Political Crisis not Affecting EU Funds Withdrawal, but Lack of Reforms is

Total Croatia News

The Pelješac Bridge project cannot be stopped by any current crisis, but any delays will slow the flow of EU money

In his last statement as part of the government that was dissolved on Thursday, Regional Development and EU Funds Minister Tomislav Tolušić announced the tender for choice of construction contractor for the Pelješac bridge to be published on Friday, or Monday at latest. He also added that any outcome of the current political crisis will not have an effect on the completion of this project, Tportal.hr reported on June 16, 2016.

“The tender will be published 99,9% tomorrow, Monday at the latest. This means the Pelješac bridge is not in question,” Tolušić said during the conference titled “Three years in EU – Growth and Employment through EU Policy.”

He ascertained that the resolution of the current political crisis, government reshuffling or new elections, will not have effect on this project, but could greatly slow the process of withdrawing EU funds, citing the fact that over 250 tenders for EU funds need to be opened just this year.

“A technical government can open all tenders. Speaking of the tenders for withdrawing EU funds that part is not in question, but the system does slow down as decisions of great financial burden cannot be signed. However, this will not affect the Pelješac bridge, as by then the construction contractor will not be chosen yet along with the rest,” Tolušić said.

He added his view that the current situation is damaging to the economy, but that new election would do more damage, as time is lost for preparation of projects to be financed form EU funds, something we’re not great at right now either.

“Time is passing. The money we have to spend we’re not spending in the tempo we should be. We want to spend a billion Euro this year, while we spent 545 million last year and 400 million the year before. By the time 2019 comes we should be spending 3.5 or 4 billion, but the way things look now it’s questionable if we’ll spend a billion at all. We’re losing time and will automatically put ourselves in a position of losing a year and costing the state a few billion Euro, due to a lack of projects. We won’t lose money due to new elections today, but will feel the loss in 2019, 2020 or 2023,” Tolušić said, reminding that out of a billion Euro from EU funds available this year, 506 million were withdrawn in the first half of the year, approximately the amount withdrawn in the entire 2015.

Entrepreneurship and Crafts Minister Darko Horvat called the condition of EU funds withdrawal in 2015 in his sector as “total failure.”

“2015 was a statistical error in my sector. Out of a potential 1.5 billion Euro only 50 million were withdrawn and that’s a failure. This year in only 10 days we managed to sign contracts valued at 90 million Kuna and for me it will be a success if we end this year at the volume around 10 times higher than last year,” Horvat said.

Head of the European Investment Bank office in Zagreb Anton Kovačev said the main obstacles for investment, including EU funds, are missing structural reforms, such as public administration or surplus of legal norms and not political instability, reminding of the example of Belgium, run for two years by a technical government.

“If we are reasonable enough and have national interest in the forefront, this should not be an obstacle,” Kovačev pointed out, saying investors are more interested in the simplicity of regulations and administration, cost of investment, meaning taxes and price of labour, things Croatia is not competitive in.

Podravka Management President Zvonimir Mršić said the current political crisis has no effect on their business and cited state administration as the biggest obstacle.

“We’re not feeling the effects of the political events at this moment, neither positively nor negatively, but 70% of Podravka’s income comes from export. At this moment our average interest is 3%, meaning we’re getting better rates than the state. We’re talking to banks almost on a daily basis and expect to keep having a lower rate than the state. However, the state administration did not create conditions for withdrawing around 2 billion Euro, available to us. That’s around 1.5 or 2% of the national GDP,” Mršić warned.


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