The main directions of the government's activities to come out of the crisis are restoring order, consolidating state finances, restructuring and downsizing the state and public sectors, and adopting measures for economic recovery and new growth, Prime Minister Zoran Milanovic said in parliament on Tuesday.
All four directions are nearly equally important because only positive results on all four can result in a better standard of living for our citizens and orderly state finances, he said.
The prime minister said the poor economic situation in Croatia was "the result of years of irresponsible HDZ-led governments."
He recalled that in 2011 his government inherited HRK 41.6 billion in illiquidity, HRK 2.5 million in due liabilities and 205,000 workers who were not getting paid.
He said gross domestic product in the second quarter of 2013 was down 0.7 per cent on the year in real terms but 0.2 per cent up from Q1.
Milanovic said the public debt would reach HRK 190 billion by the end of the year, but that the budget deficit was reduced by more than HRK 4 billion to slightly over HRK 11 billion, of which nearly HRK 9 billion went on interest rates.
He recalled that his government had privatised three large shipyards, that the Finance Ministry had introduced a more orderly collection of taxes by publishing a list od tax debtors, rolling over tax debts as well as through fiscal cash registers and pre-bankruptcy settlement.
He said legislative amendments by the end of the year would bring order to the finances of non-profit organisations. "According to available data, about 10,000 associations which submitted financial reports generated HRK 4.5 billion in revenues, of which HRK 1.2 billion from public sources. This means that more than HRK 3 billion remains outside any financial control."
Milanovic recalled that his cabinet had also completed a voter register and that it was computerising the welfare system so as to put an end to those cheating the state.
The government is aware that probably there are economic methods that would show faster results, but it cannot implement a policy it does not believe in, Prime Minister Zoran Milanovic said in parliament on Tuesday, adding that he did not believe that all problems would be solved through monetary experiments or mass lay-offs in the state administration.
"We don't believe in risky monetary experiments, we don't believe those who think we should not repay loans, we don't believe in prophets who say that all our problems would be solved if we laid off dozens of thousands of people in the state administration. Our general commitment is that the process of necessary reforms should keep up with a recovery and growth of the private economic sectors and with bringing order to the difficult situation in state finances," Milanovic said, presenting an annual report on the government's performance.
He said the government was fighting "within a reasonable limit" to keep every job in the private and public sectors, but that a labour legislation reform was imperative to slash the state's debt.
He said the consolidation of state finances was one of the directions for pulling out of the crisis, but conceded that it would be tough to keep the budget at the planned HRK 11 billion and that Croatia would enter the excessive deficit procedure.
The prime minister said economic growth was the only way to reduce the deficit and that in the short term this could be done by privatising or leasing state property. "Don't believe those who say we are selling the state. A company which has swallowed up billions of kuna from the state budget is no national treasure."
Milanovic said the government wanted to discuss how to preserve and increase workers' rights and further tax reliefs for citizens and businesses. "But as long as we are wrestling with a budget deficit and enormous credit liabilities, some demands to increase or retain material rights are simply not realistic."
He said social rights, the payment of pensions, and war veterans' entitlements would not come into question. "But we won't curry favour and delude. At the beginning of our term we rescinded officials' right to privileged pensions and now we will move reducing pensions that are higher than the average salary but were not earned through work."
Milanovic said the government's most important task was to define and pass economic recovery measures. He said that during the 21 months of his cabinet's term, twice as many projects within the IPA programme had been contracted than in the previous four years.
He called on MPs to leave a decision on the construction of the Peljesac bridge up to experts. "If you can say something good for the project in informal contacts, do so. Don't write letters, that's wrong," he said.
Prime Minister Zoran Milanovic said his government would use all democratic means to suppress the spreading of hate and "unmask the political manipulation of human suffering and heroism."
Submitting to parliament an annual report on the government's performance, he reiterated the importance of fighting for the highest standards in national minority rights, equating it with the importance of economic growth.
Speaking of the placement of bilingual signs on state institutions in Vukovar, Milanovic said the government was enforcing the constitutional law on minority rights and that it believed in it because this law and this practice made Croatia a little better and a little happier place.
He called on MPs and the public not to be completely blinded by economic issues, saying there were many more dimensions to life.
He called for not allowing the trampling of the values of anti-fascism and secularism, the discrimination of the LGBT community or the disenfranchisement of any minority. "If we allowed that, our lives, regardless of the economic situation, would be devalued."
Milanovic said his cabinet would use all the legal mechanisms for Croatia to further expand the area of freedom, for everyone to live in line with their beliefs and the free understanding of their identity.
He called the strategy for developing education and science as "the strategy of all strategies," saying that denying modern education to the generations coming of age would be an unpardonable sin. "We will make sure that the people leaving our schools develop healthy, spiritually, physically and socially. That's why we insist on health and civil education on schools."
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