned, I am sure that the mayor and I will meet to discuss several things," he said, explaining that with regard to additional borrowing, laws were clear and applied equally to everybody.

Among the topics to be discussed with Tomašević is a limit on borrowing, he said in a comment on the topic of possible new borrowing, explaining that the amount needed to service debts and cover loan guarantees this year must not exceed 20% of last year's revenue.

With regard to the purchase of fighter jets for the army, Marić said that the government would be guided by pragmatic criteria only. Therefore, a certain amount could be paid as an advance this year, he added.

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