ZAGREB, 22 April, 2021 - The general government generated a consolidated deficit of HRK 27.5 billion, or 7.4% of GDP in 2020, with the consolidated general government debt also increasing, according to a report on which the national statistical office released on Thursday.

The deficit thus ended a three-year streak of surplus.

For comparison's sake in 2019 the government generated a consolidated government surplus of HRK 1.2 billion or 0.3% of GDP while in 2018 it amounted to HRK 863 million or 0.2% of GDP and in 2017, the surplus was HRK 2.8 billion or 0.8% of GDP.

The general government budget deficit occurred in 2020 mostly due to the repercussions of the COVID-19 pandemic for the national economy, which required the government's support measures to offset the impact.

The consolidated government debt in 2020 reached HRK 329.7 billion or 88.7% of GDP after that debt had gradually decreased for several years, the State Bureau of Statistics (DZS) said in the report. 

At the end of 2019 the general government debt amounted to HRK 292.9 billion, which accounted for 72.8% of GDP. In 2018 it was HRK 286.3 billion or 74.3% of GDP and in 2017 it was HRK 285.1 billion or 77.6% of GDP.

The general government debt increased by HRK 36.8 billion in 2020 or 12.6% year on year with HRK 32.8 billion being net loans and the remainder attributed to depreciation of the kuna currency exchange rate against the euro, DZS says in the report.

RBA: Results better than expected

Commenting on the latest DZS report, Raiffeisenbank Bank Austria (RBA) analysts underscored that the budget gap of HRK 27.5 billion is better than had been expected.

They also attributed the noticeable deterioration in fiscal metrics to the consequences of the crisis caused by the COVID-19 pandemic which resulted in a double-digit contraction in budget revenue while at the same time generating an increase in general government spending.

The total consolidated government revenue in 2020 amounted to HRK 178.5 billion, which is a decrease of HRK 12.5 billion or 6.5% while at the same time expenditure amounted to HRK 205.9 billion, which is HRK 11.3 billion or 8.6% more y-o-y.

(€1 = HRK 7.567595)

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ZAGREB, 15 April, 2021 - Parliamentary opposition parties on Thursday criticised the government's plan to pay a COVID supplement to pensioners and a tax refund to young people in the run-up to local elections as vote buying.

Arsen Bauk of the Social Democratic Party (SDP) told reporters in the parliament building that the government "has obviously sorted its priorities to ensure the best possible election result" for the ruling Croatian Democratic Union (HDZ).

"We support a COVID supplement for pensioners, even before elections. I think the Croatian democracy is mature enough and that this will not result in voters voting en masse for the HDZ," Bauk said.

Homeland Movement MP Stjepo Bartulica said that Prime Minister Plenković often expressed his disdain for populists. "I see a great dose of populism in the timing of this measure," he said.

"We are all equal in Croatia, but obviously some groups are more equal than others, especially with elections coming up. In principle, I am not against helping the pensioners, but the way in which the government runs its policies actually increases cynicism in Croatia," Bartulica said.

Bridge's Božo Petrov noted that the government had promised several years ago that the living standards and monthly incomes of pensioners would rise considerably, suggesting that the measures proposed by the government should remain permanent.

Bojan Glavašević of the Green-Left Bloc said that "the pensioners and young people, as vulnerable groups, need systematic rather occasional assistance."

Unlike the opposition, the HDZ's Ivan Ćelić disagreed that this was an attempt at vote buying for local elections. "Let me remind you that a month before elections the (SDP) government of Zoran Milanović gave away electricity vouchers of HRK 200, which can be seen in the same way as the COVID supplement," he said.

(€1 = HRK 7.5)

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ZAGREB, 14 April, 2021 - Health Minister Vili Beroš said on Wednesday that the government and representatives of drug wholesalers had reached agreement on a debt settlement scheme.

The issue of the debt made the wholesalers restrict and defer the deliveries of medicines to hospitals in late March.

