ZAGREB, 13 April 2022 - As the maturity of the oldest Croatian euro bond in the amount of €1.25 billion is approaching, the Finance Ministry will for the first time this year issue a bond on the international financial market, with 2032 as the year of maturity.

The Finance Ministry on Wednesday opened a subscription book for new Croatian euro bonds ahead of 30 May, the maturity date of the €1.25 billion euro bond, the oldest Croatian euro bond issued in 2014.

The expected maturity date of the new issue is 2032, RBA analysts said.

Finance Minister Zdravko Marić said in late February an international bond issue was being prepared, to be followed by another issue on the domestic market in July.

Croatia last issued government bonds on the international financial market in March 2021, in two tranches - a €1 billion bond with 2033 as the year of maturity, an annual coupon rate of 1.125% and a yield of 1.257%, and one maturing in 2041 in the nominal amount of €1 billion, with an annual coupon rate of 1.75% and a yield of 1.788%.

The latter bond was the first issue to mature in 20 years, the longest period of maturity in the country's history on the international financial market.

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March the 21st, 2022 - Croatian Finance Minister Zdravko Maric has expressed his satisfaction with Croatia's credit rating, as confirmed by the S&P rating agency recently, claiming that Croatia now looks good in the eyes of international financial circles.

As Gordana Grgas/Novac/Jutarnji writes, after the respected Standard & Poor's rating agency reaffirmed the Republic of Croatia's credit rating and its stable outlook on Friday, but also lowered its forecast for economic growth this year from 5 to 2.5 percent, and gave a higher estimate for inflation than the previous one, of about 6 percent, Minister Zdravko Maric appeared to be satisfied in his statement for the media.

He believes that Croatia has a good reputation and is looking better and better in the eyes of various international financial circles, and this is important because it is preparing an international bond issue, with the help of the latest S&P report. As the circumstances on the international markets aren't the most favourable at this moment in time, he said, the realisation will be timed "when the best moment comes".

S&P raised Croatia's investment rating (BBB- / A-3) back in March 2019 and hasn't changed it since. Its possible increase, they mentioned, could be influenced by joining the Eurozone, a major political move which is set to occur next year.

According to Minisrer Zdravko Maric, the government will publish its latest official macroeconomic projections for this year in April, and he said that inflation has become one of the most important and noticeable macroeconomic indicators of our times.

"Inflation stood at 5.7 percent in January and at 6.3 percent in February. We expect this trend of accelerating inflation to continue in the first half of the year due to the base effect, and then a lot will depend on all of the other factors influencing this inflation. First of all, these are the prices of energy and food, but also the circumstances related to geopolitical and geostrategic events," said Maric, noting that these same circumstances affect the current forecast of Croatian GDP growth.

He said he was very pleased that the S&P report "recognised the government's efforts to improve the absorption of European Union (EU) funds, both from the Multiannual Financial Framework and the EU's New Generation,'' as well as to mitigate negative demographic trends through various measures and tax policies.

Regarding the implementation of the NPOO, he assessed that it is going very well and that Croatia had fulfilled everything it needed to by the end of last year, and then sent a report for evaluation to Brussels and expects an additional tranche of 700 million euros to be paid out in June.

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ZAGREB, 9 March 2022 - The cost of adapting the system to introduce the euro currency will cost about two billion kuna, Finance Minister Zdravko Marić revealed during a debate on the euro currency bill in the Sabor on Wednesday, underscoring that the positive aspects of that process outweighed the negative ones.

"We need to introduce the euro as soon as possible because Croatia is a highly eurorised country. Introducing the euro will mean a higher credit rating and hence lower interest rates. The business community also supports the euro, and being part of the euro area will better protect us in times of crisis," Marić said in response to concerns raised by lawmakers that introducing the euro would be an additional shock to citizens.

"When looking at the pros and cons of the euro, the balance is tipped towards the positive effects," Marić said.

He revealed that the total cost of adapting the entire system to the euro would cost about HRK 2 billion.

He said that consumer protection mechanisms have been foreseen and that in addition to dual prices, supervision would be conducted to prevent any unjustified price increases.

