Deficit to be covered by borrowing, privatisation, says FinMin

Finance Minister Zdravko Maric said on Wednesday the government planned to borrow again, possibly in the spring, to cover a planned budgetary deficit of HRK 9.2 billion, which would be financed in part also with revenues from the privatisation of state property.

Speaking on Croatian Radio, Maric said certain debts from previous years were also due. "Perhaps this pressure isn't as big for this year as for the next, and it is mostly domestic debts that are due."

The minister said he was in contact with the domestic financial industry and that he followed foreign markets. "The situation on global financial markets creates additional caution as, although interest rates are currently the lowest historically, this doesn't mean much for Croatia because the price of our debt in relation to comparable countries is markedly higher."

Maric said the geopolitical situation and uncertainties about the growth of the biggest world economies led to instability on global markets. "We will follow the situation and borrow when we estimate that it's best to do so," he said, adding that this might be in the spring.

He said the plan was to stabilise the public debt this year and reduce in the next few, which is expected to result in a credit rating upgrade.

As for privatisation, Maric said the state had more than 4,000 properties and that the biggest potential lay in using them for tourism purposes.

He also said that the 2016 budget was ready and that it would be presented tomorrow, while parliament would discuss it next week. He said there would be no major departures from recently adopted guidelines. He said wages and pensions would not be cut and that there would be a 0.5 percent salary increase per year of service.

Maric said an agreement on the base wage for the public sector would be one of the government's first topics with the social partners. He said one should strive for reforming the public sector and its salaries so that those who worked more could be rewarded.

Asked about a possible tax reform, he said an in-depth analysis should be made first. "We must consider the fiscal effectiveness... We can't undermine the viability of the budget with some changes. Now we are making a big step forward in the stabilisation of the public debt... We should also make a step forward in the simplicity and transparency of the tax system."

Maric said there would be no corrections in the tax system this year, except for alignment with European Union directives, but said there were plans for "certain corrections and legislative amendments that would go into force early next year at the earliest."

 

(EUR 1 = HRK 7.6)

Last update: Wed, 09/03/2016 - 11:40
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