Tuesday, 22 September 2020

Fiscal Policy Commission Supports Measures to Alleviate Impact of Pandemic

ZAGREB, September 22, 2020 - The Fiscal Policy Commission has supported the government's fiscal policy measures, warning that due to the high level of public debt and low potential growth rates one should focus on measures to alleviate the impact of the pandemic and help boost the economy's medium and long-term potential the most.

The Commission determined on Tuesday that macroeconomic projections for this year, which represent the basis of the revised budget, were being achieved albeit with a slightly changed dynamic.

The economic decline in Q2 will be partially offset by economic results in Q3 which are slightly better than expected, however, contrary to budget projections, the risk of the pandemic continuing into the second half of the year with a faster dynamic postpones normalisation of the system and stronger economic recovery for the period to come.

In such conditions the projected economic decline of 9.4%, on which the estimate of the budget revenue is based, could become a reality, but what worries are increased risks to planned recovery in 2021, the Commission says.

According to data on budget execution in the first half of the year, despite the measures taken, such as temporary tax write-offs and government subsidies, the budget revenue is good, primarily owing to the good results of the first part of the tourist season, which could help the projection of the budget revenue for the entire year 2020 become a reality as well, the Commission says.

On the other hand, the government's fiscal measures regarding spending have resulted in an increase in budget expenditures that are slightly higher than expected. In the second half of the year, most of those fiscal measures are expected to be phased out, which would reduce the pressure on spending, the Commission says.

It warns that at the moment nobody can forecast how long the pandemic will last, and the longer it lasts, the longer the existing measures could be in force or even new ones regarding budget expenditures could be introduced.

Despite such uncertainty, the budget deficit forecast could still be achieved, it says.

The consolidated budget deficit in H1 was HRK 17.9 billion, or 4.9% of the country's GDP.

In the first half of 2020, the budget revenues dropped 7.2% to HRK 60.4 billion while budget expenditures increased by HRK 10.1 billion, or 15.2% to HRK 77.1 billion.

When extra-budgetary users and local and regional government units are added, the budget deficit amounts to HRK 17.9 billion or 4.9% of GDP.

H1 GDP was down 7.8% in real terms from GDP in the same period of last year.


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Monday, 14 September 2020

65 New COVID Cases in Croatia, Three Fatalities

ZAGREB, Sept 14, 2020 - In the last 24 hours, Croatia has recorded 65 new COVID cases and three fatalities, and the number of active cases stands at 2,220, the national COVID-19 management team said on Monday.

Of the total number of COVID-19 patients, 310 are in hospitals, including 22 on ventilators. Currently, 8,217 people are self-isolating.

Since 25 February 2020, when the first case of the infection was registered in Croatia, 13,598 people have been diagnosed with the new disease, and of them, 227 have died, while 11,151 have recovered.

To date, 225,014 people have been tested for the virus, including 3,180 in the last 24 hours.

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Wednesday, 2 September 2020

Banks Maintaining Credit Activity Despite Pandemic, Says Banking Association

ZAGREB, Sept 2, 2020 - In Croatia, banks have retained their credit activity at almost pre-crisis levels, and in late July lending was up 3.8% on the year while moratoriums on loans to legal entities or rescheduling totaled about HRK 29 billion and to citizens HRK 9.3 billion, the Croatian Banking Association said on Wednesday.

"Data on credit activities at the end of July indicate that the outbreak of the pandemic and recession in Croatia has not resulted in a decrease in lending. The total placements of banks amounted to HRK 234.3 billion at the end of July, which is 3.8% more than in July 2019," the Croatian Banking Association (HUB) said in an overview released on Wednesday.

According to the publication, the total amount of loans issued to households at the end of July was about HRK 135 billion, which is 4.1% more on the year and 0.5% more than prior to the outbreak of the Covid-19 crisis at the end of February.

The increase in some types of lending has accelerated, for example, housing loans recorded an increase of as much as 8.8% y-o-y.

"The data indicate that this year due to market activity a significant increase occurred in the share of housing loans in overall loans (from 43.1% to 44.3%), with the share of loans in the kuna currency increasing from 30.5% to 31.3%," HIB says.

HUB notes that at the end of July housing loans amounted to HRK 59.8 billion, with HRK 18.7 billion being kuna loans and 41.1 billion housing loans pegged to a foreign currency. Most of those, in the amount of HRK 40.5 billion, was pegged to the euro.

Commercial loans to enterprises amounted to HRK 85.6 billion at the end of July or 5% more y-o-y and 2.2% more than prior to the outbreak of the pandemic.

HUB notes that new commercial loans issued in the period from March to July amounted to HRK 64.4 billion, which is an increase of 31.2% compared to gross new loans approved in the same period last year.

Citizens did not reach more for short-term loans (overdrafts, credit cards, etc.) and the gross flows of newly approved loans in that period decreased mildly by about one percent.

Enterprises and citizens applied for loan moratoriums, rescheduling

Citing information from the Croatian National Bank (HNB), HUB notes that at the end of July legal entities had applied for a moratorium or rescheduling of loans valued at HRK 29 billion and that HRK 24.8 billion or 85.6% of the total amount applied for was approved based on special (government) measures. This accounted for 29% of the total credit portfolio for non-financial companies.

Citizens applied for moratoriums on loans valued at just under HRK 9.3 billion, with HRK 7.7 billion, or 82.8% of the total amount applied for and 5.7% of the total credit exposure, being approved under government measures, HUB said.

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Monday, 31 August 2020

Plenkovic Wants Coronavirus Red List To Take Counties Into Account

ZAGREB, Aug 31, 2020 - Croatian Prime Minister Andrej Plenkovic said on Monday that he would talk with Slovenian PM Janez Jansa about putting counties and not countries on the coronavirus red list.

Plenkovic and six other European prime ministers are attending the Bled Strategic Forum, and on the fringes, he will meet with Jansa and Hungarian PM Viktor Orban.

Speaking to the press, Andrej Plenkovic said the meetings would discuss "joint efforts to reduce infection and its cross-border effects."

In mid-August, Slovenia put Croatia on the coronavirus red list, which means mandatory quarantine for anyone arriving from Croatia. In order to avoid quarantine, many Slovenian tourists left Croatia.

"Our position is to attempt, notably in Slovenia, not just because of Croatia but also for the sake of numerous Slovenians who are our frequent and dear quests, to see the county level of infection as a criterion, something like Germany has done. I think there is room for that and that that is the best option."

He said the Bled Strategic Forum, the most important foreign policy event in Slovenia, was a good opportunity for European states to analyze their management of the coronavirus pandemic so far.

We can slowly sum up what has been good since January, he said, "what we have done well together, and how to respond together in the future when it comes to a vaccine, the procurement of medical and protective equipment."

Slovenian reporters asked him if he and Jansa would discuss the territorial dispute between the two neighboring states.

"Our position has been clear the entire time. We had Slovenia's initiative before the European Court in Luxembourg and you saw the decision, that it's not competent. We are still willing to talk about the border with Slovenia and our stance has not changed during my whole term," Plenkovic said, adding that it was necessary to find a "good, sustainable solution acceptable to both countries."

The 15th Bled Strategic Forum is focusing on Europe after Brexit and COVID-19. Also attending are Czech PM Andrej Babis, Polish PM Mateusz Morawiecki, Bulgarian PM Boyko Borissov, and Serbian President Aleksandar Vucic. Italian PM Giuseppe Conte is participating via video link.

The foreign ministers of Croatia, Hungary, Poland, Slovakia, the Czech Republic, and Romania also arrived in Bled for a panel in which the EU High Representative for foreign and security policy, Josep Borrell, will also take part.

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