"Today's meeting is one more step towards the debt settlement," Minister Beroš said adding that only together the two sides could solve this decades-long issue which became exacerbated during the COVID-19 pandemic.

Finance Minister Zdravko Marić outlined the elements of the scheme.

In the next three months we will transfer some funds to the Croatian Agency for Health Insurance (HZZO), and the Health Ministry so as to enable the cash flow in those institutions and enable them to pay liabilities towards wholesalers and providers, Marić said adding that those funds would be ensured through the redirection and reallocation of outlays in the state budget.

The monthly allocation for hospitals will be HRK 600 million and an additional 300 million for pharmacies.

In June, the government is likely to conduct a budget revision whereby an additional cash inflow for hospitals and pharmacies will be ensured so that debt deferment period lasts no longer than 180 days for hospitals and 120 days for pharmacies.

In June alone, 135 million kuna will be directed to pharmacies and HRK 760 million to hospitals, with the plan to respect the deferment periods in the remainder of the year.

Marić hopes that this scheme will remove any need for any new meeting with wholesalers on the debt.

The finance minister also expects reform efforts in preventing any  further accumulation of liabilities and in this context he mentioned the plan to cut the deferment period to 60 days.

The wholesalers' representative Diana Percač thanked the ministers for efforts to provide funds to cover the debt.

She also pledged the continuation of the delivery of drugs to pharmacies until the end of this year.

(€1 = HRK 7.571658)

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ZAGREB, 14 April, 2021 - Prime Minister Andrej Plenković on Wednesday called for "the broadest possible consensus" on his government's National Recovery and Resilience Plan, a document including projects worth more than HRK 49 billion (€6.5bn) in total.

"This is a chance in a generation on which we should reach the broadest possible consensus if we can," Plenković said after presenting the document to lawmakers, rejecting claims by opposition MPs that Croatia was "begging" in the EU.

"We are not begging, but are trying to help Croatia catch up with the countries that have been in the Union longer than us, to be more efficient and faster than we were when the SDP (Social Democratic Party) was in power," the prime minister said in response to questions from SDP MPs.

The SDP's Siniša Hajdaš Dončić said that Croatia, along with Greece, has been allocated the largest amount of money per capita because it is poor. "In the six years of your government, Croatia has become what Kosovo was in the former Yugoslavia," he said.

"We have managed to obtain this amount because we think we need it. This funding will benefit both you and Croatian citizens," Plenković replied.

Željko Reiner of the ruling Croatian Democratic Union (HDZ) said: "The opposition obviously have nothing to contribute. Their thinking is reduced to two mantras: we haven't been given a full document and the money will be used for civil servants and not for the private sector."

"All the money will eventually end up in the private sector, either directly or indirectly," Plenković said.

Responding to the remark made by Domagoj Hajduković (SDP) that MPs were discussing a summary of the plan rather than the full document and that this was happening at the last minute, Plenković reiterated that theoretically the government did not have to present the document to Parliament at all. "We have prepared a good document and explained it. We have consulted the social partners and it has passed the parliamentary committees," the prime minister said.

As for the COVID-19 vaccination campaign, Plenković said that vaccination was necessary in order to bring the present public health care crisis to an end, adding that Croatia had ordered 8.7 million doses of vaccine from different manufacturers.

"We ordered as many doses as we could," Plenković said, stressing that the EU could not have known that there would be so many problems with delivery and reputational problems with some of the vaccines.

Hrvoje Zekanović (Sovereignists) was not pleased with the prime minister's answer. "I don't see why you didn't say that the EU has failed in this regard. It has proved highly inefficient during the corona crisis because there are no vaccines," he said.

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ZAGREB, 9 April (Hina) - A government representative on Friday accepted amendments by the ruling HDZ party group to a bill on local elections which ease previously proposed stricter rules for the nomination of candidates in elections and reasons for the termination of a local official's term.

