Due to healthcare, a technical budget revision is coming

Finance Minister Slavko Linić stated today that next week there should be an issuance of government bonds on the domestic market, and due to 3 billion kuna in healthcare obligations, he announced that a technical budget revision could occur in the last quarter of the year.

Appearing on the show A sada Vlada on Croatian Radio, Linić said that budget revenues in the first six months are a few percentage points below plan.

However, he notes that this is without the profits of trading companies, as the shares of Janafa owned by HANDA have not been sold, which represents nearly a billion kuna in revenue that would be realized in the second half of the year. There is also the issue of paying 3 billion kuna in healthcare debts, as well as an additional billion kuna in subsidies paid to farmers since all subsidies were paid out in the first six months, meaning there are no such obligations in the second half of the year.

“Thus, the deficit for the first six months is very high, it has already exceeded the annual limit, but by the end of the year, this will be ‘ironed out’, but it is clear that we will have to revise the 3 billion kuna in healthcare obligations, as I do not believe we will manage to achieve an additional 3 billion kuna in revenue,” said Linić.

This is a technical revision to register the payment of obligations for healthcare, explains Linić, who announces the revision proposal for the last quarter when the proposal for the budget for the next year and projections for the budget for 2015 and 2016 would also be presented.

The Finance Minister stated that next week there should be a transaction for the issuance of government bonds on the domestic market, with part being in kuna and part being bonds with a foreign currency component.

The bonds would be for a fairly long term, and Linić estimates that the interest rate could be around or slightly above 5 percent.

He said that foreign borrowing by the state is not planned until the end of this year, but it could occur in the first quarter of next year, after the healthcare restructuring is implemented.

“With such messages, that we have effectively carried out the restructuring in six months, and that no new issues arise, only then can we go to the foreign market, and that could be in the first quarter of next year,” he said.

When asked about the monetization of Croatian highways, for which a government decision on announcing a tender is expected next week, he stated that the condition for monetization is an offer of at least 3 billion euros.

“The length of the concession can be discussed; it is a matter of calculation and negotiation, but the limit of 3 billion remains. If no one offers that, there will be no monetization, we will manage on our own, increasing public debt,” said Linić.

He reminded that nearly 4 billion euros have been spent on the construction of highways to Rijeka and Dubrovnik, but that traffic is not sufficient for that investment to pay off, that the concession should yield at least 3 billion euros, and the remaining billion euros would be covered by retaining a fee of 60 lipa from the price of petroleum derivatives.

“Then we are not at a loss,” said Linić, warning that public debt is around 180 billion kuna, and when adding railways, Croatia Airlines, and other issues, it approaches a very dangerous level of 60 percent of GDP.

“If we do not want to declare state bankruptcy, which is not an option for us, we must put our asset resources to work in reducing public debt. People need to understand this – it is state management – we have assets and we need to put them to work and, on the other hand, generate income to reduce the debt,” Linić emphasized.

He also announced that by the end of this month, a proposal for a law on consumer crediting should be presented to the government, and in the fall to the Parliament. An agreement has been reached with banks that they will not unilaterally terminate overdrafts on current accounts with their customers, that they will allow repayment over one to two years, and he added that efforts are being made to find a solution for disruptions caused by significant devaluations.

Linić believes that the problem of queues of freight vehicles at the border with Serbia and Bosnia and Herzegovina will be resolved in about ten days, noting that the issue is also that the EU’s computer databases are not complete, but also that many freight forwarders, exporters, and importers have not prepared for the EU.

The Finance Minister reiterated that he does not give up on fiscalization in markets, stating that everyone has had time to prepare, including city markets that need to provide better service to users of market spaces.

“In the next month, we will establish order, we will remove all bullies who do not respect Croatian laws, but the law on fiscalization will be respected. We will put an end to smuggling, theft, the sale of all kinds of products, illegal work, and the gray economy in markets,” said Linić, announcing greater oversight and controls.