Thursday, 26 May 2022

FinMin Says Gov't Considering New Set of Measures to Counter Inflation

ZAGREB, 26 May 2022 - A new package of measures to help Croatians to address inflationary pressure is very likely to be prepared, we are working on it, Finance Minister Zdravko Marić said on Thursday after a meeting of coalition partners, however, he stopped short of saying when those measures could enter into force.

The new package of anti-inflationary measures is being discussed in the government and in the coalition, Marić said.

"We will see when it is ready, we are working on it," he said.

According to Marić, the new package "is very likely given the development of events," and it will include state aid in the form of guarantees to gas suppliers, primarily the HEP national power supplier, in order to facilitate the provision of gas supplies for the next season.

The priority is to cushion the effects of inflation and ensure energy supplies and food products, said Marić.

Asked whether the price hikes in stores were justified, Marić said that it is difficult to make general assessments because prices are impacted by a series of elements.

Commenting on complaints by the hospitality sector related to the recent "tax massacre," Marić said that these were regular activities by the Tax Administration that "protects the interest of taxpayers who meet all their tax liabilities in an orderly manner."

During the pandemic, the state showed solidarity with the services sector, primarily in hospitality and now it "expects the same at least from the other side."

He said that supervision revealed certain irregularities with a smaller number of hospitality providers. He warned that increased turnover was recorded where supervision was stepped up and significant disproportion was identified with entry (supplies) compared with exit data. As such the Tax Administration can react and that is what it is doing. Marić underscored that this is a regular activity conducted by the Tax Administration.

For more, check out our politics section.

Thursday, 5 May 2022

Right-Wing Opposition Says Croatia Not Ready For Euro, Finmin Enumerates Benefits

ZAGREB, 5 May 2022 - The right-wing opposition said on Thursday that Croatia was not ready to introduce the euro and that it would lower living standards, while Finance Minister Zdravko Marić talked about the benefits and said much had been done to reduce the negative effects as much as possible.

A number of regulations reduce the negative effects of introducing the euro on citizens and employers, from stimulating healthy competitiveness to including civil society associations, Marić said in a debate on the final proposal to adopt the euro as legal tender in Croatia.

The benefits are significantly bigger than the damage, he said, adding that the main benefits are the elimination of the currency and interest risks, a two-notch higher credit rating, and a lower risk premium.

Marijan Pavliček of the Sovereignists said entering the euro area at a time of the biggest financial uncertainty, energy crisis and high inflation was not wise.

He said this was not an economic project, but the prime minister's political project, that inflation was 7.8% and GDP growth 3%, that consumption dropped, while inflation and the deficit increased.

Božo Petrov of Bridge said all independent financial experts said Croatia was not ready for the euro. He asked how the government would guarantee that prices would not rise even more, that imports would not take over and wages fall.

Marić said it was difficult to accurately predict or guarantee something even in more normal circumstances.

Ružica Vukovac of For a Just Croatia said it was not a good time and that Croatia's economic problems should be solved first.

Ante Prkačin of the Democratic Movement said that by introducing the euro, Croatia would move further away "from the fate of Croats in Bosnia and Herzegovina, who are subject to political terror."

On the other hand, Emil Daus of the Istrian Democratic Party said introducing the euro was a logical part of European integration. The problem is, will we be a strong economy and a functioning state with clear long-term goals, he added.

Boris Lalovac of the Social Democratic Party said the euro would have a positive effect on transaction and currency costs.

Zvane Brumnić of the Social Democrats said "our only chance is if someone else takes care of us."

Grozdana Perić of the ruling HDZ said the euro would make doing business more favourable and safer as well as facilitate investment, economic growth and higher living standards.

Marić reiterated that the Council of the EU's decision on Croatia's accession to the euro area was expected in July and that if all the requirements had been met, the euro would be introduced on 1 January.

He said Croatia met all criteria as last year's deficit was under 3%, the public debt-to-GDP ratio was reduced by seven percentage points and inflation was within the EU average.

Prices will have to be displayed in both kuna and euro as of 5 September.

For more, check out our politics section.

Thursday, 4 November 2021

PM Says Motion to Vote No Confidence in FinMin Bizarre

ZAGREB, 4 Nov 2021 - Prime Minister Andrej Plenković on Wednesday evening defended Finance Minister Zdravko Marić from yet another attempt by the parliamentary Opposition to have the minister replaced, calling the opposition motion bizarre and the group of MPs who supported it as ridiculous.