In those countries where the euro was introduced prices were rounded off, which meant an average increase of between 0.2 to 0.4 percentage points, while other inflationary pressures not related to euro introduction will be addressed by the government through measures to buffer the shock, Marić explained.

As far as the criteria regarding inflation are concerned, Croatia will meet them, he underlined.

Marić noted that the exchange rate to replace the kuna has been set at 7,5345 kuna for one euro and that it won't slide more than 15% up or down. The precise exchange rate will be known in July, he said.

For more information on Croatia's adoption of the euro, check out our dedicated business and politics sections.

ZAGREB, 17 Jan 2022 - Finance Minister Zdravko Marić on Monday called on all stakeholders in the society, including media and major actors in the euro changeover in Croatia, to do their utmost to prevent anyone from using this process to "fish in troubled waters" and charge unfair and excessive prices.

Addressing a news conference at which he, together with Prime Minister Andrej Plenković and Croatian National Bank (HNB) governor Boris Vujčić, outlined a draft act on the introduction of the euro as legal tender in Croatia, Marić underscored the obligation to display prices both in kuna and euro from 5 September through the whole of 2023.

The draft act also envisages some exemptions from this obligation when there are physical limits for such displays or excessive costs. Thus, stands in farmers' markets, newsstands, electronic displays at filling stations, or taximeters will be exempted from this obligation. Also, commodities with prices already printed on them will be sold until stocks last.

However, they are not exempted from issuing invoices and bills both in the kuna and the euro, Marić said.

The authorities today published guidelines for the adjustment of the enterprise sector during the process of switching to the euro.

The guidelines have been prepared by the coordinating committee for the adjustment of the economy and consumer protection, with the economy ministry at its helm.

Undue price rises forbidden

The document highlights the major principle that undue price rises in the euro changeover are forbidden.

Marić admitted that the whole matter had not been regulated by law and called on all actors to join in the fight against any undue price rises.

Fulfilling Maastricht criteria

The minister recalled that Croatia could enter the euro area on 1 January 2023, provided that it fulfilled the convergence criteria, and a final decision on the assessment of Croatia's performance is expected in July 2022.

One of the Maastricht criteria refers to sound and sustainable public finances, which includes trends in the public debt and deficit. Marić said that this was under control and that their reduction was being conducted at an adequate rate.

Also, concerning price stability as a criterion, the inflation rate cannot be more than 1.5 percentage points above the rate of the three best-performing member states.

Marić said that inflation trends should not undermine the entire process.

HNB Governor Vujčić also believes that the convergence criterion about price stability would be met.

The reference value for the inflation rate has never been under the average rate of inflation in the eurozone, Vujčić explained.

Prices of consumer goods and services in Croatia, as measured by the consumer price index, increased by 5.5% in December 2021 compared with December 2020, while in the whole of 2021 they rose by 2.6% year on year, the State Bureau of Statistics (DZS) said today.

Regardless of the acceleration of inflation in recent months, Marić said that Croatia's inflation rate was still rough around the average of the euro area or slightly below this average.

Last Thursday, Marić said that the government had revised its inflation growth projection for this year up to 3.5%, adding that VAT cuts were being considered as part of a set of measures aimed at buffering energy price hikes. Speaking to the press, Marić said then that the government was following developments with price hikes.

He said inflation accelerated in recent months and that its growth in December might exceed 5%, which would be visible at the start of this year.

That prompted the government to revise its projection to 3.5%, up from the 2.5% increase forecast earlier, he added.

The minister said that according to available data and expectations, higher inflation rates were expected in the first months of this year, "after which there should be a convergence to an average 3.5%."

Besides food, the main focus is on energy prices given the price trends of raw materials at the European level, he said, adding that the price of gas for households would be corrected as of 1 April.

He said the government would come up with a package or individual measures aimed at buffering the increase so that living standards were not affected in a major way.

For more, check out our dedicated politics section.

ZAGREB, 4 Jan 2022 - Consumer spending in Croatia reached a record-breaking level in 2021 as Croatians spent HRK 17.5 billion in December alone.

"The data on record-breaking spending in December partly surprised us, but that's what we expected. You could see that the whole of last year was really good, notably, the 5% increase in the value of fiscalised receipts compared with 2019," Finance Minister Zdravko Marić said in an interview with HTV public television on Monday evening.

