Nikšić: Yes, 10 billion euros must go to the real sector, but it MUST also go to the public!

The EU, within the framework of the development program Next Generation EU, in accordance with the size and number of inhabitants, has allocated 10 billion euros to Croatia (7.5 billion in grants, 2.5 billion through loans). The money, in the event of a final agreement, will be available from the beginning of 2021. The coronavirus crisis, which has enormously strengthened the already impending economic crisis, has significantly increased the sense of uncertainty and insecurity, and thus significant disputes over how to use that money.

There are many gaps that need to be filled, but since there is not enough for all of them, it is necessary to align, unfortunately, the unavoidable particular interests (elections, satisfying the interests of those in power, whatever they may be) with the necessary short-term gains (vulnerable groups, especially important public functions and sectors …) and long-term stability and security.

Long-term stability and security primarily depend on the strength and capabilities of the real economy, its competitiveness in the global market. Creating conditions for strengthening exports (strong market diversification to reduce dependence on a few markets, mainly from the neighborhood); investing in development and innovation (in R&D, Croatia invests 0.37% of GDP, while the EU average is three times higher) and not in real estate; investing in the digitalization and automation of production in key industries (agriculture, food, metal processing, wood, chemical); THREE are the key areas of the real economy for spending EU funds.     

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In order for the real sector, thus encouraged to develop, to be relieved through tax reductions and other contributions to the budget, part of the funds will need to be invested in restructuring the public sector: reducing the volume and digitalization and increasing the quality of public administration services, reducing the wage mass of the public sector, restructuring state-owned enterprises. With these high-return investments, it can significantly reduce the expenditure side of the state budget, and thus the need to ensure the necessary level of revenue through high tax rates, other levies, and prices of goods and services of state-owned enterprises, and unreasonable encouragement of consumption of financially exhausted citizens and the economy.

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Nikola Nikšić

photo Dražen Lapić

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To ensure that the available funds are well utilized, it would be essential to reach a general agreement on a long-term national development strategy in our Beautiful Croatia, with the consensus of all stakeholders. Since we have not succeeded in this so far, in more than 20 peacetime years since gaining independence, perhaps this crisis squared after the elections will encourage us to finally accomplish this, thus confirming ourselves as an organized social and economic community.    

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