"The parliamentary majority rejects the motion and Minister Marić will continue doing his job to the benefit of the Croatian economy," Plenković said in a debate on a motion by 34 opposition MPs for the parliament to give Marić a vote of no confidence.

He then described independent MP Karolina Vidović Krišto's presentation in which she explained the reasons for the motion as 'bizarre', likening the ideologically diverse group of MPs who supported it to "a circus troupe".

The PM said that the Opposition did not understand the concept of division of powers, judicial autonomy or unobstructed police work, dismissing their claims as conspiracy theories.

Speaking of the government's achievements, Plenković recalled the tax reform, reduction of public debt, restoration of the country's credit rating, and job preservation, wondering what Vidović Krišto had done. "What have you done for Croatia to join the EU? Nothing at all," he said.

He added that the incumbent government would continue in its present form for several years to come and work to improve citizens' living standards.

Finance Minister Zdravko Marić dismissed allegations from the motion for a vote of no confidence, calling them unfounded.

He said that he categorically rejected any insinuation, starting with the one that he used his position to favour his friends' and acquaintances' interests, noting that he was doing his job conscientiously and responsibly.

Vidović Krišto launched the motion for a vote of no confidence in Marić over his spending a few days on a yacht owned by businessman Blaž Pavičić and over what she described as "his lie to the public that the businessman does not do business with the state."

For more on politics, follow TCN's dedicated page.

Monday, 11 October 2021

FinMin: There's Room for Stronger Economic Cooperation Between Croatia and France

ZAGREB, 11 Oct 2021 - There is room for stronger economic cooperation between Croatia and France, notably in energy, transport, and environmental protection, Finance Minister Zdravko Marić said after meeting with a high-level delegation of French companies in Zagreb on Monday.

Some of these French companies are already present on the Croatian market, while some are interested in investing in the Croatian economy, in particular in energy, renewable energy sources, the green, and digital transition, transport, and environmental protection, Marić said.

He said that there was an interest in various aspects of cooperation, with emphasis on the use of EU funds and the areas covered by the National Recovery and Resilience Plan, such as environmental protection and water management.

The meeting also focused on political aspects of cooperation, including the planned purchase of fighter jets for the Croatian Air Force, and "hopefully, a forthcoming visit by French President Emmanuel Macron." 

The French are the ninth-largest investors in Croatia, Marić said, citing the Istria motorway project and the Zagreb airport project.

Marić said that they also discussed the investment environment in Croatia. He said that since the beginning of its term in office, the government has focused on economic issues. He said that the government has embarked on tax reform and consolidation of public finance to improve the business climate.

Marić said that great emphasis was also on the National Recovery and Resilience Plan and Croatia's aspirations to join the Schengen area and eurozone, which he said would also help increase the interest of investors.

Asked to what extent the purchase of military aircraft from France would help attract French investors to Croatia, Marić said that this was difficult to say, but that today's visit showed that Croatia was recognized in the right way.

For more about politics in Croatia, follow TCN's dedicated page.

Friday, 30 July 2021

Finance Minister Zdravko Maric Planning to Slash VAT on Food

July the 30th, 2021 - Finance Minister Zdravko Maric has announced that he does indeed intend to slash VAT on food during a recent guest appearance on RTL Danas (Today).

As Poslovni Dnevnik writes, before we take to the subject at hand, it's worth noting that Finance Minister Zdravko Maric did not accept the proposals of the National Association of Caterers on lowering VAT on beverages and respecting labour costs as a tax deduction. Let's look at precisely why didn't he satisfy this association's wishes.

"We always end up talking about VAT somehow..." stated Maric.

"It's not just a question of satisfying or not satisfying people's desires. I mean, we always end up talking about VAT whatever the topic is. I do emphasise all the time for the hospitality sector, as well as for all other activities, this government in the past and this term, despite the pandemic, has conducted several rounds of tax relief to stimulate activities, employment, the raising of wages… Of course, in the wake of all this we're continuing to work hard, and caterers always come up with this suggestion that the only exclusive variable is VAT. One of the interlocutors in this regard was the co-owner of a restaurant. Let's just sit down and demystify a few things now. So... complete accommodation in tourism, complete food and service is already at a reduced rate. We're only talking about bars here,'' Maric said.

What would those numbers look like?

