ZAGREB, 23 March, 2021 - The latest assessment of Croatia by the Standard & Poor's (S&P) credit rating agency shows that Croatia is stable, and the agency's projection of Croatia's growth is similar to to our forecasts of 5% and the forecasts made by the European Commission, Prime Minister Andrej Plenković said on Tuesday.

The Standard & Poor's agency has affirmed its 'BBB-" credit rating on Croatia, with the stable outlook, the government stated earlier on Tuesday.

The credit agency's report says that Croatia's stable political climate and plans to enter the euro area are conducive to reform efforts. The agency projects a general government deficit of 2.9% of GDP in 2021. It also expects Croatia's debt to resume falling and go below 80% of GDP until the end of 2024.

During his visit to Varaždin County, Plenković said that he found it interesting that the credit agency, the EC and some other analyses show that they are aware how much his cabinet had done in the first stage of its term, that is before the COVID-19 pandemic.

In this context he pointed to "a sound and responsible management of the public finances" and the rapid curtailment of the debt.

Plenković also underscored that last July, Croatia entered the European Exchange Rate Mechanism II.

Asked by the press about the latest statement from the Croatian Employers' Association (HUP) that employers were not engaged in the elaboration of Croatia's National Plan for Recovery and Resilience (NPOO), Plenković said that the purpose of the plan is to make use of the 6.3 billion euros of non-repayable grants and after that an additional 3.5 billion euros will be at the disposal through loans.

In the period between those two steps we will focus on the preparation of the new multi-annual financial framework where 12.7 billion euros awaits us, Plenković said, adding that in the end a sum f 30 billion euros wll be available in the next ten years.

Commenting on all those amounts, Plenković said that "this is a true lever for the economic growth and investments as well as for making the economy more resilient."

When it comes to the structure and speculations about how much could be funnelled to the private sector, Plenković said that about 95% of those 6.3 billion euros would end up in the private sector either directly or indirectly.

We are working on the national recovery and resilience plan that has to satisfy three components: 37% of green transition, 20% of digital transition and to make sure that those projects will not be detrimental to some other criteria of the Green Deal, the premier said and announced the presentation of the draft plan for next week.

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ZAGREB, 19 March, 2021 - A 50-year-old man has been taken into custody following an extensive operation by the police, state attorney and the security-intelligence agency (SOA) on the suspicion of torturing and killing seven Vukovar civilians during the Homeland War in September 1991.

The suspect and members of his paramilitary unit are believed to have punched, kicked and hit with their rifle butts a group of seven civilians, aged between 24 and 55, whom they found in the basement of a house in Vukovar.

The perpetrators then led the captured civilians to the city centre, killing six on the way, while a 55-year-old prisoner was wounded.

After that, the suspect and the other paramilitaries returned to the house and collected the women and children staying there whom they also wanted to take to the city centre but were stopped by an unidentified Serb army officer. The women and children and the wounded 55-year-old man were returned to the basement, however, the next day the 55-year-old was killed by an unidentified Serb paramilitary.

The police reported that after the reintegration of the Danube region an exhumation was conducted and six of the murdered civilians were identified. A 27-year-old man from that group is still unaccounted for.

The suspect was taken into custody while the Osijek County Attorney's office has filed criminal charges against him for war crimes against civilians.

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ZAGREB, 19 March, 2021 - Croatia will enter the euro area on 1 January 2023 at the earliest, and introducing the euro has a number of advantages but for those advantages to be greater the economy needs to be more flexible, including with regard to the labour market, a conference heard on Friday.

The conference, focusing on the introduction of the euro as the official currency in Croatia, was organised by the students' association Financial Club.

Croatian National Bank (HNB) Governor Boris Vujčić said in his opening remarks that Croatia cannot enter the euro zone before 1 January 2023.

"Whether Croatia will enter the euro area on 1 January 2023 or a year or two later, depends on when it will meet the nominal convergence criteria," said Vujčić, recalling that in July 2020, Croatia entered the European Exchange Rate Mechanism II (ERM II), a sort of waiting room for the euro.

He explained that the ERM II envisaged a minimum two years of participation in it so that a candidate aspiring to join the euro area can meet the nominal convergence criteria (Maastricht criteria). On the other hand, if it does not satisfy the criteria, which refer to the stability of the exchange rate, prices and interest rates, the budget deficit and the level of foreign debt, a country can remain in the ERM II indefinitely, Vujčić said.

He recalled a survey indicating that citizens fear that with the introduction of the euro the standard of living will deteriorate and prices will increase. However, surveys in countries that have already introduced the euro indicate that prices increased by 0.23 percentage points on average in the year when the euro was introduced, mostly for everyday goods such as coffee. Prices of such products are relatively lower so their increase could have been relatively high due to rounding off.

"That left the impression in public that prices increased more than they did," explained Vujčić, underscoring that the standard of living did not fall in any country that introduced the euro but rather it improved.

Ćorić: Biggest advantage to companies exporting to euro area

Minister of Economy and Sustainable Development Tomislav Ćorić said that it was clear that citizens would not start living better on the first day of introducing the euro, however, what points to better prospects was the fact that the macro environment in the euro area was free of risks that non-member countries were faced with.

