ZAGREB, March 20, 2019 - Regional Development and EU Funds Minister Gabrijela Žalac said on Wednesday the luxury Mercedes E parked in the yard of her family house was not hers but belongs to her parents.

"When I buy a car, of course I'll state it in my declaration of assets," the minister told reporters, adding that the car was in her yard as her "brother brought his car to my mom's because he has nowhere to park it."

"My parents bought that car two months ago," Žalac said, then corrected herself by saying that "it's rented on a lease contract and when it's paid off, it will probably be bought."

She confirmed that she knows Josip Stojanović, the owner of a company leasing luxury cars which owns the car in question, whose daily lease is 1,200 kuna, but denied that the acquaintance was used so her parents could buy the car.

Jutarnji List daily says in its latest edition that Žalac did not report the luxury Mercedes E, worth at least 50,000 euro, in her declaration of assets, and that neighbours say it has been parked in the yard of her family house in Vinkovci for quite some time.

In her declaration of assets, the minister reported only her husband's Mercedes C180 worth 24,000 kuna.

Žalac would not say if she would resign if she was charged for a recent accident in which she hit and injured a little girl with her car while driving with an expired licence.

She questioned reporters why would she list something in her declaration of assets that she did not own and promised that she would present the car rental agreement, "exactly everything, my parents' income."

"I truly do not understand why all this. Why would I drag my parents into this when the media are attacking me? My neighbour's car could have been parked there," Žalac said. "You (media) said such a quantity of lies since last Saturday. If I were to deny everything you have been saying every day, that would go on for ever. You will be given everything to inspect. I am not hiding anything," she said.

She claimed that her only sin is that her driver's licence had expired, referring to a recent accident in Vinkovci when she hit a 10-year old girl with her car, who ran out onto the street, underscoring that she has paid the fine envisaged for driving with an expired licence.

Social Democratic Party (SDP) MP Peđa Grbin on Wednesday called out Minister of Regional Development and EU Funds Gabrijela Žalac because she did not clearly explain what money was being used to pay for the lease of a luxurious Mercedes parked in her driveway.

Grbin added that Žalac did not explain what her relationship was with Josip Stojanović Jolly, a car dealer who in fact owns the Mercedes, and that she should step down.

"The daily rental for that vehicle is more than 1,200 kuna, or 36,000 kuna a month, which is twice the minister's wage and, as a state official who won the trust of citizens, she is expected to provide a clear explanation," Grbin said in parliament.

He added that Minister Žalac should not be using her parents as an excuse and her relationship with the vehicle's owner and needs to clearly state how she got that vehicle.

The MOST party's political secretary Nikola Grmoja said that Minister Žalac was not convincing when she tried to explain why the luxurious Mercedes with Zagreb registration plates was parked in her driveway. "The minister appeared confused, she changed her story," Grmoja told reporters in parliament.

More news about the minister can be found in the Politics section.

ZAGREB, March 11, 2019 - Prime Minister Andrej Plenković said on Monday he had rejected the resignation of Regional Development and EU Funds Minister Gabrijela Žalac after she hit a 10-year-old girl while driving without a valid driving licence.

Speaking to reporters in Zagreb, Plenković said that the minister's failure to renew her driving licence was not the kind of infringement that would require her resignation.

Žalac has offered her resignation after she hit a 10-year-old girl who was jaywalking in the eastern town of Vinkovci on Saturday. The girl was hospitalised and the minister visited her in the evening.

Plenković said he had talked to Žalac several times since the accident, adding that her offer of resignation was "a fair and moral move". "This could have happened to anyone. Her failure to renew her driving licence is not the kind of infringement for which I would ask her to resign from the government," the prime minister said.

He said that this was an omission and negligence on the minister's part, but not a criminal office. "It was a minor offence, the minister has paid the fine and will have her licence renewed," he added.

Plenković said that the most important thing was that the girl was recovering well and would suffer no permanent consequences of the accident.

Commending Žalac for her performance as minister, Plenković said that during her term in office Croatia had increased its EU funding absorption rate from 9 percent to 65 percent and that her ambition was to increase the rate to 85 percent by the end of the year.

Speaking earlier, Žalac said that she was shaken up by Saturday's traffic accident in which a ten-year girl was injured after being hit by the car driven by her. "I am truly shaken. I wouldn't want what happened to me on Saturday happen to anyone else. I was driving to a store when a little girl ran in front of my car. I hit her, I assisted her on the scene as much as I could, we called an ambulance and the police and the girl was taken to the hospital in Vinkovci and from there to the Clinical Hospital in Osijek," said the minister in her highly emotional address to the press in her ministry.

