Gov't to pay for 60% of Zagreb's post-earthquake reconstruction

Photo /Vijesti/2020/07 Srpanj/24 srpnja/1 sjednica.jpg

The government on Friday sent to parliament a bill on the reconstruction of the Zagreb area after the March earthquake under which, as Prime Minister Andrej Plenković said, the government will cover 60% of the costs and local governments and owners 20% each.

A reconstruction fund will be established to oversee the works, raise money for the reconstruction and serve as a one stop shop for all citizens affected by the quake, he added.

The prime minister recalled that HRK 100 billion had already been ensured for emergency repairs by revising the 2020 budget and from the Environmental Protection Fund, that HRK 41 million had been allocated from the Condensing Boiler Fund, and that the government had paid for the accommodation of people who lost their homes in the quake in a Zagreb student dorm.

A US$ 200 million loan has been agreed with the World Bank, talks are under way on a Council of Europe Development Bank loan, and an application has been submitted to the European Solidarity Fund, said Plenković.

Earthquake damage estimated at €11.5 billion

"The earthquake damage is estimated at €11.5 billion, the number of damaged buildings is 25,000, the extent of the earthquake was big, ten seconds of earthquake will no doubt bring ten years of work," he added.

The law is expected to ensure the principles of organised reconstruction under professional regulations so as to preserve Zagreb's historical and artistic value. All interested stakeholders, builders, architects, art historians, conservationists and others were consulted in drafting the bill, which was also put to public consultation, resulting in 400 comments, some of which were incorporated into the bill.

Plenković said he wanted the widest possible consensus on the law and for it to be clear, transparent and implementable.

Construction and Physical Planning Minister Darko Horvat said the reconstruction would be a big financial challenge and that the bulk of the expenses would be covered by the state. A detailed programme of measures will be made for the pace of reconstruction, depending on financing.

As for public buildings, he said their reconstruction would be fully covered by the founders.

Culture Minister Nina Obuljen Koržinek said the reconstruction would envisage state-of-the-art technology to increase the value of Zagreb's buildings and preserve the cultural and historical aspects.

Finance Minister Zdravko Marić said he hoped the reconstruction would contribute to economic activity in Croatia.

Parliament will debate the bill next week.

Plenković on Croatia's EU presidency: We did the best we could amid crisis

At its first meeting the new Croatian government also adopted a report on the Croatian presidency of the Council of the European Union in the first half of this year, with Prime Minister Andrej Plenković saying that "we did the best we could" amid the coronavirus pandemic.

"We did the best we could. I am truly sorry, politically and in terms of communication, that we did not hold all the meetings that we planned for many years to further present to the Croatian public what the EU is today and what its benefits are," Plenković said.

The newest member of the European Union held its first EU presidency amid the coronavirus pandemic, mostly by video conference.

"COVID-19 has changed a lot of things, and the masks that we are wearing show the context of the time that we live in," the prime minister said.

Foreign Minister Gordan Grlić Radman highlighted "the adjustability to crisis situations and the efforts made by Croatian representatives and experts."

"We strengthened our statehood and our global visibility in the European strategic space, and I dare say, in the world order in general," Grlic Radman said.

During the Croatian presidency, the UK left the EU in an orderly fashion, the process of accession negotiations with Albania and North Macedonia was unblocked, the Zagreb summit between the EU and the Western Balkans was held, and Montenegro opened its last negotiating chapter, Grlić Radman recalled.

A 2021-2027 Mulitannual Financial Framework (MFF) was not adopted in the first half of the year and this task fell to Germany, which took over the rotating presidency on July 1.

The government also adopted the prime minister's report on the special EU summit of July 17-21 at which agreement was reached on the MFF and the Next Generation EU instrument. Croatia should receive a total of €22 billion from the EU budget and the economic recovery plan, and Plenkovic said that Croatia had managed to explain to all European stakeholders that so far it had benefited from only one MFF.

Gov't sends 3 loan agreements with int'l institutions to parliament for ratification​

One agreement refers to a €275.9 million World Bank loan for crisis response and recovery support and another for a €183.9 million World Bank loan for post-earthquake reconstruction in the Zagreb area and for strengthening public health preparedness.

In early June, the government endorsed reports on negotiations on the two agreements, which were approved by the World Bank Board of Executive Directors at the end of June and signed at the beginning of this month.

Finance Minister Zdravko Marić said at a cabinet meeting that the repayment period for both loans was 14 and a half years with five years' grace and a variable interest rate tied to six-month Euribor plus 0.75% of the fixed interest margin.

The €183.9 million loan envisages the establishment of institutional and coordination capacities for planning and implementing the reconstruction of public buildings damaged in the earthquake, facilitating the restoration of key healthcare and education services after the earthquake, and improving the public health sector's preparedness for communicable diseases in the future, Maric said.

The government also sent to parliament for ratification a €200 million loan agreement from the Council of Europe Development Bank.

Marić said the repayment period was 12 years with three years' grace and a fixed interest of 0.24% or a a variable interest rate based on six-month Euribor plus 0.36% of the fixed interest margin.

He said the loan would be used to reduce the contagion and effects of the pandemic and ensure the availability of medical services and supplies as well as drugs and protective equipment, among other things.

Croatian companies could receive €800m from Pan-European Guarantee Fund

The government also decided to initiate the signing of a contribution agreement with the European Investment Bank on the Pan-European Guarantee Fund in response to COVID-19.

The fund is part of the €540 million package agreed by the European Council to help businesses, together with the SURE programme to help workers and the European Stabilisation Mechanism to help states, said Marić.

The aim of the fund is to ensure liquidity so that eligible businesses, notably SMEs, can deal with the crisis and continue to develop in the medium and long terms.

The target value of the fund is €25 billion and it is formed on the basis of member states' guarantees, while short term liquidity is ensured by the European Investment Bank. These guarantees cover losses and operating expenses, said Maric.

It is estimated that the fund will mobilise €200 billion in additional investment.

Marić said Croatia's contribution to the fund would be €106.7 million and that Croatian companies, notably SMEs, could receive €800 million from it, depending on the absorption by other member sates.

"Participation in the fund will give the economy, notably small and medium-sized enterprises which have been significantly affected by the crisis, access to additional capacities of the EIB group as part of emergency financial aid in the pandemic."

Croatia to contribute troops to Sea Guardian mission

Under the decision, 35 troops will be sent to the mission on the Navy ship Dubrovnik in early September for about three weeks, the government said in a press release.

Defence Minister Mario Banožić said the participation of Croatian troops in the mission significantly advanced the capabilities of the Croatian Navy.

Participation in the operation will continue the development of capabilities together with other NATO armed forces as well as the development of capabilities for the protection of national interests, he said, adding that this confirmed that Croatia was a credible ally which contributed to operations.

Text: Hina