Monday, 17 January 2022

FinMin: All Efforts Should Be Taken to Prevent Unfair and Excessive Prices

ZAGREB, 17 Jan 2022 - Finance Minister Zdravko Marić on Monday called on all stakeholders in the society, including media and major actors in the euro changeover in Croatia, to do their utmost to prevent anyone from using this process to "fish in troubled waters" and charge unfair and excessive prices.

Addressing a news conference at which he, together with Prime Minister Andrej Plenković and Croatian National Bank (HNB) governor Boris Vujčić, outlined a draft act on the introduction of the euro as legal tender in Croatia, Marić underscored the obligation to display prices both in kuna and euro from 5 September through the whole of 2023.

The draft act also envisages some exemptions from this obligation when there are physical limits for such displays or excessive costs. Thus, stands in farmers' markets, newsstands, electronic displays at filling stations, or taximeters will be exempted from this obligation. Also, commodities with prices already printed on them will be sold until stocks last.

However, they are not exempted from issuing invoices and bills both in the kuna and the euro, Marić said.

The authorities today published guidelines for the adjustment of the enterprise sector during the process of switching to the euro.

The guidelines have been prepared by the coordinating committee for the adjustment of the economy and consumer protection, with the economy ministry at its helm.

Undue price rises forbidden

The document highlights the major principle that undue price rises in the euro changeover are forbidden.

Marić admitted that the whole matter had not been regulated by law and called on all actors to join in the fight against any undue price rises.

Fulfilling Maastricht criteria

The minister recalled that Croatia could enter the euro area on 1 January 2023, provided that it fulfilled the convergence criteria, and a final decision on the assessment of Croatia's performance is expected in July 2022.

One of the Maastricht criteria refers to sound and sustainable public finances, which includes trends in the public debt and deficit. Marić said that this was under control and that their reduction was being conducted at an adequate rate.

Also, concerning price stability as a criterion, the inflation rate cannot be more than 1.5 percentage points above the rate of the three best-performing member states.

Marić said that inflation trends should not undermine the entire process.

HNB Governor Vujčić also believes that the convergence criterion about price stability would be met.

The reference value for the inflation rate has never been under the average rate of inflation in the eurozone, Vujčić explained.

Prices of consumer goods and services in Croatia, as measured by the consumer price index, increased by 5.5% in December 2021 compared with December 2020, while in the whole of 2021 they rose by 2.6% year on year, the State Bureau of Statistics (DZS) said today.

Regardless of the acceleration of inflation in recent months, Marić said that Croatia's inflation rate was still rough around the average of the euro area or slightly below this average.

Last Thursday, Marić said that the government had revised its inflation growth projection for this year up to 3.5%, adding that VAT cuts were being considered as part of a set of measures aimed at buffering energy price hikes. Speaking to the press, Marić said then that the government was following developments with price hikes.

He said inflation accelerated in recent months and that its growth in December might exceed 5%, which would be visible at the start of this year.

That prompted the government to revise its projection to 3.5%, up from the 2.5% increase forecast earlier, he added.

The minister said that according to available data and expectations, higher inflation rates were expected in the first months of this year, "after which there should be a convergence to an average 3.5%."

Besides food, the main focus is on energy prices given the price trends of raw materials at the European level, he said, adding that the price of gas for households would be corrected as of 1 April.

He said the government would come up with a package or individual measures aimed at buffering the increase so that living standards were not affected in a major way.

For more, check out our dedicated politics section.

Tuesday, 4 January 2022

Marić Comments on Record-Breaking Consumer Spending in 2021

ZAGREB, 4 Jan 2022 - Consumer spending in Croatia reached a record-breaking level in 2021 as Croatians spent HRK 17.5 billion in December alone.

"The data on record-breaking spending in December partly surprised us, but that's what we expected. You could see that the whole of last year was really good, notably, the 5% increase in the value of fiscalised receipts compared with 2019," Finance Minister Zdravko Marić said in an interview with HTV public television on Monday evening.