Commenting on her expired licence, the minister said she was not even aware that the licence had expired, admitting however that this is no excuse. "This isn't an excuse at all. My licence has expired on 9 June 2016," Žalac said. Her driving licence was issued in 2006 and the minister was confident that it was valid until she was scheduled for a regular medical examination.

"I only care that this little girl is fine, that she is recovering well and that everything will be all right. That is what is most important to me right now," Žalac reiterated several times.

She apologised to the Croatian public, saying that she was driving without a valid licence out of ignorance, reiterating however that this is no excuse.

More news about the incident can be found in the Politics section.

ZAGREB, March 10, 2019 - Commenting on the responsibility of Minister Gabrijela Žalac who, without a valid driver's licence was involved in a car accident on Saturday in Vinkovci, the Office of the President said on Sunday this was an issue of moral and ethical responsibility of a state official and a citizen of Croatia.

"For the president, this is an issue of moral and ethical responsibility of a state official and a citizen of Croatia," the Office of the President said on Sunday.

In that traffic accident which happened in the eastern town of Vinkovci on Saturday morning, a 10-year-old child, who was running across the street outside a marked crosswalk, was injured when she was hit by the car which was driven by Minister Žalac.

Upon the accident the 10-year-old child was taken to the local hospital where she was diagnosed with a lower leg fracture, and the hospital's spokeswoman stated that the child was not in a life-threatening condition. Later the child was transferred to the Osijek hospital for the treatment of her injury and doctors said they did not expect any complication or serious consequence of the injury.

The government issued a press release on Saturday saying that Žalac has not tendered her resignation, nor has the government discussed that option considering the fact that the traffic accident involving the minister could have happen to anyone.

Prime Minister Andrej Plenković telephoned the minister when he was informed about the accident, according to the government's press release which underscores the fact that the minister was driving her private car on her expired licence.

She also immediately paid a fine for that offence which is actually irrelevant for the accident itself.

Furthermore, the minister helped the injured child upon the accident and is in contact with her family, the government's press release reads.

Regional Development and EU Funds Minister Žalac wrote on her Facebook wall on Saturday evening that she truly regretted the accident and apologised to the public for not renewing her driver's licence on time.

Since the accident, the public has been debating whether or not the minister needs to resign.

The president of the Social Democratic Party, Davor Bernardić, said on Sunday that a traffic accident could happen to anyone, but that the case of minister Gabrijela Žalac involved driving without a valid driver's licence and disrespect for the laws of the Republic of Croatia.

An accident can happen to anyone, this is simply a case of unfortunate circumstances. However, driving without a valid licence is disrespect for the laws of the Republic of Croatia, Bernardić said, adding that the minister's resignation would have been a moral act but that "moral and this government simply do not go in the same sentence together."

The president of the GLAS party, Anka Mrak Taritaš, said that Regional Development and EU Funds Minister Gabrijela Žalac broke the law and that the least she should have done was stand before the public and take responsibility for her actions, adding however, that this cannot be expected from the government of Prime Minister Andrej Plenković.

"A minister needs to work transparently and if they make an omission, they need to admit it. The Minister should have absolutely resigned," Mrak Taritaš said.

More news about the accident can be found in the Politics section.

ZAGREB, March 10, 2019 - Regional Development and EU Funds Minister Gabrijela Žalac, who on Saturday took part in a traffic accident in which a 10-year-old girl was injured, wrote on her Facebook wall on Saturday evening that she truly regretted the accident and apologised to the public for not renewing her driver's licence on time.

In that traffic accident which happened in the eastern town of Vinkovci on Saturday morning, a 10-year-old child, who was running across the street outside a marked crosswalk, was injured when she was hit by the car which was driven by Minister Žalac.

Upon the accident the 10-year-old child was taken to the local hospital where she was diagnosed with a lower leg fracture, and the hospital's spokeswoman stated that the child was not in a life-threatening condition. Later the child was transferred to the Osijek hospital for the treatment of her injury and doctors said they did not expect any complication or serious consequence of the injury.

"As for my driver's licence, I have failed to renew it, which was my duty, as it is the duty of all Croatian citizen to renew their licenses every ten years, and for that omission I apologise to the Croatian public," the minister wrote.

She also said she had visited her "little sweet neighbour in the hospital and she is recovering well." "My thoughts and prayers are with that girl and her family and I wish her a speedy recovery," the minister said.

