Croatian Employers Propose Keeping Economic Measures in Place Longer

Lauren Simmonds

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As Poslovni Dnevnik/Ana Blaskovic writes, with the abolition of some of the country’s epidemiological measures with even more relaxations to come in the foreseeable future, the Croatian Employers’ Association (HUP) sent to the Minister of Finance Zdravko Maric proposals for a new set of economic measures.

The existing ones, this association of Croatian employers says, should be very carefully and only gradually rolled back in order to avoid a wave of bankruptcies and layoffs, and the introduction of several new ones are crucial in order to preserve liquidity and start an investment cycle.

“Maintaining liquidity isn’t just a matter of a period of closure – it’s necessary to provide liquidity to a company for a longer period of time, so that the business can start up again (and return to the point of coverage) at the moment when restrictions (work, movement) are removed,” say this group of Croatian employers.

They noted that small and micro enterprises, which are the most numerous Croatian enterprise, are more at risk than others as measures expire and recovery is possible only with investment momentum.

“Although not all activities are equally affected by this crisis, for the sustainable growth of the overall economy, it’s necessary to start up business again in all sectors. However, given the effect of the coronavirus pandemic, it’s questionable to what extent companies are able to finance any new investment cycle on their own,” the Croatian employers stated.

Although savings have increased, access to finance is limited, so support from the state in the form of additional measures and programmes is absolutely necessary, as are different types of grants and incentives to launch investments.

Aware of the jump in government indebtedness from the association of Croatian employers, they claim that the risk of a sudden relaxation of economic measures is significantly higher than additional (favourable) borrowing.

“The worst thing would be that after the introduction of all of those measures and everything we then endured following the suspension of those measures, that the affected companies remain in trouble and start firing people. Why would the owners of affected businesses have to bear the loss of revenue all on their own? They aren’t any more to blame for the consequences of the pandemic than business owners who just happen to not be particularly affected by this particular crisis,” they stated.

Therefore, in their range of requests addressed to the Minister of Finance, they propose to retain support for job preservation until companies achieve at least 90 percent of their respective pre-pandemic revenues.

“It is extremely important that the decision to get rid of certain measures to support the economy be introduced gradually, depending on the epidemiological situation, but also on the situation in a particular sector so as not to cause a wave of bankruptcies and layoffs,” said the Croatian employers, supporting OECD and IMF recommendations, as well as those recommended by the EC.

They’re also asking the government to continue covering part of companies’ fixed costs, taking into account the percentage drop in revenues, ensuring easy access to liquidity and working capital loans with guarantee schemes for the SME segment and the possibility of converting loans into grants, continuing the moratorium until at least the end of 2021 and investing in Industry 4.0.

For large Croatian companies, they propose support for investments by increasing support in the Investment Incentives Act and additional support to companies for co-financing a project from EU funds.

Among the proposals are the possibility of compensating receivables between companies for preventing chain illiquidity, speeding up the determination of bad loans, speeding up bankruptcies and the liquidations of companies, additional (non) tax relief or their abolition, and more tax relief for investments.

“We believe that the government measures introduced as a result of the coronavirus crisis should continue as long as we have enterprises who cannot function and preserve jobs on their own without assistance measures,” the association of Croatian employers concluded in their request to the Finance Ministry.

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