Total Amount of State Aid Decreases, Support for Agriculture and Fisheries Increases

The annual report on state aid for 2008 shows that the total amount of aid has significantly decreased compared to the previous year, while at the same time, support in the areas of agriculture and fisheries has continued to grow, emphasized the President of the Competition Protection Council, Olgica Spevec, at today’s press conference.

The total state aid granted last year amounted to 8.81 billion kuna, which is 18 percent less than in 2007, according to the report from the Competition Protection Agency (AZTN). At the same time, the amount of aid for agriculture and fisheries increased from 3.21 billion kuna to 3.53 billion kuna, reaching a 40 percent share of total aid. The share of state aid in GDP fell from 3.4 percent in 2007 to 2.57 percent last year. If we look at the amount of aid excluding agriculture, fisheries, and transport, it amounts to 3.82 billion kuna, or only 1.12 percent of GDP, which means that aid in the industrial and service sectors is under control and increasingly at the level of EU countries, assessed Spevec.

Compared to 2007, aid to industry and services decreased by 2.2 billion kuna, with the largest reduction relating to shipbuilding and restructuring. Shipbuilding received 594 million kuna in aid last year, while the year before it received as much as 2.17 billion kuna. However, as privatization of shipyards is expected next year, a larger portion of the amount of 2.5 billion kuna in state guarantees could come due.

The government’s decision to postpone the second round of privatization of shipyards until early February is good, especially since it has been agreed with the European Commission to avoid shortcomings from the first tender. However, regardless of the transparency of the new tender, the state will have to take on the majority of the guarantee amounts, believes Spevec. Last year, there was an increase in the share of aid for horizontal and regional objectives in total aid by 35 percent compared to 2007, and Spevec assesses this trend positively as such programs strengthen the efficiency and success of the economy as a whole.

At the same time, the number of aid providers at the national level increased from 12 to 15, which can lower the quality and effectiveness of the granted aid, and the total amount of so-called small aid (up to 200,000 euros in three years) has increased by 44 percent, which does not encourage efficiency and lacks developmental character, warned Spevec. Regarding sectoral aid, the most was granted to transport, 1.45 billion kuna, and HRT, 1.1 billion kuna. Within transport, the most was received by HŽ, 857 million kuna, while maritime transport received 495 million kuna, and air transport 100 million kuna in aid. During 2008, there were no financial aids for the struggling economy in the fight against recession, which many countries resorted to after the outbreak of the crisis, and the same policy continued this year. In the report for 2009, we expect a further decline in the amount of state aid as Croatia, due to budget constraints, could not implement anti-recession measures like many other countries, explained Spevec. (H)