The government issued a press release on Saturday saying that Žalac has not tendered her resignation, nor has the government discussed that option considering the fact that the traffic accident involving the minister could have happen to anyone.

Prime Minister Andrej Plenković telephoned the minister when he was informed about the accident, according to the government's press release which underscores the fact that the minister was driving her private car on her expired licence.

She also immediately paid a fine for that offence which is actually irrelevant for the accident itself. Furthermore, the minister helped the injured child upon the accident and is in contact with her family, the government's press release reads.

MP Mirando Mrsić of the Democrats party said the minister should have resigned immediately. "A minister in the government cannot break the laws of their own country. Minister Gabrijela Žalac needs to resign immediately. This is the only right way of taking responsibility for your actions," the Democrats said in a press release.

Traffic experts agreed that the minister made a number of omissions, driving without a valid driver's licence. They agree she should have been example to others and check the expiration date on her license.

More news about the minister can be found in the Politics section.

ZAGREB, March 10, 2019 - Regional Development and EU Funds Minister Gabrijela Žalac has not tendered her resignation, nor has the government discussed that option considering the fact that the traffic accident involving the minister could happen to anyone, the government said in a press release on Saturday evening.

In that traffic accident which happened in the eastern town of Vinkovci on Saturday morning, a 10-year-old child, who was running across the street outside a marked crosswalk, was injured when she was hit by the car which was driven by Minister Žalac.

Upon the accident the 10-year-old child was taken to the local hospital where she was diagnosed with a lower leg fracture, and the hospital's spokeswoman stated that the child was not in a life-threatening condition. Later the child was transferred to the Osijek hospital for the treatment of her injury and doctors said they did not expect any complication or serious consequence of the injury.

The local police in Vinkovci on Saturday stated in their report about the traffic accident that Minister Žalac did not possess a valid driving licence and that she did not drive under the influence of alcohol when the accident happened. The local police have also confirmed that the accident took place outside a designated pedestrian crosswalk while the child was running across the street.

The fine for driving without a valid driving licence is 1000 kuna, or 500 kuna if the offender pays it on the spot.

According to the police report, after the accident Žalac paid 500 kuna (approximately 68 euro) for the offence of driving on an expired licence.

Prime Minister Andrej Plenković telephoned the minister when he was informed about the accident, according to the government's press release which underscores the fact that the minister was driving her private car on her expired licence. She also immediately paid a fine for that offence which is actually irrelevant for the accident itself.

Furthermore, the minister helped the injured child upon the accident and is in contact with her family, the government's press release reads.

More news on the regional development minister can be found in the Politics section.

ZAGREB, March 9, 2019 - A 10-year-old boy, who was running across the street outside a marked crosswalk, was injured in a traffic accident in the town of Vinkovci on Saturday morning when he was hit by the car which was driven by Regional Development and EU Funds Minister Gabrijela Žalac, the ministry said in a press release.

Upon the accident the boy was taken to the local hospital where he was diagnosed with a lower leg fracture, and the hospital's spokeswoman stated that the child was not in a life-threatening condition.

The local police have also reported that the accident took place outside a designated pedestrian crosswalk while the boy was running across the street.

The ministry stated that Minister Žalac would visit the injured boy on Saturday afternoon.

According to the latest information, the minister did not have a valid driving licence.

More news about the Regional Development Ministry can be found in the Business section.

ZAGREB, March 7, 2019 - The next seven-year financial period in the European Union will be a continuation of greater co-financing for poorer regions whose GDP accounts for less than 75% of the EU average, and that includes Croatia, Vittoria Alliata di Villafranca, Director DG Regional and Urban Policy, said at a two-day international conference on EU funds which started in the northern Croatian town of Trakošćan on Wednesday.

The conference, focusing on the new financial period 2021-2027 and the experience of strategic development and implementation of EU projects of other EU member states, was organised by the PJR consulting company and drew more than 250 participants.

Alliata di Villafranca, who is one of the authors of new rules for the 2021-2027 financial period, held an introductory lecture on preparing for the cohesion policy in the new period.

She underscored that the cohesion policy had created more than 1.6 million jobs in the current financial period and that some of the challenges in the coming period included Brexit, security, controlling borders and climate change.

She announced that co-financing would continue for poorer regions that have a GDP that is less than 75% of the EU average, which also includes Croatia.

The European Union and European Commission wish to simplify the system so that states can work faster, however, the administration and legal framework of a member state often pose a problem. Croatia has to work to simplify the business environment which is good at the regional level, however, it is rather slow at the national level, she said.

