Milanovic said cuts in budgetary expenditures were necessary and possible, as was curbing borrowing to cover the budget gap, but that this was futile if GDP did not grow or jobs were not created. "Everyone has finally realised that fiscal responsibility is necessary but also that that is simply not enough for job creation and economic growth."
"We still haven't come out of the recession because the weight of the construction sector's crash and the fall of personal spending is too heavy, but the moment is very close when we will begin to log positive GDP growth rates which, I assure you, will be a long term and continuous growth, not a balloon that had to blow out overnight with thousands of people who haven't recovered and who still can't spend."
Milanovic said some important data justified his "rational optimism." He said exports had grown by about 9% in the first ten months of 2014 and hoped that they would continue to grow thanks to the European Central Bank's decision to buy more than EUR 1,000 billion in bonds from euro area countries at minimal transfer rates over the next 18 months.
Milanovic was confident that the recent change in tax brackets, thanks to which thousands of people receive higher salaries as of this month, would encourage and step up personal spending, as would a write-off of debts of up to HRK 35,000 (approx. 4,500 euros), which he said would finally enable about 60,000 people to have their accounts unfrozen.
Milanovic said Croatia submitted more than 70 projects to the European Commission, the biggest being in infrastructure and energy, such as an LNG terminal, a third block of the Plomin thermal power plant, and a number of big hydro-energy systems.
"I can say with certainty that the LNG terminal on Krk will be recognised as a very important project for Europe's energy security, i.e. for the lesser vulnerability of one part of Europe when it comes to the supply of key energy sources."
These projects, alongside Croatia's inclusion in the Adriatic-Ionian Gas Pipeline, will ensure cheaper fuels for households and industry, which will additionally stimulate industrial growth and employment.
Milanovic also spoke of the absorption of European Union funds. Croatia had EUR 1.27 billion at its disposal from the pre-accession and structural funds in the 2007-13 period. To date, the absorption of EUR 970 million has been contracted and 75% of the funds have been absorbed, with EUR 487 million paid out.
The projects that have been or are about to be contracted in the said period have been estimated at EUR 350 million. These projects include water supply and drainage systems in Osijek, Porec, Cakovec and Vukovar, the construction of the Ciovo bridge, and the development of Dubrovnik airport.
In 2014, Croatia paid EUR 460 million into the EU budget and received EUR 548 million through various programmes and funds. In the 2014-20 financial framework, Croatia has EUR 10.675 billion at its disposal, about two-thirds of its national budget, Milanovic said.
"I'm deeply convinced that we have managed to develop and make the administration apparatus operational for the full absorption of the European funds that have been allocated to us," he said, adding that invitations to tenders for some of the major projects within the Competitiveness and Cohesion Operational Programme in the 2014-20 period had already been advertised.
(Hina) ha