Fiscal consolidation awaits us even without the EU

Croatia is not concerned that a procedure for excessive budget deficit could be initiated against it immediately upon entering the European Union, stated the Governor of the Croatian National Bank, Boris Vujčić, today in London.

Vujčić delivered a lecture today at a professional seminar in London titled ‘Croatia’s Place in the International Monetary System on the Eve of Entering the European Union’.

The seminar was organized by the Official Monetary and Financial Institutions Forum (OMFIF), an independent financial institute based in London and a ‘platform for confidential exchange of views between official institutions and their partners in the private sector’, as stated on their website.

Last week’s recommendations from the European Commission, compiled as part of the European Semester based on the economic program that the Government in Zagreb sent to Brussels in mid-April, indicate that Croatia will have to be subjected to official monitoring almost as soon as it enters the EU on July 1, writes Reuters.

Namely, the European Union stipulates that the budget deficit must not exceed three percent of GDP, while the Croatian Government states in its program that the general government deficit this year will amount to 3.6 percent of GDP and that it should be reduced below the maximum allowable value in the EU by 2016.

– Everyone is aware of the current fiscal picture and the possibility of initiating a procedure for excessive budget deficit. On behalf of the central bank, I can say that fiscal consolidation awaits us one way or another: I believe that this does not worry us too much, it is something we simply have to do – said Vujčić to reporters, as reported by Reuters.

An unnamed European official told Reuters yesterday that ‘the Commission will assess the situation and examine whether the deficit is excessive’. At the current stage, there is no timeline for initiating the procedure, he added.