Marić said that the record for last month was set on 23 December when nearly 8 million fiscalised receipts were issued and their value reached nearly HRK 900 million. He noted that 13 August 2021 holds the record since the fiscalisation system was introduced when nearly a billion fiscalised receipts were issued in a single day.

Marić said that the government's original growth forecast for last year was 5%. "The last projection was 9%, and by all indications, we have reached the border of the two-digit growth rate. This indeed is a very good result and we will be among the top three (EU) countries with the highest growth in 2021," he predicted.

Speaking of challenges ahead, notably those concerning the COVID pandemic, Marić mentioned inflation and disruptions to global supply chains. "In my opinion, these are the two biggest risks to our macroeconomic projections. However, there is a great deal of or at least several strong positive factors, first and foremost the implementation of the National Recovery and Resilience Plan and our path towards the eurozone and Schengen."

Marić said that the government has moved from the job retention phase to the job creation phase, noting that the labor shortage is one of the main issues that need to be addressed. "That's why all these measures concerning active employment policy, which should lead to higher employment and higher wages, should be fully supported."

2022 inflation projected at around 3.5%

Speaking of inflation, Marić said that inflation has picked up in recent months and that for the most part it has been imported, citing prices of raw materials and oil and supply chain disruptions. This has resulted in inflation spilling over to a wide range of items, notably food and fuels, he added.

"As for our projections, we will have data for December in the coming days. We expect that inflation will continue to accelerate as it did in the first half of the year. Based on the available data, average inflation for 2022 is projected at around 3.5%," the finance minister said.

Marić said that based on this estimate, it could be concluded that prices in 2022 would grow somewhat faster than wages, but added that there were several strong drivers that would push wages upwards.

"On the one hand, there is a labor shortage, so employers will be forced to increase wages, while on the other hand, active employment policy measures will make their contribution. In case of price growth is higher than wage growth, which is still not certain, but if that happens, the difference will not be such as to substantially endanger the living standards of Croatian citizens," Marić said.

For more, check out our politics section.

ZAGREB, 13 Nov, 2021 - The credit rating is important for the price of borrowing for the state, businesses and citizens as its upgrade lowers the risk premium, which has a favourable effect on the price of capital, Finance Minister Zdravko Marić told Hina on Saturday.

The Fitch Ratings agency yesterday upgraded Croatia's rating to BBB, the best in Croatia's history, with a positive outlook.

Marić said the rating was first of all closely related to debt price and the capital price for the state and, directly or indirectly, for the interest paid by businesses and citizens.

The Fitch rating has a positive effect on those processes, he said, but added that the upgrade should be viewed in continuity, recalling that until not so long ago the state paid a considerable amount for interest.

In 2015, the budgetary expenditure for interest was HRK 12 billion, which at that time was almost the entire budget of the education ministry, whereas now that expenditure is HRK 4.5 billion lower.

"Interest used to be 5-6% and now it is about 1% on the ten-year bond," said Marić, adding that the credit rating assessment was important both in times of low and in times of higher interest rates on capital markets.

"We are talking about reference interest rates," he said, adding that the increased money offer in recent years led to a considerable drop in reference rates, but that the total interest paid by citizens, businesses and the state was a sum of the reference rate and the rate related to a specific country and to the risk premium.

"That's where the rating strikes because Croatia can't influence the trend of reference interest rates, but it can the risk premium it pays."

Marić said Croatia had a stable growth, public finances in order, a clear prospect of entering the euro area, and political stability.

"Those are all elements which have an effect on rating improvement, which is then reflected in a better perception and reputation of a country like Croatia in the financial world, and in the end comes the effect on the risk premium," he said. That is important both when reference interests are low and when they are high, he added.

The investment rating is very important, not just for debt and capital prices but also for capital availability, Marić said.

"The moment you are in the investment zone, you are interesting to many more good investors who can invest in securities," he said, adding that international investors had restrictions and were often not allowed to invest in a country below the investment credit rating.

"That's why it's very good that that has changed for Croatia in terms of Fitch and Standard & Poor's," Marić said, adding that it was also important that Fitch had a positive outlook on Croatia. "That sort of indicates the direction the rating could take."

