Analysts Comment on Government’s National Reform Programme

Total Croatia News

Mixed reactions for government’s reform measures.

After the government yesterday introduced reforms that include an increase in retirement age to 67, elimination of business levies, abolition of a number of government agencies and the reduction of the share of public debt in GDP, economic experts gave their comments, reports on April 29, 2016.

Economist Guste Santini believes that among the proposed reforms there are some which are good, some which are less good, and some which are catastrophic. “It is a good thing that they want to reduce the public debt to GDP ratio, but it cannot be done by selling assets. The big question is whether now is the right time to sell assets due to poor prices in the market”, said Santini.

Talking about the reduction of business levies, he said that some of these were actually too low and should be increased. “We should analyse it more thoroughly. There cannot be a linear approach to this problem. Local and county budgets are too small, so they are forced to locally increase revenues”, said Santini. He added that the plans for introduction of property taxes were tragic. “We have been delaying the introduction of this tax for years and it seems to me that this is something that Europe insists on. It would be a tragic thing.”

Santini pointed out that Orešković’s team must take responsibility for the situation in which the country finds itself. “When you take such a high office, you have to take responsibility for the current situation. The only solution is to increase the non-taxable portion of income to 5,000 kuna a month. This would be a social measure, and then workers and trade unions could not say that there will be no reforms”, said Santini.

Stock exchange broker Mladen Oštricki is confident that the measures will lead to improvements in the economic situation. ” I absolutely believe that these measures will have a positive impact on the investment climate. The most important thing is that all these measures are implemented and that they receive political support. They will certainly give results and benefit the economic climate. People in Croatia still consider that saving money in a bank is the safest way to protect their funds, even at such low interest rates, because they are afraid to invest due to situation in Croatia. Implementation of these reforms can be a trigger to create a positive climate”, said Oštricki.

Economic analyst Damir Novotny believes that reforms are not sufficiently ambitious. “The general direction is good, but not ambitious enough. These government measures, they can hardly be called reforms and the question is whether they will result in a reduction of public debt and deficit. In my opinion, these measures will not be sufficient. Obviously, situation is not favourable for a stronger step forward in the improvement of public finances to be made”, said Novotny.


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