The budget revision will save on costs and capital investments

The Deputy Prime Minister and Minister of Regional Development and European Union (EU) Funds, Branko Grčić, stated today that a budget revision must occur and announced that savings will be sought in material costs, costs of intellectual services, and capital investments.

– The budget revision must happen. What will be sought for savings is the issue of material costs, possibly intellectual services, but also what is related to capital investments – said Grčić in response to journalists’ questions in Split, where he participated in the opening ceremony of the newly built Vocational Technical School.

– Given that we have set a very ambitious plan, around 11.5 percent growth in investments this year, I believe that one billion kuna, or two less in capital investments, will not significantly jeopardize key intentions, which is to maintain, through the state’s investment activities, some level of demand that would somehow contribute to the recovery of the economy, especially the construction sector – explained Grčić in response to questions related to the announcements of the budget revision.

In response to a journalist’s question about how he comments on the proposals of some government critics advocating for the formation of a national salvation government, Grčić said he believes that ‘this is pretentious at this moment’.

– This government has practically just begun its mandate, it has only been a year, and I believe that we will create more order in the state in all segments, stabilize public finances, and open perspectives for economic growth and new employment – he said.

He emphasized that the government has high expectations from Croatia’s entry into the EU due to a greater influx of capital through EU funds and more favorable conditions for foreign direct investments in the country.

When asked to comment on Moody’s downgrade of Croatia’s credit rating to ‘junk’ status and whether he believes government actions contributed to this, Grčić stated that one must also consider what this government inherited.

It inherited nearly 40 billion kuna more public debt in just three years of crisis during the previous government, and 40 billion more public debt means about three billion more in interest, and that is precisely the cost that has reduced the space for deficit reduction in the state this year, said Grčić.

When asked to comment on the announcement by the Orco Group, the majority owner of Sunčani Hvar, that it will file a lawsuit against the state for breach of contract signed with Orco, Grčić said that this is yet another example that a poor approach, not only to privatization but also to project management and especially to respecting contractual obligations, can lead to a continuous dispute regarding the future of a very valuable company, especially for the island of Hvar and the city of Hvar.

When asked whether a new state oil company will be formed instead of INA, Grčić neither confirmed nor denied such a possibility but briefly said: ‘That is a topic for another time, it is not the subject today’.

Some media today, citing unofficial sources, reported that the government intends to establish a ‘new state oil company’ through a proposed hydrocarbons law, which should be the key representative of the state’s interests in managing national oil and gas resources.

The Ministry of Economy, in response to Hina’s inquiry about these announcements, only replied that the ministry is preparing a law on the exploration and exploitation of hydrocarbons, that the law is currently in the preparation phase through the collection of opinions from state administration bodies, and that it will then be sent to public discussion.