Based on the economic growth achieved in the first six months, it can be expected that the growth for the entire year will be slightly above two percent, as the Government has predicted. Finance Minister Zdravko Marić states that the budget execution for the first six months shows a deficit of only 0.2 percent of GDP, and it is very likely that the Government will fulfill its promise regarding the deficit for the entire year. From Washington, where he leads the Croatian delegation at the annual meeting of the World Bank and the International Monetary Fund, he emphasizes that the focus remains on further fiscal consolidation in the preparation of the budget for 2017 and generally on efforts to stabilize and begin reducing the share of public debt in GDP.
The public debt of the general government at the end of June this year amounted to 285.7 billion kuna, which is 1.7 billion kuna or 0.6 percent less than at the end of June last year, according to HNB data. The share of public debt in GDP has decreased from 86.7 percent at the end of last year to 84.5 percent at the end of June this year, marking its first decline since these records began.
Marić stated that the budget for 2017 is already in preparation.
– Work is still ongoing on its assumptions in terms of the budget process, but the next government should fulfill and respect the recommendations of the European Commission and continue fiscal consolidation so that next year’s budget deficit is around 2 percent of GDP.
– Regarding the tax reform itself, we are finalizing the last details, as ultimately it often comes down to them. We are trying to find ways for the tax reform and its benefits to be felt by the largest part of the Croatian population.
According to him, the state financing plan for this year has been largely fulfilled, noting that this plan has also been significantly directed towards 2017, in which more than 27 billion kuna is due according to the budget, and another 9 billion kuna in the broader budget context, which includes the road segment.
– Regarding the dynamics of issuance, it is certain that we will be guided by very pragmatic principles given the high cost of debt and generally the capital that Croatia pays, and that we will seek optimal solutions to achieve additional savings on interest. The dynamics of borrowing will be known very soon when we will adopt the budget for 2017, Marić stated.
He also mentioned that in the financing plan, possibly also in pre-financing for 2017, the possibility of refinancing expensive debt in the capital market with cheaper options will be considered. He noted that discussions with representatives of the World Bank also included road companies.
– The details of the restructuring project for road companies have not yet been fully finalized, and on this occasion, we had strategic and technical meetings on this topic, which we place great emphasis on, given that a large part of the highway debt is due this year and next, Marić said, emphasizing the need for quality financial and business restructuring of companies in that sector.
