Tuesday, 22 February 2022

Finance Ministry Issues HRK 800M in Treasury Bills

ZAGREB, 22 Feb 2022 - Croatia's finance ministry on Tuesday issued HRK 800 million in treasury bills which mature in one year at the low interest rate is 0.01 per cent.

In advance of the maturity of treasury bills worth a billion kuna, the Ministry offered HRK 700 million for subscription. Financial institutions submitted bids totalling HRK 803 million and the Ministry accepted them all.

The balance of subscribed kuna treasury bills has now decreased by HRK 197 million to HRK 13.6 billion.

The next auction of treasury bills will be held on 1 March, said the ministry.

(€1 = HRK 7.532838)

Monday, 1 November 2021

Croatian 2021 Tourist Season Financial Results Arrive

November the 1st, 2021 - The Croatian 2021 tourist season financial results are finally in following a long period of praise for a remarkably good season marked by a good epidemiological picture.

As Poslovni Dnevnik/Marija Crnjak writes, in the first nine months of 2021, the largest Croatian tourism company, Valamar Riviera, reached the level of 93 percent of the pre-crisis year of 2019 in terms of operating profit (EBITDA), and operating revenues in the same period amounted to 1.5 billion kuna, or 75 percent of sales realised back in 2019.

Given the high demand at the peak of the summer season this year, Valamar achieved excellent results in its more northern destinations in the third quarter, especially in camps where 15 percent more revenue than in 2019 was earned and the premium segment of hotels and resorts where 10 percent more revenue than 2019 was recorded. However, in the first nine months of the year, no significant recovery of business was achieved down in Dubrovnik, nor was it the case for tourist facilities with two and three stars.

In 2021, Valamar expects operating profit (EBITDA) in the range of 635 million kuna to 652 million kuna, or up to 85 percent of the realisation from back in 2019 as a result of austerity measures taken in the first part of the year and a strong recovery of operations during the height of this year's summer season. It is estimated that consolidated revenues for 2021 will reach 1,625 to 1,655 million kuna, or about 75 percent of the realisation they company enjoyed back during the record year of pre-pandemic 2019.

Maistra enjoyed 85 percent of its 2019 realisation in the third quarter of this year. In the season, they accounted for 95 percent of their occupied units in comparison to the same time in 2019. Once again, the most significant growth was achieved in the lux segment of their portfolio, which realised a volume increase of 13 percent when compared to 2019. In their first nine months of operations in 2021, the Maistra Group generated 1.15 billion kuna in operating revenues, which is about twice as much as they recorded last year, equal to an encouraging 92 percent of the realisation of the same period in 2019.

Profit before interest, taxes and depreciation (EBITDA) amounted to 568 million kuna, which is three times more than last year and 3 percent more than what they recorded in 2019. Net profits also amounted to an impressive 362 million kuna.

Pula's Arena Hospitality Group generated 93 percent of 2019's revenues in Croatia during the tourist season, and their domestic portfolio functioned better than the hotels they have in Germany, Hungary and Serbia. Unaudited total revenues in the third quarter for this region represented only 39 percent of total revenues when compared to the same period in 2019. The company's total consolidated revenues for the first nine months of 2021 are at the level of 414.9 million kuna and represent an increase of 81 percent on an annual basis, which indicates very strong recovery.

Accelerated recovery in Croatia with total revenues of 380.2 million kuna shows an increase of 143 percent when compared to the previous year and has reached 75 percent of revenues earned back in 2019. There has also been a very strong jump in the consolidated EBITDA for this particular group, which reached 162.5 million kuna when compared to the 18.6 million kuna recorded last year (representing 65 percent of 2019's profit).

In the first nine months of 2021, Plava Laguna generated operating revenues at the level of 972.4 million kuna, which is 124 percent more than last year and 18 percent less than back in 2019. The growth of operating revenues was generated by an increase in business volume with an increase in average net prices of 8.7 percent as a result of an increase in the share of individual sales channel(s), especially in regard to hotels and apartments.