Marić said that the record for last month was set on 23 December when nearly 8 million fiscalised receipts were issued and their value reached nearly HRK 900 million. He noted that 13 August 2021 holds the record since the fiscalisation system was introduced when nearly a billion fiscalised receipts were issued in a single day.

Marić said that the government's original growth forecast for last year was 5%. "The last projection was 9%, and by all indications, we have reached the border of the two-digit growth rate. This indeed is a very good result and we will be among the top three (EU) countries with the highest growth in 2021," he predicted.

Speaking of challenges ahead, notably those concerning the COVID pandemic, Marić mentioned inflation and disruptions to global supply chains. "In my opinion, these are the two biggest risks to our macroeconomic projections. However, there is a great deal of or at least several strong positive factors, first and foremost the implementation of the National Recovery and Resilience Plan and our path towards the eurozone and Schengen."

Marić said that the government has moved from the job retention phase to the job creation phase, noting that the labor shortage is one of the main issues that need to be addressed. "That's why all these measures concerning active employment policy, which should lead to higher employment and higher wages, should be fully supported."

2022 inflation projected at around 3.5%

Speaking of inflation, Marić said that inflation has picked up in recent months and that for the most part it has been imported, citing prices of raw materials and oil and supply chain disruptions. This has resulted in inflation spilling over to a wide range of items, notably food and fuels, he added.

"As for our projections, we will have data for December in the coming days. We expect that inflation will continue to accelerate as it did in the first half of the year. Based on the available data, average inflation for 2022 is projected at around 3.5%," the finance minister said.

Marić said that based on this estimate, it could be concluded that prices in 2022 would grow somewhat faster than wages, but added that there were several strong drivers that would push wages upwards.

"On the one hand, there is a labor shortage, so employers will be forced to increase wages, while on the other hand, active employment policy measures will make their contribution. In case of price growth is higher than wage growth, which is still not certain, but if that happens, the difference will not be such as to substantially endanger the living standards of Croatian citizens," Marić said.

For more, check out our politics section.

Saturday, 13 November 2021

FinMin: Credit Rating Important for Capital Price for State, Businesses, Citizens

ZAGREB, 13 Nov, 2021 - The credit rating is important for the price of borrowing for the state, businesses and citizens as its upgrade lowers the risk premium, which has a favourable effect on the price of capital, Finance Minister Zdravko Marić told Hina on Saturday.

The Fitch Ratings agency yesterday upgraded Croatia's rating to BBB, the best in Croatia's history, with a positive outlook.

Marić said the rating was first of all closely related to debt price and the capital price for the state and, directly or indirectly, for the interest paid by businesses and citizens.

The Fitch rating has a positive effect on those processes, he said, but added that the upgrade should be viewed in continuity, recalling that until not so long ago the state paid a considerable amount for interest.

In 2015, the budgetary expenditure for interest was HRK 12 billion, which at that time was almost the entire budget of the education ministry, whereas now that expenditure is HRK 4.5 billion lower.

"Interest used to be 5-6% and now it is about 1% on the ten-year bond," said Marić, adding that the credit rating assessment was important both in times of low and in times of higher interest rates on capital markets.

"We are talking about reference interest rates," he said, adding that the increased money offer in recent years led to a considerable drop in reference rates, but that the total interest paid by citizens, businesses and the state was a sum of the reference rate and the rate related to a specific country and to the risk premium.

"That's where the rating strikes because Croatia can't influence the trend of reference interest rates, but it can the risk premium it pays."

Marić said Croatia had a stable growth, public finances in order, a clear prospect of entering the euro area, and political stability.

"Those are all elements which have an effect on rating improvement, which is then reflected in a better perception and reputation of a country like Croatia in the financial world, and in the end comes the effect on the risk premium," he said. That is important both when reference interests are low and when they are high, he added.

The investment rating is very important, not just for debt and capital prices but also for capital availability, Marić said.

