The Deputy Prime Minister of the Republic of Croatia and Minister of Finance Marko Primorac stated that he agrees with the IMF’s assessments that wage growth should be limited and announced a new issuance of treasury bills for Monday, as well as a proposal for the 2026 budget, which anticipates economic growth of 2.7 percent and inflation of 2.8 percent.
Primorac participated today in the traditional 33rd conference on Economic Policy of Croatia in 2026, organized by the Croatian Economic Society. In response to a journalist’s question about the concluding statement of the IMF Mission at the end of its visit to Croatia, Primorac replied that he believes fiscal policy, in terms of fiscal stability and maintaining the budget deficit at the level of the consolidated general government below three percent, is something that places Croatia among EU members with more appropriate fiscal frameworks and fiscal policies.
Primorac also stated that he fully agrees with the IMF that wage growth should be limited.
– Regarding wage growth in the public sector, we agree with the IMF’s assessments that we need to carefully weigh this situation and therefore, in the context of current negotiations with the unions, which are being conducted by Minister Piletić, this is something we continuously try to clarify – he noted.
He assessed that it is unrealistic to expect, after wage growth that largely occurred due to the reform of wages in the public sector, that such a trend and dynamics of wage growth will continue in the next period.
– That is not realistic, possible, nor would it be opportune for Croatia – he emphasized.
Primorac highlighted that wages are continuously being relieved, with reliefs amounting to more than 2 billion euros annually from 2016 to the present. He stated that since 2024, they have managed for the first time to increase wages for those with the lowest incomes, that the basic personal allowance has been continuously increased, and that tax brackets have been partially reduced.
However, he also reminded that some citizens are not in a position to pay income tax at all, as their tax base is lower than the personal allowance, so any step in tax policy could no longer help them in the tax part. Therefore, as he said, an innovative element has been incorporated into the system, which has exempted gross wages from contributions for those with the lowest incomes. He stated that efforts are being made to continue to relieve labor from taxes and to shift the tax burden to other forms of economic strength, primarily property, i.e., real estate, and that they have been quite successful in this so far.
New treasury bills are coming
On this occasion, Primorac also announced a new issuance of treasury bills, which will have a maturity of 364 days, with a targeted issuance amount of 1.2 billion euros, at a yield of 2.6 percent. Subscriptions will begin through digital channels already on Sunday at midnight, and on Thursday, this issuance will be announced in more detail.
Speaking about the state budget for the next year, he said that the proposal is in the final stages of preparation and will soon be presented to the Government.
– In accordance with the projections of the Ministry of Finance, we expect economic growth of 2.7 percent, inflation of 2.8 percent, and a deficit at the level of the consolidated general government of 2.9 percent. Discussions are ongoing with all relevant ministers and ministries, and the budget should be adopted by the Government by November 15, after which it will be sent to parliamentary procedure – he announced.
In his presentation, Primorac reflected on what has been done in the past three years, stating that from a macroeconomic perspective, we can be satisfied with what has been achieved, as well as with the reform processes, fulfilling a number of criteria and the approach to the OECD, which he believes will happen next year.
– By reducing the share of public debt in GDP, we have created fiscal space for reactions if necessary, we have sought to relieve the economy, and regarding further steps, the ambition is to shift the tax burden from labor to other forms of economic strength, primarily property, i.e., real estate – he said.
He also mentioned some changes in the tax system, which should demotivate those who speculate in real estate, the taxation of tourist rentals, and the fiscalization of tips, emphasizing that the population register will be fully functional by June 2026, and that Fiscalization 2.0 will increase fiscal discipline.
Primorac also highlighted work on improving the social climate, protecting children and minors, especially in the gambling system. With the entry into force of new regulations, advertising will be regulated, and such spaces will be moved away from schools and churches, and it has already been announced, he says, that about half of the branches will be relocated.
He stated that the state is fulfilling its borrowing needs largely from citizens today, with over 300 million euros worth of recent issues of government bonds and treasury bills, and the next step would be the issuance of corporate bonds, especially by public companies.
Working group for recommendations on how to strengthen productivity
Primorac agrees that work should be done on strengthening productivity, but emphasizes that this has been discussed for 15 years, but with few concrete recommendations. “We are ready to accept concrete advice,” said Primorac and announced the formation of a working group, stating that they need people who are scientifically and professionally engaged in the topic of increasing productivity.
The president of the Croatian Economic Society, Darko Tipurić, spoke about the trap of low productivity and emphasized that it is time for decisions and presented ten necessary steps to exit low productivity, among which are the development of high value-added industries, education, modernization of infrastructure, further reduction of administrative burdens, increasing the quality of institutions and the efficiency of the state, strengthening governance and the rule of law, and long-term linking of wage growth to productivity growth.