"We're talking about approximately half a billion kuna. Now, looking at the data we have from the past year, it's certain that the pandemic had a significant share in the hospitality sector, however, you know that the hospitality sector has been recognised with our measures since day one. At a time when it was horizontal for all sectors, and to this day the hospitality industry is one of the few that is the recipient of measures to preserve jobs and cover fixed costs.''

There has been a lot of talk about VAT in the last term of this government as well, it was promised that the general VAT rate would be reduced. In the end, that didn't happen. Is it a topic at all anymore?

"It isn't in the government's programme at the moment. Let me remind you, there was a reduction in the income tax rate, especially for young people, you know that it all came into force and that it has already been done. Young people can testify to that, I'd also say that they were pleasantly surprised with those tax refunds. What follows, when the conditions for that are created, is written in the government's programme that the reduction of VAT will be applied to all food in general, but we'l see when and how we'll implement it,'' stated Finance Minister Zdravko Maric.

Next came the topic of the pandemic-dominated season, and we're not just talking about tourism here. Maric was asked if he was worried about the epidemiological situation and the possible sudden end of the tourist season, to which he responded:

"I think we really do all need to contribute individually to prevent that from happening. We aren't talking only about tourism here but also all other economic activities. The third quarter is generally the strongest in terms of economic activity. Very soon our children will return to school. We really have a lot of segments that we have to take care of in order to finally gain this victory over the virus and to be able to live normally again,'' Finance Minister Zdravko Maric replied.

The European Commission has now officially adopted Croatia's National Recovery and Resilience Plan. What's the next phase? When do the first funds arrive and what will they be used for?

"At the end of August, the government will authorise the signing of a financial agreement with the EU. After that, I expect a 13 percent advance in September of somewhere around 820 million euros. By the end of the year, Croatia must meet the 34 criteria it listed in the document, which is the basis for withdrawing an additional 700 million euros in the first half of next year. By the end of 2022, we need to meet the requirements that will ensure the withdrawal of 46 percent of the total envelope of money, which is very good news because it means that at the beginning of this period, we'll be able to use the most funds,'' concluded Finance Minister Zdravko Maric.

For more, follow our politics section.

Friday, 11 September 2020

FinMin Violated the Principle of Good Conduct, The Conflict of Interest Commission Says

ZAGREB, Sept 11, 2020 - The Conflict of Interest Commission found on Friday that FinMin violated the principle of good conduct by participating in a decision by the Croatian Bank for Reconstruction and Development (HBOR) to grant a loan to a company owned by his friend Josip Stojanovic Jolly.

The procedure against Maric was launched in December last year due to the possibility of bias because, in his capacity as finance minister and president of the HBOR supervisory board, he did not excuse himself from the decision to issue a loan to Stojanovic's Olympia Vodice company, which was issued with an HBOR loan for the construction of a hotel even though he had made it clear in his statements to the media that Stojanovic was a friend of his.

The commission decided on Friday that Maric was not in conflict of interest but rather that he had violated the principle of good conduct, which is not subject to any penalty.

The commission also found that Maric had not violated the law by attending a World Cup match in Russia where he was seen in Stojanovic's company, as Maric provided evidence that he personally paid for his ticket.

In a second case, the commission found that Zagreb Mayor Milan Bandic and members of parliament who crossed the floor and joined his parliamentary group had not violated the law.

The commission decided on each individual member of parliament who crossed the floor and joined Bandic's party and whether they were rewarded for that with some counter-favor. The commission found that no violation had occurred with regard to the Conflict of Interest Act.

The procedure involved Mayor Bandic and Members of Parliament Marija Puh, Mladen Madjer, Milanka Opacic, and Sinisa Varga who crossed the floor in parliament, as well as Deputy Mayor of Donja Stubica Luka Grabusic and Radoboj Mayor Andjelko Topolovec who too joined Bandic's party.

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Thursday, 30 July 2020

FinMin: Almost Entire Amount of This Year's Financing Needs Secured

ZAGREB, July 30, 2020 - Finance Minister Zdravko Maric said on Thursday that of the HRK 63.4 billion necessary for financing this year, almost all had been secured by the summer break.

Although the financing account of HRK 63.4 billion sounded really high and there was a polemic about how to secure the money, almost all have been secured by the summer break, he said in parliament.

A general government surplus was planned for the first time for this year, in the amount of HRK 1.5 billion, but the coronavirus epidemic caused a drop in revenues and an increase in expenditures for healthcare and to help the economy, due to which the state had to borrow on the domestic and the foreign market, Maric said.

