Grcic and Lalovac to meet Moscovici on Tuesday to discuss national reform programme

Deputy Prime Minister and Minister for Regional Development and EU Funds Branko Grcic and Finance Minister Boris Lalovac are meeting with European Union Commissioner for Economic and Financial Affairs Pierre Moscovici in Brussels on Tuesday to discuss the reform measures being undertaken by the Croatian government.

In the second half of March the government sent the European Commission an initial draft of measures aimed at correcting macroeconomic imbalances and was to prepare fiscal measures to identify areas where where further cuts were possible.

Lalovac said recently that he and Grcic had been instructed to identify areas where between 500 million to one billion kuna could be saved.

Croatia and all other EU member states are required to submit their national reform programmes and programmes for stability and convergence to the European Commission by mid-April. Based on these documents and its own analyses of economic policies in the member states, next month the Commission will present a targeted set of recommendations for each member state, targeting priorities that will have to be addressed by each country.

If the Commission finds the Croatian measures to be insufficient, it may take corrective action to ensure that the macroeconomic imbalances are corrected. The Commission never took such action against any member states. It may impose financial sanctions of up to 0.1% of GDP, but only on euro area member states, while in the case of other member states it may suspend a portion of EU funds that are at their disposal.

The Commission said in a report in late February that Croatia was experiencing excessive macroeconomic imbalances that required resolute political action and specific monitoring.

According to recommendations adopted by the Council of the EU, Croatia was to reduce its deficit to 4.6% in 2014, to 3.5% in 2015 and to 2.7% in 2016, and reduce or halt public debt growth, but Croatia is far from meeting these recommendations. Lalovac has said that last year's deficit will certainly be above 5%, and the exact figure will be known by the end of this month when an initial calculation is made using the new ESA2010 methodology.

Lalovac said that instead of 12.8 billion kuna, last year's budget deficit could be between 16 and 18 billion because the new methodology also accounts for public companies' debts and guarantees provided to public companies by the government.

Lalovac said that some of the public companies were a great burden on the budget, announcing significant cuts in public companies.

(Hina) vm

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