"The moment you are in the investment zone, you are interesting to many more good investors who can invest in securities," he said, adding that international investors had restrictions and were often not allowed to invest in a country below the investment credit rating.

"That's why it's very good that that has changed for Croatia in terms of Fitch and Standard & Poor's," Marić said, adding that it was also important that Fitch had a positive outlook on Croatia. "That sort of indicates the direction the rating could take."

He praised the media focus on the credit rating, saying that it was good that people became aware of how important it was to know how to manage public money well.

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

For more about Croatia, CLICK HERE.

Sunday, 7 November 2021

Finance Minister and Bridge Party Leader Test Positive for COVID-19

ZAGREB, 7 Nov 2021 - Finance Minister Zdravko Marić has been found to be positive for COVID-19 after undergoing a test at the weekend, the government announced in a press release on Sunday.

Marić underwent a test after a member of his family had developed symptoms of the infection. His test returned positive, after which epidemiologists have ordered him to stay in isolation for ten days.

The minister "is feeling well and for now, he has no symptoms of the COVID-19 disease. He will stay in isolation and perform his duties from home while following orders from his doctor and epidemiologists," the press release said.

Marić, as well as other cabinet ministers, were vaccinated against COVID-19 early this year, and would soon receive a booster dose, following recommendations by the Croatian Public Health Institute, government spokesman Marko Milić said, adding that several cabinet ministers had already received the third dose of vaccine.

Milić appealed to all citizens to get vaccinated if they had not done so yet because the vaccine protects against serious forms of the disease. He also appealed to people who had received their second shot six months ago or longer, especially the elderly or those immunocompromised, to get a booster dose as soon as possible.

He recalled that Deputy Prime Minister Boris Milošević and Labour Minister Josip Aladrović, who had become infected even though they had been vaccinated, had overcome the infection with very mild symptoms.

Also, the opposition Bridge party leader, Božo Petrov, said in an interview with Nova TV on Saturday evening that he was positive for COVID-19. "Two or three days ago I found out I was infected. I had symptoms, I called my doctor and did a PCR test, which showed I was positive," he said.

For all you need to know about coronavirus specific to Croatia, make sure to bookmark our dedicated COVID-19 section and select your preferred language.

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

Friday, 5 November 2021

Zdravko Maric Reveals Staggering Cost of Croatian Fight Against Covid

November the 5th, 2021 - The Croatian fight against the spread of the novel coronavirus, SARS-CoV-2, and the economic/job preservation measures which were introduced, have cost the country a pretty penny. Finance Minister Zdravko Maric revealed the exact, eye-watering figures.

As Poslovni Dnevnik writes, most of the costs relate to government measures which were introduced in an attempt to preserve jobs, both directly and indirectly, and these are taxes, contributions, everything that the state decided to take into its own hands, said Finance Minister Zdravko Maric, who presented to Croatian Parliament the rebalance of this year's state budget.

The supplementary budget increases total budget revenues by 3.3 billion kuna to 153.6 billion kuna, and expenditures by 6 billion kuna to 173.3 billion kuna. The state budget is expected to record a deficit of 19.7 billion kuna or 4.7 percent of GDP, while the general government deficit will be 18.9 billion kuna or 4.5 percent of GDP.

The Minister reiterated that the estimates of GDP growth for this year have been revised from the originally planned 5.2 percent to about nine percent, writes Dnevnik.hr.

When we look at all components of domestic GDP, except for investments in the private segment, we have a significant increase in all categories, Zdravko Maric explained, before pointing out that, in terms of investment, in the coming years, they will be the main drivers of overall economic growth.

Average annual inflation is 2.4 percent

Zdravko Maric also gave an estimate of price movements, meaning inflation.

''Regardless of the last few months and the accelerated, visible inflation, our estimate for this year is 2.4 percent for average annual inflation,'' he said. He also stressed that a reduction in public debt in GDP to 83.1 percent is planned.

