ZAGREB, April 11, 2020 – Finance Minister Zdravko Marić said on Friday budget revenues in the first ten days of April were one-third of those at the same time last year and reiterated that at first Croatia would tap the domestic market to finance aid and deal with the fallout of the COVID-19 crisis.
Speaking on the public broadcaster HTV, he said the general assessment was that the measures the government had taken so far to help the economy were satisfactory and that Croatia was near the top in the EU in terms of their GDP share.
He said the implementation of the measures was good and that 95,000 employers had applied for aid for over 550,000 workers.
He also mentioned moratoriums on loans, programmes for exporters and new credit lines totalling €1.8 billion.
Speaking on RTL television, Marić said bilateral arrangements worth HRK 6 billion had been signed with six domestic banks with an average interest of a little over 1%. He told HTV that pension funds and other instruments would also be utilised.
Asked how much the crisis would cost, Marić reiterated that according to projections, the next three months would cost the state budget about HRK 45 billion only to ensure the functioning of the state and the economic measures.
He could not say what the budget revenues would be. He said that aside from the budget reallocations the government made yesterday, Croatia would have to borrow and that this would increase the public debt.
“If we stay the course we have taken, then the jump won’t be high,” he said, adding that the period after the crisis would be even more challenging.
Marić said a budget deficit could be expected this year as well as a GDP decrease, announcing that the government would present its projections soon. He added, however, that no projections, including those from world financial institutions, contained data on how long and how deep the crisis caused by the COVID-19 pandemic would be.
On Thursday, the World Bank estimated that Croatia’s GDP will contract 6.2% this year, that the budget deficit will reach 8% of GDP and that the public debt-to-GDP ratio will be nearly 84%.
Marić welcomed Thursday’s agreement by EU finance ministers on an economic response to the pandemic crisis.
All member states agree on short-term measures: a credit line of the European Stabilisation Mechanism (ESM), a European Investment Bank (EIB) guarantee fund, and a programme for pan-European support for short-time work arrangements (SURE), all totalling €540 billion – €240 billion from the ESM, €200 billion from the EIB and €100 billion for SURE.
Marić said Croatia could not count on ESM funds as it was not a member of the euro area. “Croatia can count on SURE, an instrument to help measures that we too are implementing to preserve jobs,” he said, adding that those were no longer grant schemes but loans.
He said the finance ministers also reached a political agreement which, to come into effect, must pass certain legislative procedures. He announced that Croatia, as the country chairing the Council of the EU, would do its best to expedite the legislative part.
More budget news can be found in the Business section.