The nominal level of operating profit EBITDA adjusted for one-off positions amounted to 487 million kuna and the company recorded a significant increase compared to the same period last year of 261 percent. In the first nine months of the year, the group generated a profit of 340.2 million kuna, while in the previous year, a concerning loss of 70.1 million kuna was recorded.

It's worth noting that Plava Laguna recently announced that this year, the company will reward its employees with a maximum of 5,000 kuna as a non-taxable reward, a Christmas bonus in the amount of 3,000 kuna, a gift in kind worth 600 kuna and a rebate in the amount of 70 kuna gross per day of vacation, as well as a gift for the children of their employees up to 15 years of age in the amount of 600 kuna. The right to a Christmas bonus within this company is being exercised in the proportional amount of a maximum of 3,000 kuna for all employees who have worked for at least two months during the year.

For more on the Croatian 2021 tourist season financial results, make sure to check out our dedicated business section.

Wednesday, 27 October 2021

MPs to Debate 2021 Budget Revision Next Week, Says Finance Minister

ZAGREB, 27 Oct 2021 - Parliament is expected to debate the draft 2021 budget revision next Wednesday and the draft 2022 budget early in December, Finance Minister Zdravko Marić said on Wednesday.

The idea is to debate and vote on the revised budget as soon as possible so that all reallocations and payments can be made by the end of the year, he told reporters.

Asked to comment on the fact that the health sector's debt to drug wholesalers was growing again, Marić said it was growing even though HRK 9 billion was set aside for it in the budget and that one should add to that the HRK 23 billion budget of the Croatian Health Insurance Fund.

That, he said, points to the need to reform health expenditures by spending taxpayers' money better and more effectively, while keeping the quality of healthcare.

Asked if there was money for a new round of payments to businesses affected by the pandemic, Marić said the draft 2022 budget did not envisage this year's level of job-keeping measures. He added, however, that the draft 2020 budget did not envisage them either, yet they were adopted to protect people's health and keep jobs.

For more, check out our politics section.

Wednesday, 20 October 2021

Value of Croatian Fiscalised Receipts Exceeds Pre-Pandemic 2019 by 9%

October the 20th, 2021 - Croatian fiscalised receipts and their amounts have provided much more than a mere glimmer of hope following an uncertain and difficult economic period, with the values exceeding that of pre-pandemic, record 2019.

As Poslovni Dnevnik writes, the total value of Croatian fiscalised receipts last week exceeded four billion kuna (4.1), which improved the amount from the same period last year by 22 percent or 743.7 million kuna. Data from the Tax Administration also shows that in the period from the 11th to the 17th of October, when compared to the same week back in 2020, the number of Croatian fiscalised receipts (43.6 million) was 18 percent higher.

In the trade sector, the total amount of Croatian fiscalised receipts issued last week amounted to 2.8 billion kuna, while in catering and tourism, ie accommodation and food preparation and service activities, receipts with a 66 percent higher value were issued, reaching an impressive 365 million kuna last week.

If we compare last week's situation with that from the pre-crisis year of 2019, known as being a record one, fewer actual receipts were issued, but their value increased. In particular, there were 4 percent fewer fiscalised receipts issued and a nine percent increase in their value.

A cumulative review of fiscalisation for the period from February the 22nd to October the 17th this year compared to last year (from the period of February the 4th to October the 18th, shows that in 2021, the number of issued receipts grew by 24 percent and in value by 27 percent.

"Across all economic activities, a total of 1.5 billion Croatian fiscalised receipts were issued, in the total amount of 143.8 billion kuna, which increases the value of those receipts by 30.4 billion kuna annually," reads the analysis of the Tax Administration.

In the wholesale and retail trade, the repair of motor vehicles and motorcycles, the number of receipts issued in the period from February the 22nd to October the 17th, 2021 compared to February the 25th to October the 20th, 2019 saw one percent fewer invoices, but their value increased by six percent.

