Deputy Prime Minister Grcic says EC recommendation good news

The European Commission's (EC) assessment that there is no need for corrective action against Croatia over macroeconomic imbalances is yet another in a series of good news, Minister of Regional Development and EU funds Branko Grcic told a press conference on Wednesday.

"Along with GDP growth, the fall in unemployment and the latest indicators of a decrease in the deficit in the first four months of this year compared to last, this is certainly yet another piece of good news," Grcic said.

The European Commission decided on Wednesday that there was no need to take corrective action against any EU member state, including Croatia, as part of the Macroeconomic Imbalance Procedure.

The Commission addressed six recommendations to Croatia for this year and the next, including those to reduce the excessive deficit, discourage early retirement, align the wage system with productivity and macroeconomic conditions, rationalise state agencies and reduce parafiscal charges.

"There aren't any corrective mechanisms against Croatia, which is something that was largely speculated, neither with reference to macro-economic imbalances nor the excessive deficit procedure," Grcic underscored.

He believes that the government has done a good job in preparing the National Reform Programme, which he said was assessed as a good basis to implement economic policies and reforms.

"This time we approached the job more firmly and seriously and the EC has recognised that," Grcic said.

According to him, the government has done its job within the framework of fiscal consolidation and total fiscal effort within the framework of the EC's forecast.

He added that the greatest challenge in the coming period was to reduce the budget deficit and growing public debt.

Grcic said that as opposed to the Opposition, which he said had announced radical cutbacks to pensions, healthcare and welfare if they came to power, the government would manage to achieve economic recovery without such measures.

One of the government's priorities in reducing public debt will be to re-schedule public debt with more favourable interest rates. A reduction of one percent point would mean a yearly benefit of around three billion kuna to the budget, he said.

None other measure can achieve such a saving and bring in that much money as a quality restructure of public debt, he said, adding that this was possible for only a part of the debt.

Asked if the EC had put pressure on the government to introduce a property tax, he said that at the moment Croatia was not ready, primarily because of the state of land registers. "We need time and technical preparations for that project," he stressed.

As far as parafiscal charges are concerned, he said that the commission made an informal recommendation and we plan to reduce these by HRK 280 million this year.

With regard to penalties for early retirement, Grcic said that that was one of the areas of the reform programme that has to be completely aligned with the EC.
 

(Text and photo: Hina) 

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