Tuesday, 12 May 2020

Opposition: Budget Revision Doesn't Give Answers for Situation after June

ZAGREB, May 12, 2020 - Opposition parties in parliament on Tuesday criticised the 2020 budget revision, saying that it does not give any answers for the period after June when job-keeping measures will expire, and warned of a possible sudden increase in unemployment.

"The revision is gauged for the period until June 15 and does not provide any answers as to what will happen after that. That is when the key measure to preserve jobs expires," said Branko Grčić (SDP), asking what would happen with the 500,000 jobs after June 15.

"Where is the decision to extend that measure for three months? Where is the money to finance that measure? There isn't any..." said Grčić.

He believes that 500,000 people will end up in the Employment Service while money to cover their unemployment allowances has not been included in the budget revision.

Grčić added that all countries in the neighbourhood had introduced measures to help the business sector but also measures for households and that only consumption and demand can maintain any economic activity in the short term.

Nikola Grmoja (MOST) said that it's obvious from the budget revision that the election is at the front door and that budget spending is not being reduced while a drastic drop in revenue is expected. He, too, warned of the possible sudden increase in unemployment once the government's measures expire.

He called out the government and ruling majority for protecting banks because they did not adopt a decision on a loan and interest payment moratorium.

Grozdana Perić of the ruling HDZ party refuted criticism that the government was protecting only certain sectors, noting that it considered all economic activities important.

She added that the budget revision was a consequence of the coronavirus crisis and that Croatia would emerge from the current crisis much sooner than had been the case earlier.

More budget news can be found in the Business section.

Thursday, 7 May 2020

Revised 2020 Budget Reduces Revenues to 122 Billion Kuna

ZAGREB, May 7, 2020 - The government on Thursday sent to parliament a draft 2020 budget revision which reduces revenues by HRK 23.2 billion to almost HRK 122 billion and keeps expenditures at HRK 147.3 billion.

Speaking at a cabinet meeting, Finance Minister Zdravko Marić said the revised budget was appropriate to the current circumstances and that it ensured the functioning of the state and all its institutions and systems.

Under the revised budget, revenues are planned at HRK 121.95 billion, down from the originally planned HRK 145.1 billion. This decline is a result of bailout measures in dealing with the COVID-19 - the partial or full exemption from income and profit tax as well as contribution payments for businesses affected by the crisis - and of the economic downturn.

Last week the government projected that this year GDP will decrease by 9.4%. The 2020 budget was drawn up with a 2.5% growth projection.

Marić said that until the end of March, the revenues side showed no or little effects of the coronavirus crisis and that the fall was felt in mid-April. In the first two weeks, VAT revenues not only decreased but were negative.

The situation improved by the end of the month and April saw a 43.2% annual drop of tax revenues, while contributions dropped by 20%, Marić said.

Under the revised budget, tax revenues are planned in the amount of HRK 66 billion, HRK 18.1 billion less than in the original 2020 budget.

Marič said the strongest message of the revised budget was keeping expenditures at HRK 147.3 billion despite an unplanned HRK 7 billion for keeping jobs and millions in additional expenses for healthcare.

The focus in this short term is solely on the state's necessary expenses, he said, adding that the EU had helped to keep budgetary expenditures as originally planned thanks to a more flexible approach regarding contracted and allocated funds.

The original 2020 budget was almost balanced but the revision envisages a deficit of HRK 25.3 billion or 7% of GDP. The public debt-to-GDP ratio is planned to increase by 13.5 percentage points to 86.7% of GDP.

Marić recalled that in February the government issued three bond tranches totalling HRK 15 billion and, recently, a seven-year bond on the domestic market worth €1.445 billion as well as refinancing a HRK 7.8 billion treasury bill due today.

Marić said that in the weeks ahead the government planned to issue bonds worth €1.25 billion on the international market and a domestic bond in several tranches as well as utilise EU funds and borrow from international financial institutions.

The budgets of all ministries have been cut with the exception of the Labour and Pension System Ministry, whose budget was increased by HRK 4.75 billion to HRK 53.8 billion, the Health Ministry, whose budget was increased by HRK 93.7 million to HRK 12.5 billion, and the Agriculture Ministry, whose budget was increased by HRK 47.5 million to HRK 7.46 billion.

