State agencies will be downsized, says Deputy PM

The downsizing of state agencies is one of the five key components of due diligence of budgetary expenditures that will be carried out because it is being agreed with the European Commission as part of a national reform plan, Deputy Prime Minister Branko Grcic said on Wednesday.

He was responding to questions from the press about which agencies could be merged and how much would be saved through that.

Reporters reminded him that Finance Minister Boris Lalovac said that public companies generated a high debt and that they were "a sword over our heads," to which Grcic replied that one of the key reform issues was "curbing public debt growth." Since last year, the borrowing of public companies is a big burden because of a new method of calculating the deficit and the public debt.

Asked if the European Commission had replied to Croatia's proposal of steps for macroeconomic balance and what it had recommended, Grcic said this matter was in the final stage.

He said the commission for the European Semester met again yesterday and that a European Commission delegation was to make another visit to Croatia this week. The proposal will be finalised with the delegation and endorsed by the government before being sent to the Commission.

Grcic said the key areas were a public administration reform, better management of public companies, dealing with the health sector's debt, health sector reforms, reducing the deficit, stopping public debt growth, and better management of public finances.

Asked when savings could be expected in public companies, Grcic said reforms in them were under way and that all details would be presented at a conference on those companies on April 30.

Entrepreneurship and Crafts Minister Gordan Maras said the incumbent government reduced the consolidated public sector deficit by nearly HRK 10 billion since 2011 and downsized staff in ministries and agencies by 2,500. But, he added, "more needs to be done for Croatia to come out of borrowing and stop burdening future generations."

Grcic said data for 2014 showed that wage expenditures in public companies had been reduced by 8.5% and staff by about 5.5%, more than in public administration. He said that made sense because those companies should be market-oriented.

The two ministers were in the northern Adriatic city of Rijeka to present investment possibilities through EU funds.

(EUR 1 = HRK 7.6)

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