"Although we're revising the deficit from 3.8 to 4.5 percent, this year we expect, given the much higher growth rate than initially expected, a further reduction in the share of public debt in GDP to 83.1 percent," he said, before noting that for four years in a row now, public debt has been reduced "cumulatively by almost 12 percentage points of GDP".

''The coronavirus pandemic and to a degree, the earthquakes of 2020, once raised the share of public debt in terms of GDP to 87.3 percent and once erased all the effect of those four years,'' said Maric, adding that those 4.2 percentage points, according to estimates that have been seen in other countries, will place Croatia among the top three.

This result, Zdravko Maric added, should be emphasised not only in numbers, but also in the fact that we have done and are doing everything possible, and according to the growth rate and reduction of the share of public debt in GDP, it can already be concluded that the effect of the pandemic, without no matter how strong, he was a one-off.

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.

Wednesday, 27 October 2021

Finance Minister Maric: Croatia to Reach Pre-Recession Levels in 2 Years

October the 27th, 2021 - Finance Minister Maric has been discussing the completion of the rebalance of the state budget for 2022, and has stated that all of the processes and procedures which need to be done have been passed, as reported by N1.

As Poslovni Dnevnik writes, Finance Minister Maric stated that the rebalance and domestic economic growth is higher than expected, that he and his team are busy finalising the macroeconomic projections and that they're going over 8 percent, which is a very good result and we can be satisfied with it.

''The Republic of Croatia will reach pre-recession levels of GDP in two years, which is a fantastic result. That rate had its repercussions, revenues will be slightly adjusted for the better, but that said, we also have not the best news, as the expenditure side of the budget is growing slightly more than the revenue.

We had a slightly higher indexation of pensions, primarily due to inflation, but as a government, we're glad that pensions are rising. We also have a situation with measures to preserve jobs, they were envisaged only for the first couple of months, but for some sectors they're still valid. As for salaries, we knew from the beginning that we had insufficient funds, but now we're securing them. At the level of the general government, the deficit is slightly higher,'' explained Finance Minister Maric.

On the debt to wholesalers, he said that healthcare is in the first budget, so now, given the situation with coronavirus, this enfeebled sector inevitably needs a quality reform on the expenditure side.

''Revenues provide their contribution, and this year, we'll allocate over 9 billion kuna to keep the payment deadlines at 180 days for hospitals and 120 days for pharmacies. If we look at wholesalers, at the moment, with a small deviation, the debt of hospitals stands at 2.8 billion kuna, and pharmacies some 400 million kuna. To compare, over 9 billion has been paid off so far and will be paid by the end of the year to meet those deadlines. That's when we'll need to come to increasing expenditures,'' he added.

When asked how much the rebalance for the healthcare system will amount to, Maric said quite frankly - one billion and six million kuna.

"You'll get to hear about the deficit on Thursday, and then we'll have to dose it a little, it will certainly be over 4 percent but it won't reach some unsustainable level," he said.

“It brings us back to the trajectory we had before the pandemic. We had a continuous reduction of public debt for four years, then we had a jump due to coronavirus, and this year alone we've been returning to the path of reducing public debt,'' he said.

''l’ll finish up with a bit of good news - public debt will decline at the end of the year. It's something we want to emphasise, it's a clear message to everyone, you know yourself, fiscal policy has been put into the function of preserving health and life and jobs from day one,'' said Finance Minister Maric.

''The inflation projection is still below 3 per ent. Despite the acceleration, it's stayed at that level, but we're still taking it very seriously, not only because of the Maastricht criteria, but also because of people,'' concluded the Minister of Finance.

For more, check out our politics section.

Saturday, 23 October 2021

Finance Minister Zdravko Maric Talks Rebalances, Projections, Eurozone

October the 23rd, 2021 - Finance Minister Zdravko Maric has spoken out about rebalances, projections for the future, stability and of course, the topic on the lips of most - Croatian Eurozone entry, which is edging ever closer.

