Set of measures adopted to prop up economy during COVID-19 epidemic

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The government on Tuesday adopted 63 measures to prop up the economy during the COVID-19 epidemic, with the aim of preserving jobs and enabling payment of wages.

Finance Minister Zdravko Maric underscored that the measures had been hammered out with business associations and trade unions and were in compliance with common European efforts to curb any economic damage due to the novel coronavirus.

The first set of measures, according to Maric, are of a horizontal nature and relate to those enterprises that have already felt the consequences of the epidemic.

The measures refer to the deferment of public contributions, specifically to the deferment of paying income and profit tax and contributions on wages for a period of three months and possibly an extra three months of grace period if necessary and after that these payments can be made in installments of up to 24 months.

The set of measures for financial liquidity include a three-month moratorium on liabilities to the Croatian Bank for Reconstruction and Development (HBOR) and commercial banks, as well as the approval of loans for cash flow in order to pay wages, suppliers and to reschedule other liabilities.

Maric says that it can be expected that citizens too will be allowed to defer loan payments also for a grace period of three months.

He announced interest-free loans for municipalities, cities and counties, the Croatian Health Insurance Fund (HZZO) and the Croatian Pension Insurance Fund (HZMO), equal to the amount of income taxes, surtax and contributions that have been deferred and/or for which installment payments have been approved.

The approval of new loans for liquidity for enterprises to finance wages, utility costs and other basic business operating costs (with the exception of loan liabilities to commercial banks and other financial institutions) in cooperation with commercial banks as another measure was announced by Maric.

Pavic: "COVID 19 loans"

Regional Development and EU Funds Minister Marko Pavic highlighted the increasing of the allocation for the 'ESIF micro loans" for working capital for micro and small enterprises that is being implemented by Agency for SMEs, Innovation and Investments (HAMAG-BICRO).

Measures also include the unconditional extension on the duration of projects that were to have been competed in March, April and May this year as well as on the liabilities that fall due in March, April and May for a period of 90 days and this refers to all projects co-financed from the Competitiveness and Cohesion Operational Programme that are currently underway.

Furthermore, Pavic said that the payment of 75% of requested funding from the cohesion programme would be accelerated while the remaining 25% would be paid after an examination of the proper spending of earmarked funds for the procurement of works/good and/or services.

He also announced the establishment of a new financial instrument "COVID-19 loans" for working capital for small and medium-sized enterprises.

Economy Minister Darko Horvat said that amended legislation on boosting investments would introduce new assistance measures as well as a three-year grace period for the existing beneficiaries of the law.

Furthermore, an additional 114 million kuna "will be activated" through the national agency for SMEs and 380 million kuna will be put at the disposal of businesses for ensuring working capital, the minister said.

Tourism Minister Gari Cappelli confirmed plans for deferred payment of taxes and fees for companies and small businesses in the tourist trade.

Additional discounts on motorway tolls

Transport Minister Oleg Butkovic announced a temporary deferment of the payment for permits for extraordinary transport and the extension of the so-called winter discounts on motorway tolls to 1 June and some other discounts.

The agriculture ministry has prepared a financial aid package of HRK 350 million, and additional grants in the fisheries sector. Deferred payment for services to the Croatian Forest Management Company ("Hrvatske Sume") and the postponement of payments of concession fees for the use of state-owned agricultural land are envisaged.

Vujcic: Liquidity more than sufficient to enable smooth cash flow for businesses

Croatian National Bank (HNB) governor Boris Vujcic informed the government on Tuesday that the country possessed very high foreign currency reserves and that system liquidity was more than sufficient to ensure the cash flow for businesses.

Presenting the central bank's measures designed to mitigate the economic consequences of the crisis caused by the outbreak of COVID-19, Vujcic said that he expected a sharp but short contraction of economic activity, primarily as a result of efforts to contain the spread of the coronavirus.

There are forecasts that this situation will be relatively short, lasting three, six or eight months. Of course, the shorter the crisis, the lesser the impact on the economy, the HNB governor said.

HNB has drawn up 3 groups of monetary policy measures

Vujcic said that the HNB had prepared three groups of monetary policy measures.

One refers to the stabilisation of the kuna exchange rate and to ensuring foreign currency liquidity. In this context, Vujcic recalled that in the last four interventions, the central bank sold €1.63 billion to commercial banks so as to stabilise the kuna exchange rate at 7.57 per euro.

Foreign currency reserves stand at €19 billion.

The second set of measures focuses on making sure that there is enough kuna liquidity and therefore the central bank has conducted structural and repo operations. On Monday, 750 million kuna was injected into the banking system as a short-term measure, plus 3.8 billion kuna as a long-term measure for a period of five years and at an interest rate of 0.25%.

The third group of measures refers to support to the stability of the state securities market through the purchase of government bonds.

If Croatia were a member of the euro area, some of these measures would not have to be implemented, said Vujcic.

We would also have access to the European system of monetary stability, where €500 billion is available, he said.

National Civil Protection Authority given more powers

The government on Tuesday sent to the parliament a bill of amendments to the Civil Protection Act, giving the national civil protection authority more powers to facilitate the work of state institutions amid the novel coronavirus epidemic.

The government proposes that the existing law be amended so as to enable the national civil protection authority to make decisions and issue instructions that will be implemented by local and regional self-government, Minister of the Interior Davor Bozinovic said.

The bill is aimed at ensuring uniform action by all civil protection authorities in adopting and implementing decisions that regulate citizens' and legal persons' everyday activities in the context of an epidemic, the minister added.

The bill was sent to the parliament to be discussed under fast-track procedure in order to ensure the timely implementation of measures designed to remove the danger of immediate threat to people's lives and health and the danger of damage to the economy during the COVID-19 epidemic.

Justice Minister Drazen Bosnjakovic said that he had sent four recommendations to the judicial authorities over the novel coronavirus epidemic in an effort to ensure their uniform functioning and reduce risks as much as possible.

Judicial bodies have been recommended to continue with work, notably on urgent cases (concerning children's rights, labour rights, criminal cases) and to defer all the other cases.

Another recommendation is for work in judicial bodies to be organised in such a way to enable remote work where it is possible, and the minister has also recommended using electronic communication.

The Economy Ministry and the Commodity Stockpiles Directorate have been instructed to carry out, using budget funds, emergency procurement of goods which are in short supply and which are necessary to implement measures to protect public health and increase supervision over the spreading of COVID-19.

Goods will be delivered from commodity stockpiles exclusively at the request of the Ministry of the Interior and the Public Procurement Act will not apply to their procurement for the sake of protecting vital national security interests that cannot be safeguarded by other measures, Economy Minister Darko Horvat said. The list of goods and services is confidential.

The government today also forwarded to the parliament amendments to the Commerce Act to enable county civil protection authorities to regulate working hours for shops in their areas of responsibility in extraordinary situations, such as the current coronavirus epidemic.

Text: Hina