He praised the media focus on the credit rating, saying that it was good that people became aware of how important it was to know how to manage public money well.

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ZAGREB, 7 Nov 2021 - Finance Minister Zdravko Marić has been found to be positive for COVID-19 after undergoing a test at the weekend, the government announced in a press release on Sunday.

Marić underwent a test after a member of his family had developed symptoms of the infection. His test returned positive, after which epidemiologists have ordered him to stay in isolation for ten days.

The minister "is feeling well and for now, he has no symptoms of the COVID-19 disease. He will stay in isolation and perform his duties from home while following orders from his doctor and epidemiologists," the press release said.

Marić, as well as other cabinet ministers, were vaccinated against COVID-19 early this year, and would soon receive a booster dose, following recommendations by the Croatian Public Health Institute, government spokesman Marko Milić said, adding that several cabinet ministers had already received the third dose of vaccine.

Milić appealed to all citizens to get vaccinated if they had not done so yet because the vaccine protects against serious forms of the disease. He also appealed to people who had received their second shot six months ago or longer, especially the elderly or those immunocompromised, to get a booster dose as soon as possible.

He recalled that Deputy Prime Minister Boris Milošević and Labour Minister Josip Aladrović, who had become infected even though they had been vaccinated, had overcome the infection with very mild symptoms.

Also, the opposition Bridge party leader, Božo Petrov, said in an interview with Nova TV on Saturday evening that he was positive for COVID-19. "Two or three days ago I found out I was infected. I had symptoms, I called my doctor and did a PCR test, which showed I was positive," he said.

For all you need to know about coronavirus specific to Croatia, make sure to bookmark our dedicated COVID-19 section and select your preferred language.

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November the 5th, 2021 - The Croatian fight against the spread of the novel coronavirus, SARS-CoV-2, and the economic/job preservation measures which were introduced, have cost the country a pretty penny. Finance Minister Zdravko Maric revealed the exact, eye-watering figures.

As Poslovni Dnevnik writes, most of the costs relate to government measures which were introduced in an attempt to preserve jobs, both directly and indirectly, and these are taxes, contributions, everything that the state decided to take into its own hands, said Finance Minister Zdravko Maric, who presented to Croatian Parliament the rebalance of this year's state budget.

The supplementary budget increases total budget revenues by 3.3 billion kuna to 153.6 billion kuna, and expenditures by 6 billion kuna to 173.3 billion kuna. The state budget is expected to record a deficit of 19.7 billion kuna or 4.7 percent of GDP, while the general government deficit will be 18.9 billion kuna or 4.5 percent of GDP.

The Minister reiterated that the estimates of GDP growth for this year have been revised from the originally planned 5.2 percent to about nine percent, writes Dnevnik.hr.

When we look at all components of domestic GDP, except for investments in the private segment, we have a significant increase in all categories, Zdravko Maric explained, before pointing out that, in terms of investment, in the coming years, they will be the main drivers of overall economic growth.

Average annual inflation is 2.4 percent

Zdravko Maric also gave an estimate of price movements, meaning inflation.

''Regardless of the last few months and the accelerated, visible inflation, our estimate for this year is 2.4 percent for average annual inflation,'' he said. He also stressed that a reduction in public debt in GDP to 83.1 percent is planned.

"Although we're revising the deficit from 3.8 to 4.5 percent, this year we expect, given the much higher growth rate than initially expected, a further reduction in the share of public debt in GDP to 83.1 percent," he said, before noting that for four years in a row now, public debt has been reduced "cumulatively by almost 12 percentage points of GDP".

''The coronavirus pandemic and to a degree, the earthquakes of 2020, once raised the share of public debt in terms of GDP to 87.3 percent and once erased all the effect of those four years,'' said Maric, adding that those 4.2 percentage points, according to estimates that have been seen in other countries, will place Croatia among the top three.

This result, Zdravko Maric added, should be emphasised not only in numbers, but also in the fact that we have done and are doing everything possible, and according to the growth rate and reduction of the share of public debt in GDP, it can already be concluded that the effect of the pandemic, without no matter how strong, he was a one-off.

