PM in Brussels: Croatia is gradually reducing deficit

Croatia is gradually deleveraging, implementing reforms and reducing its deficit, but no one will compel us to dramatically cut consumption, Prime Minister Zoran Milanovic said in Brussels on Thursday.

"We won't, nor will anyone compel us to implement reforms that would mean dramatic cuts to consumption and stop the cycle that has been put in motion and which has finally begun to give serious signs of life," Milanovic told the press on arriving for an EU summit. He was asked about the national reform programme which Croatia needs to submit to the European Commission next month.

"We cannot reduce the deficit by several percentages of GDP overnight. We cannot and we won't, but we will reduce it gradually. We have said that and that's what we are doing," he said. "Our budget is currently in deficit, but nearly all of it is going towards repaying loans and interest. If we look at it that way, and that's the way it should be looked at, the situation has never been more favourable, because expenditure on current costs was much higher previously, and now that is not the case because we are slowly deleveraging," he added.

The two-day summit will focus on an energy union, economic reforms in member states, a trade agreement with the United States, relations with Russia, and the situation in Ukraine and Libya.

Milanovic also commented on the government's proposal not to pay Christmas and holiday bonuses for public-sector employees this year. "This is a necessary measure and I would be happy if it were otherwise, that we could increase salaries by 30 per cent, but we can't. This decision was adopted by the government today and it is going to parliament," he said.

Milanovic said that Croatia supported the creation of an energy union in Europe. "An energy union is a good thing for us. Croatia is not overly dependent on energy from Russia, but we support an energy union," he said.

(Hina) vm

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