- Published: 30.04.2015.
Grcic: It is important to implement all reforms
It is important to implement all reforms so that the government can achieve its macroeconomic and fiscal forecasts, Deputy Prime Minister and Minister of Regional Development and European Union (EU) Funds Branko Grcic told a press conference on Thursday.
The government on Thursday adopted the Convergence Programme for the Republic of Croatia for the period 2015-2018, which will be forwarded to the European Commission (EC) and which foresees lowering the budget deficit to below 3% of Gross Domestic Product (GDP) in 2017 as part of the Excessive Deficit Procedure (EDP), but with the continuing growth of public debt until that year too.
"The convergence programme and national reform programme together offer a complete fiscal effort of 1.5% of GDP which should be sufficient for this year," Grcic said.
He underscored that the government didn't expect the EC to acknowledge all its measures as fiscal effort but that he believes that "1 percent can be achieved" from that 1.5%, which he said should be sufficient.
What is not in favour of fiscal consolidation is deflation which limits nominal growth of GDP and nominal budget flow, he said. "That is why we have to invest more effort in implementing reforms on the expenditure side of the budget."
Grcic noted that fiscal consolidation meant reducing public spending as an essential component of GDP and that implied correcting the GDP growth outlook from 0.5% to 0.4%.
The government forecasts a GDP growth of 1% in 2016, 1.2% in 2017 and 1.5% in 2018. "This is a conservative estimate considering the latest macroeconomic indicators which should result in a growth of 0.4%," he said, adding that the reality of the forecasts are based on signals that indicate that positive trends will continue. He recalled that the number of jobless had fallen below 300,000, industrial production and exports had increased and an increase in retail was expected.
The programme forecasts a reduction of budget deficit from 5.7% in 2014 to 5% this year, 4% in 2016 and 2.7% in 2017, Grcic said, adding that the target of 3% of GDP had been pushed back a year due to the new Eurostat methodology of calculating budget deficit.
(Hina) sp