More budget news can be found in the Business section.

Thursday, 7 May 2020

Everyone Will Feel Budget Cuts, Expenditures Stay as Planned

ZAGREB, May 7, 2020 - A revised budget should be ready for the government's meeting on Thursday, Finance Minister Zdravko Marić said on Wednesday, adding that everyone would feel the cuts and that despite the difficult circumstances, budgetary expenditures would stay as planned.

Asked by the press ahead of an inner cabinet meeting how much the budget would be reduced, Marić said that despite additional expenses for the health system and outlays to keep jobs, budgetary expenditures would stay as originally planned.

He said savings would be made wherever possible so that the expenditure side of the budget that is financed from taxes and contributions stayed as originally planned.

Asked who the biggest "victim" of the revised budget was, Marić said "everyone, depending on their budgets."

"The most important thing is that everyone contributes. In today's circumstances, you can't expect the Health Ministry's budget to be reduced significantly when you have constant demands for outlays for equipment or masks, or the Labour and Pension Ministry's budget for pensions and support to the economy," said Marić.

The key message of the revised budget is that we are managing to keep expenditures as planned, he added.

This year's budgetary revenues are planned in the amount of HRK 145 billion and expenditures in the amount of HRK 147 billion.

The decrease in revenues is evident due to the bailout measures for the economy and, even more so, the decline in economic activity, Marić said, adding that the revenues side of the budget would certainly "suffer."

Asked if Croatia would borrow on the foreign market soon given the possibility of a caretaker government, he said the international market was "in our focus" but that it is necessary to prepare well for that and to "wait for the right moment."

Commenting on the European Commission's latest economic forecast, Marić said the steep decline in all of the EU would not be fully compensated for in 2021 and that it is necessary to work on making the decline as small and recovery as quick as possible.

The fiscal position and estimate of the public debt-to-GDP ratio are similar to the government's projections, which means the government's projections are credible, he added.

Asked if there was money to keep jobs after June, when a three-month period of government aid for that purpose ends, Marić said the money for May had been ensured through a bond issue and that aid for June and other months would be worked on.

As for tax payment deferrals, he said they were possible for a period of six months and that this measure might be reviewed, depending on the circumstances.

More budget news can be found in the Business section.

Friday, 1 May 2020

IJF: Croatia Improves Budget Transparency, But There Is Room for Improvement

ZAGREB, May 1, 2020 - Croatia has made progress on the global scale of state budget transparency, and according to the survey for 2019, it ranked 21st place among 117 countries, the Institute for Public Finance (IJF) said on Thursday, pointing out that there was still a lot of room for improvement.

As the IJF announced in an analysis by Mihaela Bronić and Josip Franić, the International Budget Partnership (IBP), a non-profit organisation from Washington D.C., published on Wednesday the Budget Transparency Score for 2019, and Croatia scored 68 out of the possible 100 points, according to the Open Budget Survey (OBS).

Thus, Croatia finished 21st on the transparency scale among the total of 117 analysed countries, entering the group of countries where substantial Information is available about the central state's budget, it was stated in the press release.

Croatia has increased the availability of budget information by increasing the information provided in the Enacted Budget and Audit Report and by publishing the Pre-Budget Statement online in a timely manner, said the International Budget Partnership’s Open Budget Initiative on its website.

More economy news can be found in the Business section.

Wednesday, 29 April 2020

Budget Projections on Thursday “Won’t Be Nice”

ZAGREB, April 29, 2020 - The government will outline new macroeconomic and budget projections on Thursday, and Finance Minister Zdravko Marić warned on Wednesday that the figures would not be nice due to the consequences of the COVID-19 epidemic.

"Unfortunately, this is our reality, those consequences of the coronavirus" Marić said while coming to ta meeting of the inner cabinet in Zagreb.

A new national programme of reforms and convergence plan are to be added to the government's agenda on Thursday.

Marić today declined to answer questions whether the downward trends would be expressed in double-digit figures.

He dismissed reporters' speculations that the government underperformed in the implementation of the national reforms programme, and countered that the implementation had to date been at a level of 80% while the remaining part could not be fulfilled due to the outbreak of COVID-19.

Marić pointed out progress in making the country ready for the adoption of the euro.

More economic news can be found in the Business section.