Instead of a surplus, we are planning a deficit of almost HRK 25 billion and this has affected the financing account, which amounts to HRK 63.4 billion for 2020, he added.

Maric announced that macroeconomic projections would be revised in late August and early September.

He was speaking during a debate on the ratification of three loan agreements with international financial institutions totalling almost €660 million for dealing with the COVID-19 crisis, the reconstruction of the Zagreb area after a March earthquake, and boosting public healthcare.

Two of the agreements are with the World Bank and one with the Council of Europe Development Bank.

(€1 = HRK 7.5)

Wednesday, 8 July 2020

FinMin Says Lower Taxes Don't Guarantee Higher Net Wages

ZAGREB, July 8, 2020 - Finance Minister Zdravko Maric said on Wednesday that tax cuts were not a guarantee of higher net wages but that efforts would be made to make that happen because of the idea behind tax cuts was higher wages and higher employment and investments.

Answering reporters' questions outside the government offices about the government's plans to reduce income tax rates from 36% to 30% and from 24% to 20%, Maric recalled that the HDZ party's platform envisaged certain tax changes, adding that the party stood behind that and that they would be an integral part of the government's programme as well.

He said that the government would continue with tax reliefs, but not this year since major legislative changes regarding the taxation system always took effect with the start of a calendar year.

Maric noted that lower taxes were not a guarantee that net wages would grow because that depended on employers, and in that context, he recalled that not everyone had lowered prices when the VAT rate was reduced.

"I will always do what is within my power but we cannot force anyone to do it," Maric said, adding that he expected the media to help create pressure so that lower taxes materialise as higher net wages.

He noted that around 1.8 million taxpayers, more than a half, were not subject to income tax so any change in that segment did not refer to them.

He added that the situation with the state budget was "not great" and that after four years of balanced budgets this year would see a rather large deficit, which, he noted, had been compensated for to a large extent with financing activities on the domestic and international markets.

"The situation is under control but challenges still lie ahead," said Maric, noting that the coronavirus crisis did not have to be only a problem and challenge but rather an opportunity to learn lessons and take steps that would put Croatia back on the right track, to be followed by higher growth rates.

Wednesday, 17 June 2020

Finmin Says Healthcare Debt Totals HRK 9 Bn

ZAGREB, June 17, 2020 - Finance Minister Zdravko Maric said on Wednesday the healthcare system's debt in the last quarter reached HRK 9 billion and announced changes and reforms necessary to make the system financially tenable.

"It's still not ten billion but the debts are rising. Given the coronavirus, it's normal that we had additional needs to finance healthcare. The system turned out to be very good in terms of the functioning of doctors, nurses and other staff, but at the same time the financial circumstances are such that it is necessary to make certain changes, reforms so that the system becomes financially tenable," he told reporters after an inner cabinet meeting.

Asked about the amount of the debt, Maric said that in Q1 2020 it was HRK 9 billion.

Thursday, 11 June 2020

FinMin: Investors in Bond Recognise Croatia's Successes

ZAGREB, June 11, 2020 - Finance Minister Zdravko Maric said on Thursday the new euro bond issue met with big interest among investors and that they recognised Croatia's successes in the affirmation of the investment credit rating, drawing closer to the euro area and the fight against COVID-19.

Speaking to the press, he said investors' interest in the new bond was 4.2 times bigger than the issue, i.e. €8.4 billion. "I can't remember such a big interest among quality investors across the world."

That means that "several big and important houses recognised what was done and what is being done in Croatia" and that "our image has been affirmed in international financial circles," said Maric.

The new euro bond will be used to refinance a dollar bond which was issued ten years ago and is due on July 10, and its interest of 6.6% is replaced with 1.5%, which is a considerable saving, he said.

The Finance Ministry on Wednesday issued an 11-year €2 billion bonds on the international capital market at 1.5% interest and 1.643% yield. The issue was arranged by Banca IMI/Privredna Banka Zagreb, Barclays, Deutsche Bank, and J.P. Morgan.

The investment community's interest was exceptional, with more than 400 potential investors, which was helped by investors who invest only in investment credit rating securities, the ministry said today.

The revenue from the issue will be used to refinance a US$ 1.25 billion euro bond due in July. Nearly HRK 360 million will be saved on interest annually. The rest of the issue will be used to finance government aid for businesses affected by the COVID-19 pandemic, as envisaged in the revised 2020 budget.