The hospitality and tourism sector, on the other hand, recorded 30 percent less receipts issued as well as a six percent lower amount of these receipts when compared to the pre-pandemic year of 2019, according to a cumulative review of fiscalisation.

For more, follow our business section.

Wednesday, 8 September 2021

146% Growth in Receipts Issued in Croatian Tourism Sector by End of August

September the 8th, 2021 - The Croatian tourism sector has an enormous amount to be happy about so far this season, as the height of it passed with a massive jump of 146% in issued receipts from within the sector.

As Poslovni Dnevnik/Ana Blaskovic writes, in a small Mediterranean country that lives primarily from tourism and personal consumption, the news of record fiscalisation will not only put a spring in the step of the finance minister, Zdravko Maric. The value of fiscalised receipts issued in the Croatian tourism sector last week increased by 39 percent compared to the same period last year, and as much as 13 percent compared to the excellent pre-pandemic 2019 when tourism broke records.

In the period from August 30 to September 5, 5.3 billion kuna of receipts were issued, equal to a massive one and a half billion more than last year, with 26 percent more receipts issued.

While a significant jump was expected on an annual basis as last year's end of August was remembered for the exodus of tourists (and the contents of their wallets), results that surpassed the time before the pandemic give a lot of optimism for faster-than-expected Croatian GDP recovery dynamics.

Most issued receipts in the total amount of 30.2 million kuna (23 percent more), were issued in the most generous category of fiscalisation, retail and wholesale (which includes the repair of motor vehicles and motorcycles). Their value increased by 19 percent, reaching 3.1 billion kuna.

The hospitality and Croatian tourism sector, specifically providing accommodation and food preparation and service, issued 28 percent more receipts last week, or 8.7 percent more than last year. At the same time, their value jumped up to a very impressive 1.1 billion kuna, equal to 146 percent.

Data from the Tax Administration illustrates the fact that when compared to the year before the pandemic (when the economy grew by 2.9 percent), there were two percent less receipts issued, but there was also 13 percent more value. In trade, for example, the number of receipts rose 2 percent and their value by 11 percent.

Last week, however, caterers and those engaged in the Croatian tourism sector issued 15 percent fewer receipts than in the year before the global coronavirus pandemic fundamentally turned their lives and businesses upside down. It should be noted that the value of goods and services recorded in these receipts was at the same time higher by 21 percent.

The dynamics of fiscalisation also outlines the downward trend of the summer tourist season. On a weekly basis, the value of fiscalised receipts issued is lower by five percent, and their number by one percent.

So far, at least as far as trade is concerned, the number of issued receipts has remained unchanged, but the amount on them has fallen by three percent, according to the Tax Administration. With the peak of the tourist season now behind us, the number of receipts issued in catering and hospitality and the Croatian tourism sector decreased by four percent and their value decreased in one week by 16 percent.

Given the fact that the outbreak of the coronavirus pandemic in Croatia on February the 22nd last year marked a turning point for the tax authorities in many ways, from filling the budget to an explosion of expenditures, it is interesting to compare this period on an annual basis.

As such, in the second year of the pandemic (from February the 22nd to September the 5th this year) the number of fiscalised receipts and their number was higher by 26 percent than in the first year of the pandemic, which reflects the relaxation of a number of epidemiological measures, but also the absence of the lockdown we witnessed back in spring 2020.

This year, 1.3 billion receipts were fiscalised, in the total amount of 117.7 billion kuna, so the value of fiscalised receipts in the second year of the pandemic increased by 24.7 billion kuna in total.

A comparison with the same period back in pre-pandemic 2019 suggests that the number of fiscalised receipts is still eight percent lower than it was before the pandemic, although their amount has risen three percent.

For more, make sure to follow our business section.