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ZAGREB, 4 Nov 2021 - Prime Minister Andrej Plenković on Wednesday evening defended Finance Minister Zdravko Marić from yet another attempt by the parliamentary Opposition to have the minister replaced, calling the opposition motion bizarre and the group of MPs who supported it as ridiculous.

"The parliamentary majority rejects the motion and Minister Marić will continue doing his job to the benefit of the Croatian economy," Plenković said in a debate on a motion by 34 opposition MPs for the parliament to give Marić a vote of no confidence.

He then described independent MP Karolina Vidović Krišto's presentation in which she explained the reasons for the motion as 'bizarre', likening the ideologically diverse group of MPs who supported it to "a circus troupe".

The PM said that the Opposition did not understand the concept of division of powers, judicial autonomy or unobstructed police work, dismissing their claims as conspiracy theories.

Speaking of the government's achievements, Plenković recalled the tax reform, reduction of public debt, restoration of the country's credit rating, and job preservation, wondering what Vidović Krišto had done. "What have you done for Croatia to join the EU? Nothing at all," he said.

He added that the incumbent government would continue in its present form for several years to come and work to improve citizens' living standards.

Finance Minister Zdravko Marić dismissed allegations from the motion for a vote of no confidence, calling them unfounded.

He said that he categorically rejected any insinuation, starting with the one that he used his position to favour his friends' and acquaintances' interests, noting that he was doing his job conscientiously and responsibly.

Vidović Krišto launched the motion for a vote of no confidence in Marić over his spending a few days on a yacht owned by businessman Blaž Pavičić and over what she described as "his lie to the public that the businessman does not do business with the state."

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October the 27th, 2021 - Finance Minister Maric has been discussing the completion of the rebalance of the state budget for 2022, and has stated that all of the processes and procedures which need to be done have been passed, as reported by N1.

As Poslovni Dnevnik writes, Finance Minister Maric stated that the rebalance and domestic economic growth is higher than expected, that he and his team are busy finalising the macroeconomic projections and that they're going over 8 percent, which is a very good result and we can be satisfied with it.

''The Republic of Croatia will reach pre-recession levels of GDP in two years, which is a fantastic result. That rate had its repercussions, revenues will be slightly adjusted for the better, but that said, we also have not the best news, as the expenditure side of the budget is growing slightly more than the revenue.

We had a slightly higher indexation of pensions, primarily due to inflation, but as a government, we're glad that pensions are rising. We also have a situation with measures to preserve jobs, they were envisaged only for the first couple of months, but for some sectors they're still valid. As for salaries, we knew from the beginning that we had insufficient funds, but now we're securing them. At the level of the general government, the deficit is slightly higher,'' explained Finance Minister Maric.

On the debt to wholesalers, he said that healthcare is in the first budget, so now, given the situation with coronavirus, this enfeebled sector inevitably needs a quality reform on the expenditure side.

''Revenues provide their contribution, and this year, we'll allocate over 9 billion kuna to keep the payment deadlines at 180 days for hospitals and 120 days for pharmacies. If we look at wholesalers, at the moment, with a small deviation, the debt of hospitals stands at 2.8 billion kuna, and pharmacies some 400 million kuna. To compare, over 9 billion has been paid off so far and will be paid by the end of the year to meet those deadlines. That's when we'll need to come to increasing expenditures,'' he added.

When asked how much the rebalance for the healthcare system will amount to, Maric said quite frankly - one billion and six million kuna.

"You'll get to hear about the deficit on Thursday, and then we'll have to dose it a little, it will certainly be over 4 percent but it won't reach some unsustainable level," he said.

“It brings us back to the trajectory we had before the pandemic. We had a continuous reduction of public debt for four years, then we had a jump due to coronavirus, and this year alone we've been returning to the path of reducing public debt,'' he said.

''l’ll finish up with a bit of good news - public debt will decline at the end of the year. It's something we want to emphasise, it's a clear message to everyone, you know yourself, fiscal policy has been put into the function of preserving health and life and jobs from day one,'' said Finance Minister Maric.

''The inflation projection is still below 3 per ent. Despite the acceleration, it's stayed at that level, but we're still taking it very seriously, not only because of the Maastricht criteria, but also because of people,'' concluded the Minister of Finance.

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