Minister Zdravko Maric Announces Cuts: Only Pensions are Safe

Lauren Simmonds

As Poslovni Dnevnik writes on the 21st of August, 2020, Finance Minister Zdravko Maric was a guest of Dnevnik Nova TV on which he revealed where the Croatian Government is planning cuts in order to “patch” the budget back up again, that is, which categories it will not touch.

At the beginning, the Minister of Finance, Zdravko Maric, commented on the deficit in the state treasury of 17 billion kuna when compared to last year and said that the deficit due to the coronavirus crisis is actually even bigger.

“This is a mid-year result that applies to both the period before the arrival of the coronavirus pandemic and after the fact. We’ll try to see how much coronavirus is actually going to cost us. On the one hand, we have a decline in revenues, both due to the decline in economic activity and due to the anti-epidemic measures, delays and the write-offs of taxes, but increased needs on the expenditure side of the budget. We paid only six billion kuna in job preservation support. When some other measures are added to that, we’re at almost 12 billion kuna, and then when we add it all up, we come to 21 billion kuna, and that’s at the moment,” explained Minister Maric, pointing out that cuts are being considered, and only pensions will be safe from them.

“Pensions will certainly not be touched, all other things are subject to our considerations,” he said. He said that the government is fully aware of the situation with the crisis, but pointed out that in the past four years they have proved that they will return public finances to balance as soon as possible.

“Reforms are one of the two key levers for using funds from the European Investment Recovery Fund,” he said, but Zdravko Maric was reluctant to talk about concrete cuts and reforms and avoided those issues several times.

Although it isn’t possible to accurately estimate the upcoming economic downturn, he pointed out that a decline of over twenty billion kuna is unfortunately predicted. The minister also explained that part of the reason for this was the decline in fiscalisation, which declined by more than 35 percent back in April this year.

“It will be the biggest drop for sure, at least since GDP has been being monitored. We didn’t have such statistics to go off back during the Homeland War, but this will certainly be the biggest drop,” claimed Zdravko Maric.

He announced that the government is starting to reduce income tax from 36 down to 30, and from 24 down to 20 percent, and the profit tax for all those who achieved less than seven and a half million kuna in turnover will be reduced from 12 to 10 percent. As for employees, he acknowledged that the new measures wouldn’t affect the salaries of those not covered by the reduction, so he appealed to employers when it comes to salary increases.

“De facto, today you can pay an additional thousand kuna a month to a worker, or even more, without needing to pay any additional taxes. Even before the coronavirus crisis hit, one of the key issues was how we were going to be able to compensate for labour shortages and how we can stimulate employers to increase employee wages. We’ve already said that we can only get out of this crisis if we work at it all together, as a joint force,” he said.

He estimated that we will return to how thinga were the year before the coronavirus hit, in terms of the Croatian economic picture, only a year later than expected, so in 2022.

“It’s a complex issue in which one must always refrain from commenting. We have a consultant doing his job, the process is carrying on, and when all the parameters are clear and when he sits down at the table and sees what that price is, whether the buyer is willing to buy and the seller sells, then we’ll have to see, but it’s complex and it’s difficult go into details,” Maric explained when discissing the complicated issue of possibility of buying INA.

Still, he admitted that all this has been going on for a long time and that it must end once and for all at some point in time.

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