Economic Situation in Croatia Satisfactory, But Is it Sustainable?

Total Croatia News

ZAGREB, February 18, 2020 – Finance Minister Zdravko Marić said on Tuesday that the economic situation in Croatia is satisfactory but that further reforms are necessary given the always present question of how sustainable the existing situation is.

“Progress is necessary because even though the current economic situation is satisfactory, with a growth rate of around 3%, balanced public finances, a current account surplus and a further drop in public debt, there is always the question of the sustainability of such a situation,” Marić told reporters who after a meeting of EU finance ministers in Brussels asked him what he expected of the report on macroeconomic imbalances in the EU which the European Commission is expected to publish soon.

The minister went on to say that the global financial crisis of several years ago showed that things can change rapidly and that it was necessary to constantly work on structural reforms.

“As far as Croatia is concerned, monetary and fiscal policies have yielded and will continue to yield results, but focus must now be on reforms,” he said.

Marić expressed the belief that the report to be released by the EC next week would recognise the progress made but that Croatia had to focus on the recommendations which it had not implemented yet.

He called for launching a public debate on the health care system and on the dependence of the national economy on imports, with a systematic approach and with as little populism as possible.

Asked which reforms he considered the most important, Marić cited the issue of wages and bonuses, the organisation of work in the state and public administration, reform of the health sector as well as of the judiciary, which, he said, should be more at the service of the business sector.

Speaking of ECOFIN, Marić said that the EC was today given recommendations for the 2021 budget, which is the first budget to be drafted as part of the new multiannual financial framework.

“I expect the multiannual financial framework to be adopted in the coming period and the EC to make a draft budget for 2021 in May or June,” Marić said.

Answering a reporter’s question, Marić said that today’s ECOFIN meeting also included an informal discussion on the process of selection of the new head of the European Bank for Reconstruction and Development (EBRD).

The current EBRD president Suma Chakrabarti’s term expires in May this year.

Marić said the dialogue on the matter would continue, primarily at the level of finance ministers. “I cannot speak or speculate about the candidates at the moment,” he said.

He recalled, however, that with regard to the EBRD as well as the European Investment Bank (EIB), a debate had been launched about the EU’s new financial architecture.

“The selection procedure for the EBRD president should be viewed in a broader context. As a country with long-lasting membership in multilateral organisations, including the EBRD, Croatia wants activities in countries where the EBRD has been active so far to continue, but we will take into account also new proposals regarding the new financial architecture and expansion to some other countries of the region,” he said.

The EBRD signed its first agreement in Croatia in 1994 and so far it has supported 211 projects worth more than €3.8 billion.

More economy news can be found in the Business section.


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