Government: By 2021, the share of public debt in GDP will fall to 66 percent

The Government of the Republic of Croatia has accepted the proposal of the National Reform Program for 2018 as well as the proposal of the Convergence Program for the Republic of Croatia for the period from 2018 to 2021 at today’s session. These two documents are part of the obligations that Croatia has within the framework of the European Semester process, in which EU member states are trying to reduce macroeconomic disparities in the Union through economic and structural reforms.

>>> Plenković: Now is the right time for structural reforms

– I want you to take responsibility and ownership of this reform process, I expect it to be fulfilled and implemented, and if we implement it, we strengthen credibility, enable economic growth, increase employment, reduce negative demographic trends, increase investments, and maintain fiscal discipline. This is the right time for structural reforms. We have economic growth, favorable macroeconomic indicators, and we are in a year when elections are not anticipated, and a breakthrough can be made – said Prime Minister Andrej Plenković to the ministers during the discussion on the National Reform Program, adding that this year he expects a surge in private investments and an extraordinary tourist season.

The government reform document contains numerous activities divided into 59 measures and 11 reform areas. Its main objectives are to strengthen the competitiveness of the economy, maintain fiscal discipline, and strengthen the link between education and the economy.

– The National Reform Program is a response to the structural challenges of our economy. We are still in transition, facing general challenges, and at the same time, we must implement reforms. Therefore, all the proposed measures respond to both the challenge of transition and the modern age – said Minister of Foreign and European Affairs Marija Pejčinović Burić.

Finance Minister Zdravko Marić presented an overview of the Convergence Program of the Republic of Croatia for the period from 2018 to 2021, which anticipates economic growth at annual rates of around 2.5 percent by 2021.

>>> Minister Zdravko Marić should explain how the state ‘earns’

– The main driver of growth remains domestic demand, specifically household consumption and personal consumption. The effects of the tax reform are visible here, and personal consumption will continue to be a driver of growth. However, the investment environment has also positively reacted to the tax reform and other measures to improve the business climate. Last year, private investments grew at a rate of 7.4 percent. This shows the strength of the economy and the positive effect of the measures, as well as the resilience, willingness, and desire of the economy. In the coming years, we expect the continuation of this positive trend, and we also have plenty of room in public investments, including through greater utilization of European funds. The Pelješac Bridge is the most visible and significant, but it is not the only one – said Zdravko Marić.

The finance minister also warned of the growth of exports of goods and services, which is the main effect of entering the EU. Inflation is forecasted at rates of around 1.5 percent annually for the next three years. At the same rates, Marić hopes that employment will also grow, and unemployment should fall to 7.5 percent by 2021, according to the Convergence Program.

– The share of public debt in GDP will fall to 66 percent by 2021. Through responsible and efficient collection of tax revenues, attention to the expenditure side, and activities to activate state assets, we responsibly project that our public debt will follow the good trend so far – said Marić.

At the Government session, among other things, the proposal of the Law on the Management of State Assets was adopted, as well as the proposal for the decision on the preparation of the State Spatial Development Plan.