Assistant Regional Development and EU Funds Minister Ana Odak spoke about the National Development Strategy for the period until 2030, underscoring that the main objective was to make order in the system of strategic planning.

The ministry's state-secretary, Spomenka Đurić, presented data on the absorption of EU funds stating that Croatia had signed contracts for 65% of the total allocation yet only 15% had been granted.

"The ministry is aware of the huge discrepancy however this and next year, it plans to make a large number of payments to beneficiaries. In the first two months of 2019, intensive payments have begun. In the past two years we focused mostly on contracting and now the implementation of most of the projects is starting," Djuric said.

The conference also heard about the experiences of Romania and Latvia regarding EU fund investments and the implementation of strategic projects.

More EU funds news can be found in the Business section.

ZAGREB, March 5, 2019 - European Commissioner for Regional Policy Corina Cretu said in Dubrovnik on Tuesday that there is no danger for future EU projects in Croatia that would be financed from the Cohesion Fund following a reduction of budget funds, and Croatia's minister responsible for European funds, Grabrijela Žalac, said that Croatia had some objections to the European Commission's proposed budget for the period 2021-2027.

A ministerial conference of the group of "Friends of Cohesion - Cohesion Policy and Structural Reforms Post 2020", organised by the Ministry of Regional Development and European Union Funds, was held in Dubrovnik on Tuesday, with Žalac and Cretu attending.

Cretu said that the EC has proposed a reduction of 10% in funds for cohesion policy and that a total of 373 billion euro has been secured, which is more than ever.

There is no danger for future projects in Croatia due to the reduced funds. We will begin negotiations in March with all member states on their operational programmes. The Croatian government and regions have to prepare a strategy based on the funding they have available and the rate of co-financing, Cretu said.

Žalac said that Croatia, as the newest EU member state, is a recipient of European funds and that it has some objections to the European Commission's proposed multi-annual budget 2021-2027, which will increase the rate of co-financing from 15% to 30% while reducing the rate of pre-financing, and the deadline to implement projects will be reduced from three to two years.

"We want to discuss that in detail with EC representatives, particularly with the Directorate-General for Budget. Everyone should not be treated equally considering that Croatia only started to use the benefits of the cohesion policy two years ago and only now are the effects of that visible in the field. By the end of the year we need to adopt all the necessary regulations for the new financial perspective, and our EU presidency will be marked by the adoption of the European budget, Žalac said.

Last May the EC presented its proposal for the multi-annual budget for the period 2021-2027, which is larger than the present budget but foresees lower amounts for cohesion policy and agriculture. According to the proposal, Croatia would receive about 6% less than in the current multi-annual budget.

The purpose of the Dubrovnik conference, which brought together ministers and state-secretaries for regional development and EU funds of EU member states, was to exchange opinions on connections between cohesion policies and structural reforms in the period after 2020 and to find answers to key issues related to cohesion policy and the proposed multi-annual financial framework for the period following 2020.

The "Friends of Cohesion" group consists of 16 EU member states opposed to cut backs in cohesion funding in the new EU multi-annual budget, which is supposed to reduce the gap between wealthier and poorer EU countries. The group is made up of Croatia, Czech Republic, Estonia, Hungary, Malta, Poland, Slovenia, Slovakia, Bulgaria, Cyprus, Latvia, Lithuania, Romania, Italy, Portugal and Greece.

Cretu said that the conference discussed the future of the cohesion policy, what is important for Croatia, which has EUR 9.9 billion at its disposal for the 2021-2027 period, but also for Europe overall.

I recalled three key points in the EC's proposal through a simple and pragmatic approach. Above all, a more modern policy that focuses on the transition toward a 'smart economy' and a low-carbon economy and so the cohesion policy has to pass through all European regions preparing for that transition. We need an effective policy that requires public policy that will stimulate investment and innovation and an efficient administration, Cretu said.

She added that the cohesion policy should be simplified particularly with regard to the implementation of projects, and in that regard the European Commission proposes 80 various measures.

More news on EU funds can be found in the Business section.

ZAGREB, January 24, 2019 - The government on Wednesday launched changes to the Nomenclature of Territorial Units for Statistics (NUTS 2), dividing Croatia into four statistical non-administrative units which will improve regional aid allocation and ensure better terms for the absorption of European Union cohesion funds.

Another goal is forming as homogeneous regions as possible in terms of development, and the new division will also redress the injustice done in 2012, when less developed parts of the country, notably Slavonia and Baranja, were obstructed in attracting EU funds, said Regional Development and EU Funds Minister Gabrijela Žalac.

