Government endorses National Reform Plan

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The government on Thursday endorsed the National Reform Programme, comprising 60 measures divided into four areas, which it will forward to the European Commission by the end of the month, with Prime Minister Tihomir Oreskovic saying they were "fair but necessary reforms."

He asked citizens to support the reforms because one could no longer work as until now.

The reforms are grouped into four areas: macroeconomic stability and fiscal sustainability, facilitating doing business and improving the investment climate, public sector efficiency and transparency, and better education for the labour market.

The main economic goal is growth and job creation in the next 18 months, Oreskovic said. "This document outlines the government's policy for the next 18 months and Croatian citizens will measure us based on this document."

"The reforms are fair but necessary," he said, adding that raising the economic growth potential was not possible without them and that the European Commission predicted that growth would be under one percent unless reforms were carried out.

The reforms were defined in open and healthy discussion, Oreskovic said, adding that macroeconomic stability and fiscal sustainability entailed public debt reduction which, together with growth, was the key to change.

To facilitate doing business and improve the investment climate, we must remove red tape from the system and strengthen the information system in public administration because that will accelerate processes, he said, adding that it was necessary to cut entrepreneurs' costs  by reducing parafiscal levies.

Oreskovic said public sector efficiency and transparency would be enhanced by reducing the number of government agencies, and underlined the importance of a curricular reform for better education for the labour market.

The government also endorsed Croatia's convergence plan for the 2016-19 period, which Finance Minister Zdravko Maric said had two key goals - encouraging economic growth and employment, and curbing public debt growth.

The plan is a macrofiscal framework for the National Reform Programme and envisages that the Croatian economy will growth two percent, with milder accelerations in the following years, he said.

"But, by implementing all reforms, we wish to intensify the economic potential so as to step up economic activity in the coming years," he said, adding that domestic demand, followed by exports, was expected to make the biggest contribution to growth in said period.

Maric said the government already made a statement with this year's budget that fiscal consolidation and further reduction of the deficit and the public debt were some of its basic goals. The general government deficit for this year has been planned at 2.6%, which is the lowest deficit planned since the pre-crisis year 2008, while for next year it is projected at 2% and for 2018 at 1%, he added.

Also planned for this year is not only the stabilisation of the public debt to GDP ratio but its reduction to 85.9%, Maric said. The reduction of the fiscal deficit, with HRK 1.6 billion in revenues expected annually from the activation of state property, is expected to further reduce public debt to 80%, he said, adding that if growth in the years ahead was higher than planned, the public debt would fall "far below 80%" by the end of 2019. 

"We will thus be practically complying with all EC recommendations," Maric said, adding that the convergence plan analysed potential risks such as higher interest rates on global markets or a major depreciation of the domestic currency given the high share of foreign currencies in the debt. However, he said, "there are also positive risks. We should persevere with the reforms."

(Text: Hina)

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