The risk premium in all countries that entered the euro area has dropped, said Ćorić, noting that that was something that in normal circumstances should  bring benefits to Croatia, such as reducing yields on long-term security instruments and lower interest rates on commercial and consumer loans.

Considering, however, that we live in "fairly radical economic times," and a period of very low interest rates, the effects which countries that entered the euro area some ten years ago had would be somewhat lower, however, they would still be significant, he said.

The advantages are potentially biggest for export-oriented companies considering that the exchange rate risk will be eliminated, he said.

Ćorić said that the project for euro introduction was not an end in itself but was primarily a very good tool for Croatia's long-term economic growth and development.

Mačkić: Flexibility of labour market, final goods and services market

President Zoran Milanovic's economic adviser, Velibor Mačkić, conveyed the president's message saying that it was necessary to discuss the benefits and potential harm of Croatia joining the euro area.

Mačkić believes that Croatia has not developed its own institutions sufficiently and that that poses a problem. "The country needs a different economy, a much more flexible economy, to be able to benefit more significantly from the monetary union," said Mačkić.

He added that the labour market and the market of final products and services need to be more flexible.

Mačkić underlined the importance of an efficient fiscal policy and of the reform of the tax system which Mačkić believes needs to change from "a consumption-based to income-based tax system."

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ZAGREB, 19 March, 2021 - The Croatian parliament on Friday supported by a majority vote amendments to the Act on Hydrocarbon Exploration and Exploitation enhancing the transparency of those processes, with public participation, and banning large-scale hydraulic fracturing.

The amendments define more precisely procedures related to all oil mining activities and prevent the overlapping of more investors in a single area conducting different activities.

For the sake of development and use of renewable energy sources, Croatia's geothermal potential will be promoted by authorising the Hydrocarbon Agency to carry out exploratory activities and establish a development company promoting the development and use of geothermal potential.

Large-scale hydraulic fracturing is banned as a risky and dangerous activity, even though other exploratory activities using the fracturing method are still allowed.

Hydraulic fracturing is a well stimulation technique involving the fracturing of bedrock formations by a pressurised liquid. The process is used to recover gas and oil from shale rock and is very controversial and questionable from the point of view of environmental protection and preservation.

The parliament also amended by a majority vote the Act on Road Transport which defines the co-financing of public road transport, notably bus lines in rural areas.

The cancellation of nonprofitable bus lines in some areas, notably those that are sparsely populated, makes normal life for citizens more difficult and the situation has been additionally worsened by the coronavirus pandemic, which is why the government decided to ensure co-funding for public passenger road transport.

The amended law also exempts taxi drivers who have provided that service  under earlier regulations from the obligation of having to pass a professional competence exam.

The parliament also amended the Act on the Security of Sea Ships and Ports under which all ports must have security assessments ready.

The parliament adopted a national programme for the protection of consumers for the period from 2021 to 2024, a strategic document designed to enhance the efficiency of market supervision and better consumer information and education.

MPs also unanimously supported the establishment of an office for projects of the World Meteorological Organisation in Croatia.

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ZAGREB, 19 March, 2021 - Lawyer Tena Šimonović Einwalter is the new Public Ombudswoman, the Croatian parliament decided on Friday by secret ballot.

A total of 115 MPs voted for her election, while the other candidate, lawyer Sandra Hančić, received the support of one MP, Deputy Speaker Željko Reiner said.

Šimonović Einwalter, elected for a term of eight years, was since 2013 a deputy to Public Ombudswoman Lora Vidović, whose term expired on 1 March and who did not apply for re-election.

Five candidates had applied for the post, and after one candidate was eliminated for not having complete documentation, the remaining four were interviewed and Šimonović Einwalter and Hančić were proposed to the parliament.

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ZAGREB, 19 March, 2021 - The performance of the Croatian Competition Agency (AZTN) in 2019 was praised on Friday by lawmakers from both the ruling majority and the Opposition.

The report about the agency's activities in 2019 shows that the regulator settled 772 cases that year. The AZTN Council vice-president Vesna Patrlj today informed the parliament that while the agency was receiving more and more cases, it was faced with a decrease in the headcount.

In late 2019, it employed 52 workers and now it has two fewer employees.

"Wages are very low, while the work is very complex, and the training of employees takes some time," Patrlj said in her response to SDP lawmaker Andrea Marić who asked how highly educated people could be motivated to work in this regulator.

In 2019, the regulator issued HRK 4 million in fines and established the existence of two cartels, that is unlawful alliances of rivals, which is considered to be anti-competitive behaviour. The cartels were detrimental to consumers, Patrljsaid without specifying.

In one of the two cases, a user reported this unlawful association and in the other case, the regulator detected it after the participants in the cartel boasted of it in media statements.

Patrlj also called for promotion of the culture of market competition.

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ZAGREB, 19 March, 2021 - Jelena Pavičić Vukičević on Thursday accepted the nomination by the Bandić Milan 365 - Labour and Solidarity party to run for Zagreb mayor at the local election in May.