Wednesday, 22 April 2020

Croatia's Government Surplus 1.55 Billion Kuna in 2019

ZAGREB, April 22, 2020 - In 2019, the consolidated general government surplus amounted to HRK 1.55 billion, or 0.4% of GDP, while the consolidated general government debt amounted to HRK 293 billion or 73.2% of GDP, shows a report on the Excessive Deficit Procedure by the national statistics office, published on Wednesday.

In 2018, Croatia saw a consolidated government surplus of HRK 850 million or 0.2% of GDP while the consolidated government debt amounted to HRK 286 billion or 74.4% of GDP.

The official statistics indicate that 2019 was the third consecutive year that the government achieved a general government surplus while the debt to GDP ratio continued to decrease thanks to a nominal increase in GDP.

The surplus was mostly owing to a considerably improved financial result of extrabudgetary beneficiaries and public companies and increased tax revenues.

In 2019, taxes on production and imports totalled HRK 81.3 billion, an increase of 6% on the previous year.

Investments also grew by 27.6% to HRK 17.2 billion but last year was also marked by payments of government guarantees for shipyards amounting to HRK 1.78 billion, which impacted the surplus, DZS said.

At the end of 2019, the consolidated general government debt increased by HRK 6.9 billion, up 2.4% compared to the end of 2018. Of that amount, HRK 5.7 billion was net borrowing while the rest is attributed to positive exchange rate changes in the kuna against the euro.

The debt-to-GDP ratio fell by 1.5 percentage points compared to 2018 and stood at 73.2% of GDP at the end of 2019.

Last year the government adopted a budget based on an expected economic growth of 2.5%, a consolidated general government surplus of 0.2% of GDP or HRK 629 million, and a public debt to GDP ratio of 71.3%, however, with the outbreak of the novel coronavirus, which is seriously affecting the economy, it will be difficult to achieve those goals, the DZS said in its report.

More economy news can be found in the Business section.

Tuesday, 21 April 2020

Finance Ministry Issues 2.55 Billion Kuna Worth of Treasury Bonds

ZAGREB, April 21, 2020 - The Croatian Ministry of Finance sold HRK 2.55 billion worth of treasury bonds at an auction on Tuesday, considerably more than planned.

In advance of the maturity of HRK 1.16 billion worth of treasury bonds, the Ministry offered HRK 1.5 billion for subscription with a maturity of one year. Financial institutions submitted bids totalling HRK 2.55 billion and the Ministry accepted them all.

The Ministry issued HRK 2.55 billion in kuna-denominated treasury bonds with a maturity of one year and at an interest rate of 0.06%, the same as at the previous auction. The low interest rate is not surprising given the liquidity surplus in the financial system of some HRK 34 billion.

With the maturity of HRK 1.16 billion worth of treasury bonds, the balance of kuna-denominated bonds subscribed increased by HRK 1.39 billion to HRK 17.9 billion.

The next auction is scheduled for April 28 via the Bloomberg Auction System.

More budget news can be found in the Business section.

Thursday, 16 April 2020

Budget Revenues in First Half of April Only 1/3 Year-on-Year

ZAGREB, April 16, 2020 - Finance Minister Zdravko Marić said on Thursday budget revenues in the first half of this month were only a third of those generated in the first half of April 2019.

Speaking in parliament, he said the ministry expected May and June to be even more challenging.

Speaking of the effects of the crisis caused by the COVID-19 epidemic, Marić said fiscalised receipts in all activities were down 40%.

Responding to MPs' questions, he said HRK 13-15 billion a month was needed for the health, pension and welfare systems as well as for the measures to help the economy.

That is about HRK 45 billion for three months and if we add over HRK 20 billion for liabilities due, there is a need for HRK 65-70 billion, Marić said.

He reiterated that 95,000 employers had applied to the Employment Service for support to keep 550,000 jobs, and said that HRK 1.4 billion had been paid out to date for 439,000 workers.

He said the rest of the money for the March wages would most likely be paid out by tomorrow, after which applications would be invited for April wages, which would be paid in the first two weeks of May.

Marić said the Tax Administration had received 102,000 applications for the deferral, full or partial write-off or instalment payment of public contributions and that 85% had been granted.

