zdravko maric.jpg
Photograph: HINA/ Daniel KASAP/ dk

The government's objective this year is to stabilise the country's credit rating and in the continuation of its term to upgrade it, Finance Minister Zdravko Maric said on Tuesday at a conference "Loans and Economic Growth", underscoring that upgrading the credit rating was a big challenge.

"From today's perspective, we have some sort of economic growth, last year it was 1.6% and this year we foresee a somewhat higher growth rate, however, the credit rating is a big challenge. If we want to make growth sustainable and stronger, it's clear that we have to strengthen credit growth," Maric said opening the conference that was organised by the Croatian Banking Association (HUB) and the Croatian Employers' Association (HUP) and brought together more than 250 participants from the banking and business sectors and the government.

He underscored that he was pleased that bandying around with economic activity growth rates had stopped and that it was a good thing that talks had turned to real and potential growth rates of Croatia's economy.

"That is the key challenge facing us, this year and in the years to follow - economic growth and employment," he said.

He added that the government could not run away from the growing public debt. That is why it intends to contribute to stabilisation through fiscal consolidation, reducing the budget deficit, more rational, efficient and responsible use of budget funds and by activating dormant state property to help reduce the public debt, said Maric.

As he pointed out, the government is starting from two grades below investment rating with a negative outlook, an assessment given by all three leading global rating agencies, and it aims already this year to at least stabilise that rating and set the preconditions to upgrade it in the continuation of its term.

He said that a key challenge was how to direct surplus liquidity to where it was needed. Another major challenge for the government is how to facilitate doing business for entrepreneurs, remove red tape and in that way make room for better conditions for growth.

HUP president Gordana Deranja underscored that the problem of how to obtain loans was not the only problem for entrepreneurs. "High taxes, constant legal changes, legal insecurity, slow and complicated bureaucracy are just some of the negative things that hamper business in Croatia. The deficit and public debt are also among the burning issues and unless they are resolved, there will not be any growth soon, or new projects and investments," she said.

Resolving these problems is directly connected with the country's credit rating which is worryingly low, which is why companies and citizens are paying such high interest rates on loans, she said.

"Unfortunately, we are still waiting for reforms... We have to keep reiterating that they need to be resolutely implemented without any delay," she said.

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