As Poslovni Dnevnik/Ana Blaskovic writes, at the end of this year or at the very beginning of 2022, the situation in the Republic of Croatia should return to pre-crisis levels. This is of course good news for the domestic economy with the perspective of Eurozone entry in 2023, but this generally optimistic picture is still being threatened by numerous risks, from poor vaccination levels to so-called ''bubbles'' on the Croatian real estate market. These matters could be heard being discussed at the conference of the Zagreb Stock Exchange and pension funds entitled "The Challenge of Change/Izazov promjene".

Finance Minister Zdravko Maric announced that he would step out next week with a rebalance and a few new projections.

"At the end of this year, or at the beginning of next year, we should reach pre-pandemic figures," he assured. The Croatian Government will also refresh its fiscal expectations for the next three years, which will be marked by the implementation of the National Recovery and Resilience Plan, the effects of which should boost GDP by 1.5 percentage points on average.

818 million euros have been pumped into Croatia so far, and the new cash injections will depend on the fulfillment of 34 different criteria by the end of the year. If they're met, the government will submit a report to the European Commission (EC) in January or February, and then "we can expect a new payment in May or June."

In terms of Eurozone accession, Finance Minister Zdravko Maric says, everything is currently going according to plan. Interest rates and the exchange rate aren't in question, but inflation is a new fear. "Inflation is a priority for us because of society, the economy and of course because of people, but we should also look at it through Maastricht, even though Croatia is at the EU average. According to these projections, we should satisfy that as well. The real date of joining the Eurozone is 2023, I see no reason as to why we won't manage to meet the criteria,'' said Maric.

The introduction of the euro as Croatia's official currency could reduce the risk premium by two levels and thus partially amortise the possible growth of interest rates, which has been a current topic lately.

Croatian National Bank (CNB) Governor Boris Vujcic, on the other hand, expects a quick recovery "in the shape of the letter V", for 2021 in the form of GDP growth of 8.5 percent, and then of 4.1 percent. He noted that inflation is a consequence of supply disruptions, making it somewhat difficult for ordinary monetary tools to address it.

"Raising the reference interest rates over the next two years isn't going to significantly affect the price of oil and gas, which make up half of inflation," said Vujcic. He underlined that the current figures (3.5 percent in September, op.a.) are historically low, but that we have become accustomed to a long period of low inflation, which has in fact been too low.

"This year we expect an inflation rate of 2.3 percent, which isn't worrying, it's actually very close to the goal of monetary policy and it will calm down slightly next year,'' he assured.

Risks in the macro environment...

In addition to energy, the CNB sees numerous risks in the macro environment in the form of the slower cleaning of the market from bad companies and the creation of a real estate bubble, among other things. Prices are also being pushed by foreigners buying properties, especially on the coast.

“The availability of property has started to deteriorate, loan installments in relation to disposable income are slowly growing. "If this trend continues, property purchasing becomes inaccessible to a part of the population with lower incomes, and this should be kept in mind because it's now also becoming a political problem," the governor warned.

Assessing the risks to financial stability, Hanfa's Ante Zigman briefly summed it up by saying that "it isn't exactly great, but it isn't terrible either".

“We’re not too worried about it all, but we’re on guard,” he said. In the second quarter, the risks were somewhat reduced, and for the third, in which inflation returned to the scene, there is no data to be looked into yet. There are a range of risks present; from investment concentration, labour market issues to, once again, the issue of real estate.

"Currently, there are high risks of valuation, the question is whether or not we have an overheated market. The risk of things falling due to high valuations is very possible ", warned the head of Hanfa. Labour Minister Josip Aladrovic out that there is reason for optimism at the end of the global coronavirus pandemic.

"We've never had closer cooperation between politics and economics. The government acted in a timely and adequate manner, we can say that we saved the economy. We're now going into the job creation phase,'' he said, announcing that a very important role is played by pension funds that manage 130 billion kuna.