The government's support for the economy shows the level of trust we have put in enterprise, the real and private sector, and we don't expect this trust to be abused, he said.

Marić voiced hope that the government's help would be utilised in the only right way, "which is that only with solidarity and unity can we ensure Croatia overcomes this crisis with the smallest scars possible and welcomes its end as prepared as possible."

More economic news can be found in the Business section.

Saturday, 11 April 2020

Budget Revenues in April Decline by Two Thirds

ZAGREB, April 11, 2020 - Finance Minister Zdravko Marić said on Friday budget revenues in the first ten days of April were one-third of those at the same time last year and reiterated that at first Croatia would tap the domestic market to finance aid and deal with the fallout of the COVID-19 crisis.

Speaking on the public broadcaster HTV, he said the general assessment was that the measures the government had taken so far to help the economy were satisfactory and that Croatia was near the top in the EU in terms of their GDP share.

He said the implementation of the measures was good and that 95,000 employers had applied for aid for over 550,000 workers.

He also mentioned moratoriums on loans, programmes for exporters and new credit lines totalling €1.8 billion.

Speaking on RTL television, Marić said bilateral arrangements worth HRK 6 billion had been signed with six domestic banks with an average interest of a little over 1%. He told HTV that pension funds and other instruments would also be utilised.

Asked how much the crisis would cost, Marić reiterated that according to projections, the next three months would cost the state budget about HRK 45 billion only to ensure the functioning of the state and the economic measures.

He could not say what the budget revenues would be. He said that aside from the budget reallocations the government made yesterday, Croatia would have to borrow and that this would increase the public debt.

"If we stay the course we have taken, then the jump won't be high," he said, adding that the period after the crisis would be even more challenging.

Marić said a budget deficit could be expected this year as well as a GDP decrease, announcing that the government would present its projections soon. He added, however, that no projections, including those from world financial institutions, contained data on how long and how deep the crisis caused by the COVID-19 pandemic would be.

On Thursday, the World Bank estimated that Croatia's GDP will contract 6.2% this year, that the budget deficit will reach 8% of GDP and that the public debt-to-GDP ratio will be nearly 84%.

Marić welcomed Thursday's agreement by EU finance ministers on an economic response to the pandemic crisis.

All member states agree on short-term measures: a credit line of the European Stabilisation Mechanism (ESM), a European Investment Bank (EIB) guarantee fund, and a programme for pan-European support for short-time work arrangements (SURE), all totalling €540 billion - €240 billion from the ESM, €200 billion from the EIB and €100 billion for SURE.

Marić said Croatia could not count on ESM funds as it was not a member of the euro area. "Croatia can count on SURE, an instrument to help measures that we too are implementing to preserve jobs," he said, adding that those were no longer grant schemes but loans.

He said the finance ministers also reached a political agreement which, to come into effect, must pass certain legislative procedures. He announced that Croatia, as the country chairing the Council of the EU, would do its best to expedite the legislative part.

More budget news can be found in the Business section.

Thursday, 9 April 2020

2.1 Billion Kuna of Budget Funds Redistributed to Address Corona Crisis

ZAGREB, April 9, 2020 - The government on Thursday redistributed budget funds in the amount of HRK 2.1 billion to address the consequences of the outbreak of COVID-19, and the most of those funds would be used for the government's measure to help employers to retain their workers.

Finance Minister Zdravko Marić informed the cabinet that a new round of the redistribution of the funds would soon ensue.

The lion's share, that is HRK 1.87 billion of the reallocated funds, will be set aside for the government's measure designed to keep jobs and ensure funds to employers whose businesses are hard hit by the corona crisis.

The Croatian liquidity guarantee scheme for export-oriented companies, which has been prepared by the Croatian Bank for Reconstruction and Development (HBOR), can count on 80 million kuna.

For instance, the government also has set aside 53 million kuna to fund the procurement of new equipment for microbiological diagnosis of the infection with coronavirus.

The funds have been ensured through austerity measures made by the ministries.

The infrastructure and transport ministry, for instance, has ensured 305 million kuna through cost-cutting plan.

The education and science ministry has provided HRK 294.8 million through its austerity measures, and the regional development and EU funds ministry 152.9 million. Other ministries have also made savings by cutting their costs.

More budget news can be found in the Business section.

Page 1 of 10

Search