After a meeting of the party's presidency, Pavičić Vukičević said that she would lead the party to victory.

After Zagreb Mayor Milan Bandić's death, his deputy and long time associate Pavičić Vukičević stepped in as acting mayor until the election.

Jelena Pavičić Vukičević was Bandić's associate from the very start of his career and she herself has had many years of experience in the city's administration.

When Banidć was elected for his first term as mayor in 2000, she was the secretary of the Zagreb branch of the Social Democratic Party and a councillor in the city assembly. Three years later she was elected to parliament and in 2008 she was appointed as the head of the City office for education, culture and sports. From 2009 to 2013 she was appointed as Bandic's deputy mayor. In the 2017 local election, she was directly elected as deputy mayor of Zagreb.

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ZAGREB, 18 March, 2021 - In the fourth quarter of 2020, hourly labour costs rose in the EU and euro area at rates that were almost twice as high as in the previous quarter, while Croatia was again among the countries that recorded declines, a Eurostat report shows.

In the 27-member EU, hourly labour costs increased by 3.3% in the fourth quarter of 2020 compared with the same period in 2019. In the third quarter, they increased by 1.8%.

At the same time, hourly labour costs in the euro area were 3.0% higher than in the last quarter of 2019, following a 1.6% increase in the third quarter.

The higher labour costs reflected a rise in the costs of hourly wages and salaries, while the non-wage component moderated the growth in hourly labour costs, in particular due to the tax reliefs and subsidies granted by EU governments to support enterprises affected by the coronavirus crisis.

In the EU, the costs of hourly wages and salaries increased by +3.7% in Q4 2020, following a 2.4% rise in Q3. In the euro area, the costs of wages and salaries per hour worked grew by +3.5%, after a 2.2% increase in the third quarter.

In the EU, in the fourth quarter of 2020 compared with the same quarter of the previous year, the economic activities that recorded the highest increases in wage and salary costs were "Arts, entertainment and recreation" (+11.0%) and "Accommodation and food service activities" (+10.2%)

The non-wage component increased by 1.8% in the EU and by 1.5% in the euro area, following stagnation in the previous quarter.

The largest increases in hourly labour costs were recorded in Austria (+11.6%) and Bulgaria (+10.0%), while the lowest increases were observed in Hungary (+0.7%) and France (+0.3%).

Croatia, along with Ireland, Malta and Finland, had lower hourly labour costs in the fourth quarter of 2020 than in the same period in 2019. Ireland observed the largest decrease in hourly labour costs, of 4.8%.

in Croatia, hourly labour costs in Q4 2020 were 1.1% lower than in Q4 2019, while in Q3 they fell for the first time in four years, by 0.6%. In the fourth quarter, wage and salary costs fell by 0.2% and the non-wage component shrank by 6.3%, the largest decline since Q2 2016. In the third quarter, wage and salary costs rose by 0.3%, while the non-wage component fell by 5.8%.

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ZAGREB, 18 March, 2021 - The government on Thursday decided to extend its loan guarantee programme for enterprises in the field of culture and the creative industry until 30 June this year.

The programme foresees HRK 300 million in loans with guarantees of 100% of the principal and a maximum amount of €800,000 per applicant. The shortest period of the guarantee is one year and the most five years, which includes a one-year grace period.

Minister of Culture and Media Nina Obuljen Koržinek recalled that the government adopted the guarantee programme for enterprises in culture and the creative industry in July last year, which was the first time in history.

Considering that the pandemic situation has continued, the government has decided to extend the guarantee programme until 30 June, said the minister and added that preparations are underway to extend the programme until the end of 2021.

The loan guarantee programme is earmarked for SMEs in the field of culture and creative industry affected by the coronavirus pandemic.

The programme is aimed at securing additional liquidity for micro, small and medium-sized enterprises in culture and the creative industry at a decreased interest rate and/or fewer collateral required.

The programme is based on the European Commission Temporary Framework to support economy in the context of coronavirus outbreak. It was approved by the Commission on 17 June 2020 and adopted by the government on 2 July 2020.

Following amendments on 13 October 2020, the Commission enabled member states to extend the duration of state support until 30 June 2021, the government explained.

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ZAGREB, 18 March, 2021 - The government sent its proposal to amend the Volunteering Act to parliament on Thursday, defining the operation of volunteer centres and their funding.

The proposal also defines the concept of corporate volunteering, given that many companies in Croatia have developed a system of volunteering, and the concept of volunteering coordinator, who plays a significant role in efficient management of volunteering programmes in organisations.

The proposal does not allow volunteering for a duration of more than 38 hours a week over a period of more than three months without a break of at least three months, or long-term volunteering that would otherwise constitute a commercial contractual relationship.

The Minister of Labour, Pension System, Family and Social Policy, Josip Aladrović, said that the volunteering sector was developing fast and that the existing law made the implementation of new volunteering initiatives difficult in certain aspects. He said that the proposed amendments would remove the existing obstacles and ambiguities.

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