A regulation has been eased under which a person with a final court verdict sentencing them to a prison term of at least six months or whose verdict has been changed to community service and a conditional verdict will be banned from running in elections, starting already with the May 16 local election.

The HDZ parliamentary group proposed that the ban should not apply to persons sentenced to prison for an unintentional crime, if their sentence has been changed to community service or a conditional sentence.

Also accepted were amendments that relax reasons for the termination of the term of a member of a representative body, municipal head, mayor and county head and their deputies.

If those officials have committed an unintentional crime and have been sentenced to prison but their sentence has been changed to community service or a conditional sentence, the terms of those officials will not cease, government representative Sanjin Rukavina said.

He did not accept Social Democrat MP Arsen Bauk's amendment under which those officials' terms would end also in case the party which has nominated them and on whose slates they have been elected has been given a final court verdict for an offence.

The government partially accepted amendments by the SDP, GLAS and Centre party groups under which the term of a member of a representative body, municipal head, mayor and county head stops on the day when they deregister their residence in their local government unit.

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ZAGREB, 9 April, 2021 - The Voice of Entrepreneurs association considers that the National Recovery and Resilience Plan, as proposed by the government, will destroy the chances for economic recovery, and calls for a radical change in the document.

In order for the National Recovery and Resilience Plan to have a greater impact, priority should be given to investments in the private sector, the association said in a statement issued on Friday.

Entrepreneurs think that the plan will not direct enough funds to small and medium-sized enterprises and that that will have a negative impact on the entire economy.

Unlike other countries, they add, Croatia does not intend to direct most of the funds from the recovery plan to the business sector and the most affected companies, sectors and citizens.

The current recovery and resilience plan relies mainly on state and local government projects and projects with low and long-term returns, and in some cases negative returns, which is contrary to the general goal of rapid recovery, the association said.

It is true, they add, that the plan envisages distributing 54% of the funds for the business sector and 46% for reforms in the public sector, but the 54% intended for the business sector includes investments in public companies that have so far demonstrated low efficiency, such as wastewater projects, waste management, road and transport infrastructure construction.

The National Recovery and Resilience Plan is thus not aimed at helping the private sector and encouraging the competitiveness of the Croatian economy, the association of entrepreneurs said, stressing that the existing plan is not oriented towards rapid recovery of domestic demand, investment in high return projects and technological innovation.

They call for prioritising private sector investment and focusing on high return projects.

Last week, the government presented the National Recovery and Resilience Plan for 2021-2026, which contains project proposals in six areas, worth a total of HRK 49.08 billion.

Of that, 54% is intended for projects in the business sector, 15% for education, science and research, 12% for building reconstruction, 10% for public administration and justice, 5% for health care and 4% for the labour market and social protection.

Digitisation and green energy transition feature in all six areas in the document.

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ZAGREB, 6 April, 2021 - Health Minister Vili Beroš said on Tuesday that today's meeting with drug wholesalers was a clear sign that the government wanted to solve the debt problem, while Finance Minister Zdravko Marić said additional payments might be made so that drug supply ran smoothly.

"Today's meeting is a clear signal that we wish to solve this problem through joint effort. The meeting was constructive and Minister Marić left open the possibility of additional funds to make sure that drug wholesalers supply the health system regularly," Beroš told the press, reiterating that increasing health contributions was not being considered.

The meeting focused on short-term solutions and the debt repayment schedule, but the government is discussing healthcare reforms that will lead to long-term solutions, Beroš said.

"We presented to drug wholesalers our determination to embark on reforms and our willingness to settle the debt," he said, but added that the Croatian Health Insurance Fund had to redirect HRK 2.5 billion for the treatment of COVID-19 patients instead of regular healthcare.

"This government will do everything so that not one citizen remains without the medicines they need. Last week we found a way through direct payment for medicines necessary for life-threatening conditions, including for cancer patients."

The HRK 900 million ensured for drug wholesalers last week is part of the search for a solution, Beroš said.

