Linić’s Ministry Distorts the True Facts About Housing Savings Banks

The Committee of Housing Savings Banks at the Croatian Banking Association (HUB) assessed today that the Ministry of Finance “does not understand the housing savings system” and presents selective data from the World Bank regarding housing savings in Croatia, while on the contrary, the Housing Savings System contributes more than 300 million kuna annually to the state budget.

A few days ago, the Ministry of Finance opened a public discussion on its website regarding the proposed amendments to the Law on Housing Savings and State Incentives for Housing Savings, which, among other things, proposes the abolition of state incentives for housing savings, which are paid at a rate of 10 percent of the paid deposits.

The Ministry states that savers primarily use this system for savings, which is more favorable than in commercial banks due to obtaining state incentive funds, and after the five-year period, they withdraw their saved money and use it for various purposes, not for solving housing issues.

The President of the Committee of Housing Savings Banks at HUB, Zdravko Anđel, critically comments on these moves in today’s statement, claiming that “a supposed World Bank document on the housing savings system in Croatia has been published on the Ministry of Finance’s website, as well as a Commentary in which the Ministry provides its interpretation of the Analysis from the Institute of Public Finance on the same topic.”

The Committee of Housing Savings Banks at HUB claims that “in both cases, the Ministry presents things distorted.”

It emphasizes that “the Ministry has not published the complete World Bank document, as it would be seen that it is actually an offer to conduct research on this topic, which is full of incorrect initial insights.”

The Committee also comments on the Commentary on the Analysis from the Institute of Public Finance, noting the Ministry’s claim that 44 percent of savers in the system are older than 44 years, that 87 percent of households that save live in their own properties, and that more educated citizens from urban areas save in the system.

The President of the Committee of Housing Savings Banks emphasizes that “the housing savings system promotes intergenerational solidarity,” and that “the data on the structure of savers is in line with the structure of the population in Croatia.”

He states that “26.5 percent of children and young people in the system are being saved for by their parents, so they can independently address future housing needs, rather than being a burden on the state,” and reminds that in the total “population of Croatia, this group constitutes 27 percent of the population.”.

“In the system, 29.5 percent of savers aged 23 to 44 are addressing their housing issue for the first time, not necessarily by purchasing new property but by expanding, reconstructing, or adapting and equipping existing property; in the total population of Croatia, this group constitutes 27 percent of the population,” the Committee states.

It reminds that “44 percent of savers in the housing savings system are over 44 years old,” and that these are “savers who improve their living conditions with their savings or help younger family members solve their housing issues,” and that in the total population, this group constitutes 46 percent of the population.

They add that “55 percent of housing savers who do not use credit use their own housing savings for housing purposes,” and emphasize that “older individuals help the young, and parents save for their children,” and that there is an increasing demand for loans for the renovation of the housing stock in Croatia.

“Through selective interpretation, the Ministry concludes that ‘housing savings in the Republic of Croatia serves exclusively the wealthier layer of citizens who save their surplus income under extremely favorable conditions.’ This claim is supported by the data on the annual income of savers of about 43,000 kuna per family member. If converted to salary, it amounts to an income of 3,583 kuna per month, of which an average of about 300 kuna is set aside for housing savings. Is this about wealthier citizens?” the Committee emphasizes.

They conclude that the Ministry misinterprets the data, but also that “it presents incorrect data. So far, savings banks have approved 5.6 billion kuna in loans, not 3.5 billion as stated by the Ministry,” they say.

These loans have helped 37,000 families solve their housing issues or improve their living conditions, emphasizes the Committee of Housing Savings Banks.

Data from the Analysis shows that housing savers live in lower quality and smaller living spaces than the average in Croatia, which require investments for purchase, construction, expansion, adaptation, or reconstruction. All investments in real estate stimulate a range of industrial sectors and activities, thereby visibly and measurably contributing to the filling of the state budget, emphasize the Committee of Housing Savings Banks.

The President of the Committee concludes that the Housing Savings System contributes more than 300 million kuna in revenue to the state budget annually.

“In the event of the abolition of incentives, this item, amounting to only 100 million kuna, would only be absent in the budget for 2016 due to delays in payment. This is far less than the revenue the state would lose if the incentives are abolished,” concludes the President of the Committee of Housing Savings Banks at HUB, Zdravko Anđel.