Economists Comment on Government’s Policies

Total Croatia News

They give the government a passing grade, but they do expect more.

In its first 100 days, the government has tried to keep focus on business and economy. Alen Kovač from the Economic Research Department at Erste Bank said that althought the cooperation format between the main coalition partners does contribute to slower decision-making, they have kept a strong focus on the problem of sustainability of public finances and on raising awareness about the importance of the fiscal adjustment and the efforts to stabilise the credit rating, reports on May 3, 2016.

“The budget framework for 2016 and a good starting position from 2015 are all good indicators. The efforts directed towards the improvement of the investment environment, but also towards the revival of the privatization process, are to be commended”, Kovač added. In his words, the focus on stability and predictability of the institutional framework is of special significance. But, he added that in the context of the current situation, structural reforms and the capacities for their implementation are still questionable.

“This pertains, most of all, to the efficiency of the wider public sector and especially to the quality in managing public companies. When it comes to efficiency, the direction towards digitalization is encouraging, as well as the announcement regarding the introduction and monitoring of the success criteria in public services. The time will show whether there was enough will and capacity to implement these programmes. Regarding the public enterprises, the first 100 days did not bring some significant changes and this is certainly a topic for the next 100 days”, said Kovač.

Hrvoje Stojić, the head economist at Hypo Alpe Adria Bank, has given a positive assessment to the government for its first 100 days, but added that the cabinet did not specify measures pertaining to the supply side economics, although the effects of such measures can be assessed only in medium-term.

“Despite the announced comprehensive reform of the tax system, here I am mostly referring to the lack of guidelines for the internal devaluation that is necessary for recovery of the competitiveness of private enterprises. They could have shown the urgency through the adjustment of the wage budget in the public sector together with the reduction of the business fees in medium-term. Strengthening the supply side economics includes the comprehensive tax reform, further flexibilization of the labour market, goods and services, and restructuring of the state companies. Few details have emerged about that, and they should present them before the next cycle of the business budgeting at the latest”, said Stojić

He also warned that there was no broader public debate about reforms in the pension and healthcare system, and about the other generous social benefits, pointing out that that it will be difficult to catch a momentum later in the government’s term.


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