The government's decision, under which the country is divided into Pannonian Croatia, North Croatia, Adriatic Croatia and the City of Zagreb, will go into force on 1 January 2023, at the same time as new European regulations, she said, adding that the proposal would be submitted to Eurostat by February 1 this year and that the EU's new financial perspective would be based on the new regulations.

Žalac said that under the current division, the continental region comprises 14 counties and the City of Zagreb and the Adriatic region seven coastal counties.

The counties of the former Pannonian Croatia – five in Slavonia and Bjelovar-Bilogora, Sisak-Moslavina and Karloavac counties – will again make up one statistical region, she said, recalling that these counties were at 40% of the EU development average.

Five counties in north Croatia – Krapina-Zagorje, Varaždin, Međimurje, Zagreb and Koprivnica-Krizevci – make up the third statistical region, while Adriatic Croatia is made up of the seven coastal counties.

The City of Zagreb becomes a separate unit as it has a population of over 800,000 and is the only unit in Croatia whose development is more than 100% above the EU average, and also to prevent its development degree from spilling over to other counties and diminishing their businesses' ability to absorb higher percentages of regional aid.

Prime Minister Andrej Plenković said Bjelovar-Bilogora County would be part of Pannonian Croatia, although the county said they wanted to be part of North Croatia. He said such a decision was in the interest of all those wishing to invest and create jobs in the county.

He noted that Bjelovar-Bilogora was the eighth most undeveloped county and that it would get higher economic aid. He said the county could intensively cooperate on joint European projects with the northern counties.

More news on the Croatia and EU funds can be found in the Business section.

ZAGREB, January 14, 2019 - Regional Development and EU Funds Minister Gabrijela Žalac said on Monday that 2.9 billion euro was made available in 2018 through 152 tenders for the allocation of European Union funds, whereby 79% of the total 10.7 billion euro has been made available.

Speaking at a press conference, Žalac said the total amount of the tenders advertised had risen to 8.5 billion kuna. She added that in the 2014-18 period tenders were advertised for 5.6 billion euro, 52% of the available allocation.

Žalac said project contracting had risen in this government's term, from 975 million euro at the end of 2016, the beginning of the term, to 6.6 billion euro. She added that 62% of the EU funds allocated had been contracted, a surge of 572%.

At the end of 2018, 1.98 billion euro in EU funds had been disbursed, of which 1.05 billion last year alone. At the end of October 2016, 291 million euro had been paid out, accounting for a surge of 578% until the end of last year.

Žalac said a statement of expenditure worth 1.03 billion euro was forwarded on the last day of 2018 and that 1.83 billion euro had been verified to date. In line with that statement, Žalac expects the European Commission to appropriate the approved funds to the Croatian budget by the end of this month.

As for the N+3 rule, under which a member state has an additional three years to absorb funds after the year in a project was approved, Žalac said all the funds allocated to Croatia for 2015 had been submitted to the European Commission.

She said the contracting rate had increased more than five times and that the goal was to reach at least 85% of the 10.7 billion euro by the end of this year.

Žalac underlined the Slavonia, Baranja and Srijem Project, as part of which grants worth 8.7 billion kuna were contracted last year, 47% of the total 18.75 billion kuna.

She announced changes to statistical regions, saying the aim was to redress the injustice made in 2012 when the City of Zagreb was added to the Continental Croatia region, whereby GDP in undeveloped areas jumped from 39% to 64% overnight.

The minister said the Competitiveness and Cohesion Operational Programme would be amended this year, with a view to transferring funds to finished projects. She said "major underperformance" was recorded in the programme's information and communication technologies and environment and resource efficiency thematic priorities, and that "we are surprisingly poor" in climate change and risk prevention.

Žalac said those funds did not go to waste but would be redirected to the economy and enterprises, adding that Croatia was most successful in the SMEs competitiveness priority.

Asked which beneficiaries had the biggest contracting problems, she said big infrastructure projects in water agglomeration. She added that poor project documentation also affected implementation.

The minister said the EU's draft multiannual framework for 2012-27 envisaged 9.9 billion euro for Croatia, 5.6% less than the current framework for the cohesion policy and 6% less for the common agricultural policy. She said the draft also envisaged increasing national co-financing from 15 to 30% as well as doubling the current pre-financing. She said was this was unacceptable for Croatia and that negotiations at EU level were yet to begin.

More news on the EU funds and Croatia can be found in the Business section.