“They need to invest in long-term sustainable investments, which will create pensions and increase them in the future. It's up to us to redefine the regulations in the direction of the diversification of investments and goals, which we'll do in the short term and in cooperation with those pension funds,'' he concluded.

For more, follow our politics section.

Friday, 15 October 2021

Independent MP Collects 34 Signatures for No-Confidence Motion Against FinMin

ZAGREB, 15 Oct 2021 - Independent member of parliament Karolina Vidović Krišto said on Friday she had collected signatures of 34 lawmakers for her initiative to launch a no-confidence vote in Finance Minister Zdravko Marić because he had stayed on a yacht owned by a private businessman this summer.

Vidović-Krišto said that she was glad that the initiative was supported by 34 MPs from different ideological groups.

"This is great news for citizens, as the MPs have overcome their partisan frameworks and are fighting for the common good, and that is the fight against corruption," she told a news conference in the parliament.

She said that when it came to the Opposition, only lawmakers from the We Can party and the Istrian Democratic Party (IDS) had not signed her petition.

Vidović Krišto accused Marić of serving "the interests of power centres" rather than working for the benefit of Croatian citizens.

The case of Marić staying on a yacht of a businessman grabbed the limelight in mid-August after some media outlets started speculating whether the minister's short travel on a private yacht constituted a conflict of interest.

The minister said then that the yacht was owned by his friend Blaž Pavičić and that Pavičić had not used any tax breaks or a loan from the Croatian development bank (HBOR) and that he had no tax debt written off during Marić's ministerial term.

During today's news conference, Vidović Krišto accused Marić of lying that the businessman concerned had no business deals with the Croatian state.

She criticised Prime Minister Andrej Plenković for his failure to sack Marić over this case, and accused the prime minister of ignoring the Croatian laws, obstructing the Croatian institutions and disenfranchising the Croatians.

For more on politics, CLICK HERE.

 

Wednesday, 29 September 2021

Finance Minister Zdravko Marić: Only Those That Meet All Criteria Will Get Money From NPOO

ZAGREB, 29 Sept, 2021 - Finance Minister Zdravko Marić told a press conference on Wednesday that the money from the National Recovery and Resilience Plan (NPOO) would be granted only to those that met all the criteria.

The European Commission on Tuesday disbursed €818 million to Croatia in a pre-financing payment under the Recovery and Resilience Facility (RFF), which is equivalent to 13% of the country's total financial allocation under the RRF.

Marić said that the government had agreed the pace of expenditure and implementation of reform and investment measures. He said he expected at least 50 projects to be prepared by the end of the year, adding that they concerned digital transformation and the transition to green transformation in the industrial sector. 

"Who will get these funds will depend on tenders and fulfilment of the criteria," the finance minister said.

He announced tenders for the construction of kindergartens and schools, and said that individual projects, such as development of autonomous vehicles by the Rimac company, were also important.

Before the end of this year or early next year, there will be additional tenders for the award of grants for energy efficiency and further green transformation, and some of the funds will also go towards post-earthquake reconstruction, he said.

Asked about the possibility of Croatia losing some of the money because of problems with public procurement, Marić said that public procurement must be efficient because "projects are subject to deadlines, and speed and efficiency are the key."

He noted that the Croatian public procurement law is the most complicated in the EU and needs amending.

Asked who can apply for NPOO funding, Marić said that in the context of the manufacturing industry those would be small and medium-sized businesses, notably those that would contribute to green and digital transformation.

"Funds will be disbursed to all those that fulfil the criteria and requirements," he said, adding that funds would also go towards development of the telecommunications network.

"This 13 percent of the allocation has now been paid, the next €700 million will be paid by the middle of next year and a further 700 million by the end of next year. We need to carry out 34 measures until the end of this year. Some have already been implemented, while some have certain risks," Marić said.

"The next tranche will depend on how many measures have been fulfilled. If we fulfil all 34 measures, €700 million will come in, and if we don't, there will be a certain correction to this amount," Marić concluded.

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

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