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 Could that outdated and quite frankly ridiculous process now finally be coming to an end?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The explanation of the proposed decree which will remove this outdated procedure for the issuing of Croatian passports and much more states that the abolition, ie the partial abolition of administrative fees/stamps, will reduce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.

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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)

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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.

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.

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.

Wednesday, 8 April 2020

Finance Ministry Announces Redistribution of Budget Items

ZAGREB, April 8, 2020 - Finance Minister Zdravko Marić said in an interview with the N1 commercial broadcaster on Wednesday that in the current circumstances, the state's outlays in the next three months were estimated at 65-70 billion kuna. He said that during the government's meeting on Thursday, the cabinet would discuss how to redistribute the budget allocations in order to ensure funds for addressing the consequences of the coronavirus epidemic.

Marić recalled that some of the austerity measures had been already taken.

He added that for the monthly functioning of the expenditure side of the state budget, it was necessary to provide 13-15 billion kuna, including HRK 3.5 billion for pension allowances.

Asked how he intended to cover the budget gap and fund the government's rescue package for the economy in the corona crisis, Marić said that the budget must show its strength in responding to all challenges for the functioning of the state. "In these circumstances, nothing is easy, but mechanisms do exist," Marić said.

Considering the issue of borrowing, Marić said that currently the authorities would tap domestic markets. In parallel, steps are being taken on international markets, including contacts with partner financial institutions such as the European Investment Bank (EIB) and the World Bank.

According to some previous announcements, Croatia could count on tapping more than a billion euros from European Union funds to narrow the budget gap in the coming months.

Asked whether it would be inevitable to cut wages in the public sector, the minister said that it was necessary to pursue a dialogue with the social partners "There are several proposals in the pipeline," he added.

He said that the government was preparing a third package of measures designed to help sustain the economy during this crisis.

The minister underscored that the response of the government that has already prepared two sets of measures that are being implemented was adequate and timely when it came to the corona crisis.

The Fitch credit ratings agency, which on 1 April revised its outlook on Croatia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to stable from positive and affirmed the IDR at 'BBB-', envisaged that Croatia's economy would contract by 5.5% in 2020, from a growth of 2.9% in 2019, due to the impact of the COVID-19 pandemic and that economic activity was expected to rebound in 2021.

Fitch believes the financial sector is in a better position to weather the crisis than in 2008-09, supported by a liquid, profitable and highly capitalised banking sector that is less reliant on cross-border lending. The capital adequacy ratio was 23.2% at end-2019 versus 15.1% at end-2008, while liquid assets to total assets were close to 35% at end-Q319.

The National Bank of Croatia (HNB) has taken a number of steps to support the currency regime, maintain liquidity in the financial system, and provide some relief to the corporate sector, says Fitch.

"The HNB has abundant foreign reserves (USD21 billion in January; 35% of 2019 GDP) and a long-track record of maintaining exchange-rate stability to help the economy withstand shocks. Moreover, inflation is low (1.5% in February) and will remain very low this and next year (averaging 0.7%)," it says among other things.

More economic news can be found in the Business section.

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