HUS dissatisfied with criteria for participation in aid programs

The Croatian Trade Union Association (HUS) welcomes the Government’s package of measures to assist the economy, but opposes the criteria for participation in aid programs, emphasizing that the only criterion should be the quality of the proposed projects.

The only criterion for selecting beneficiaries of economic assistance measures should be based on a professional analysis of the profitability and other measurable effects of each individual project, states a letter sent to Prime Minister Jadranka Kosor by HUS President Ozren Matijašević. The criterion that a beneficiary of Government measures as of July 1, 2008, should not be in teškoćama or must have settled debts to the state is, according to HUS, not good for three reasons.

First, a significant number of companies have their debts to the state due to state-owned enterprises that generate illiquidity in the domestic economy by failing to meet their obligations. Furthermore, HUS believes that a good portion of export-oriented companies are recording losses and an increase in unpaid obligations, including to the state, due to the unfavorable exchange rate of the kuna and numerous fiscal and parafiscal burdens that have caused their unfavorable business results prior to the onset of the recession.

Finally, HUS warns that such a criterion unnecessarily diverts attention from the key criterion for granting credit funds – the sustainability and profitability of the economic plan and project, što bi se utvrđivalo na temelju stručne analize i sagledavanja učinka svakog pojedinog projekta. "We fear that strict insistence on the criteria set by the Government will lead to further declines in employment in the real sector and manufacturing industry, thereby opening up a real possibility for deepening the deficit of the state budget and the need for new unpopular measures that Croatian citizens and the economy can hardly endure," the letter states.

The Croatian government yesterday established financing models for measures for economic recovery and development and submitted a proposal for a law on the guarantee fund for economic recovery to the Parliament. The measures for economic recovery and development include two models of active state involvement in financing companies – models for financing business projects and a guarantee fund, intended for entrepreneurs whose difficulties are caused by the financial and economic crisis, or who fell into difficulties after July 1, 2008.  (H)