(€1 = HRK 7.5)

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ZAGREB, 1 April, 2021 - Croatia's general government debt reached HRK 329.7 billion at the end of 2020, an increase of 12.6% compared with the end of 2019, with the general government debt to GDP ratio rising to 89.1%, the latest Croatian National Bank (HNB) data shows.

At the end of December 2020, the general government debt increased by HRK 526 million (+0.16%) from the previous month and by 36.8 billion (+12.6%) from December 2019.

At the end of last year the total debt amounted to 89.1% of the annual GDP, compared to 72.8% at the end of 2019.

The general government debt to GDP ratio had been falling since 2014, when it stood at about 85% of GDP. After decreasing to 72.8% of GDP in 2019, the needs for financing the measures to combat the coronavirus outbreak and the GDP decline led to the general government debt to GDP ratio increasing to 89.1% in 2020.

The general government debt includes the domestic and external debt components of central government, social security funds and local government.

HNB analysts noted that the debt increase was mostly due to a rise in the domestic debt component, which had gone up by HRK 4.1 billion (+1.9%) since November 2020 and by HRK 26.0 billion (+13.2%) since December 2019.

At the end of December 2020, the general government debt totalled 223.7 billion on the domestic market, while the external debt component amounted to nearly HRK 106 billion. The external debt component fell by HRK 3.6 billion (+3.3%) month on month and increased by HRK 10.8 billion (+11.3%) year on year.

The general government debt structure is dominated by long-term debt instruments. At the end of December 2020, the debt comprised bonds (64.4%), long-term loans (29.1%), and short-term loans and securities (6.5%). Compared with December 2019, the short-term debt rose by HRK 8.4 billion (+63.1%), while the long-term debt increased by HRK 30.5 billion (+10,9%).

(€1 = HRK 7.5)

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ZAGREB, 26 March, 2021 - The Voice of Entrepreneurs association warned on Friday of the difficult position of travel agencies in a year of the pandemic, during which they had lost over 90% of revenue, adding that the government had done nothing to help them.

"The media say that travel agencies have received billions of kuna in aid from the state, which is simply not true. Also, (Education) Minister Fuchs and (Tourism) Minister Brnjac are asking travel agencies to find the money to return vouchers given to passengers, and a new law is being mentioned, under which the agency is obliged to give its clients a refund within 15 days. However, it isn't said that travel agencies have on average lost over 90% of revenue over the past year," the association said in a press release.

It added that the owners of travel agencies could not get loans to refund their clients, that they were forced to sell their own real estate to cover the expenses and that they had not received a single penny of help from the state or any other institution.

The only aid they received is HRK 4,000 monthly grant for workers, but for every employee, the employer has to cover the additional cost of transport and other fixed costs, for which no solution has been found to date, the association said.

It said that fixed costs had not been covered either, and since they were closed, agencies could not cover all the costs.

Travel agencies "were not closed by the decision of the national civil protection team, but their operation is completely restricted by government measures," the association stressed.

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ZAGREB, 24 March (Hina) - Andreja Marić of the Social Democratic Party (SDP) and Rada Borić of the New Left party on Wednesday critcised the Croatian government as well as the European Commission over procrastination in administering COVID-19 vaccines.

Addressing the national parliament, Andreja Marić said that the Croatian government failed this test.

Until three days ago, a mere 470,000 doses of all vaccine producers were delivered to Croatia, which is only 14 doses per 100 inhabitants, Marić said.

To date, 358,000 doses have been administered, and 8.9% of citizens have received one shot so far of the two-dose vaccine and 2.2% have been inoculated with both doses. Only Bulgaria and Latvia have fared worse than Croatia in the European Union, she said.

Marić insists that delays in coronavirus vaccine deliveries are not the result of the unjust distribution inside the European Union but a consequence of Croatia's wrong decision to rely on AstraZeneca vaccines at the beginning.

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