Friday, 27 August 2021

FinMin Pleased with State of Budget

ZAGREB, 27 Aug 2021 - Finance Minister Zdravko Marić said on Friday that he could be pleased with the state of the budget and that it was in line with expectations, with some tax revenues exceeding them, such as VAT, which outperforms its 2019 level since the beginning of the year.

As the level of employment has been preserved, and even increased, Marić is also pleased with the amount of paid contributions for pension insurance.

He underscored again that the key to the sustainability of public finance lay on state budget expenditures, on which great emphasis was placed.

Asked by the press whether the government had a clear reform plan on the table, for instance, for health care, which is a great burden on the budget, the finance minister recalled the National Recovery and Resilience Plan (NPOO) had been adopted and it listed reforms in various segments.

The health care reform, Marić said, should go beyond what is written in the NPOO, because that is a more comprehensive process which everyone knows is needed, Health Minister Vili Beroš is working on it, and the entire package of measures should be presented to the public by the end of the year.

Asked about job-retention grants for entrepreneurs, Marić recalled there were conditions for those grants, such as a drop in revenue, so those grants were not crucial for a significant part of businesses. However, he added that one always had to be braced for any negative surprises.

For more on politics, CLICK HERE.

Thursday, 10 June 2021

Goodbye Stamps for Croatian Passport and Driving License Renewals?

June the 10th, 2021 - For all those who have been through the delightful procedure of renewing a Croatian passport, driving license or other document, the topic of stamps will be all too familiar. Could that outdated and quite frankly ridiculous process now finally be coming to an end? Maybe.

As Poslovni Dnevnik writes, the Ministry of Finance has submitted a proposal for a new Regulation on the tariffs of administrative fees for public discussion. This is a revolutionary decree, which will reduce the amount of tariff numbers from 95 down to a much lower 58.

What this translates to is that it's now possible that people might no longer have to pay administrative fees or buy stamps for many as 177 various documents obtained from the state authorities.

Should this proposal be accepted, people will no longer need the infamous stamps when obtaining a driver's and traffic license, a Croatian passport, when certifying signatures, for issuing a decision to open a company, for issuing new documents, for issuing site approvals for oil, gas and more.

There has also been a proposal to totally abolish all cadastral fees, fees in the field of education, sports and water management, when acquiring real estate, in the field of cultural heritage protection and fees in the field of competition protection. This, of course, doesn't mean that all these documents will no longer be needed, and this decree merely abolishes the payment of stamps for their issuance.

The explanation of the proposed decree which will remove this outdated procedure for the issuing of Croatian passports and much more states that the abolition, ie the partial abolition of administrative fees/stamps, will reduce the state budget revenue by around 80 million kuna. The biggest relief for people and businessmen, in the amount of about 69.3 million kuna, will be felt in the area of ​​internal affairs.

Revenue from cadastral fees will be lower by about 3.6 million kuna, in the field of healthcare by about 2 million kuna, and in water management by about 1.2 million kuna, reports Jutarnji list.

For more, follow our dedicated lifestyle section.

Tuesday, 20 April 2021

Ministry of Finance Sells HRK 2.34 Bn Worth of Treasury Bonds

ZAGREB, 20 April, 2021 - The Croatian Ministry of Finance sold HRK 2.34 billion worth of treasury bonds, which was by 139 million kuna higher than planned, at an auction on Tuesday,with an interest rate of a mere 0.02% for one-year-long bonds.

In advance of the maturity of HRK 2.55 billion worth of treasury bonds, the Ministry offered HRK 2.2 billion for subscription, HRK 2 billion with a maturity of one year and HRK 200 million with six months' maturity.

Financial institutions submitted bids totalling HRK 2.34 billion and the Ministry accepted all of them.

The Ministry issued HRK 2.34 billion worth of treasury bonds with a maturity of one year at an interest rate of 0.02%, which was the same interest rate as at the previous auction held on 2 March.

The balance of kuna-denominated bonds subscribed has decreased by HRK 212 million to HRK 14.32 billion.

(€1 = HRK 7.560764)

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

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.

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