zdravko marić.jpg
Photograph: HINA/ Damir SENČAR /ds

Finance Minister Zdravko Maric said on Wednesday that the European Bank for Reconstruction and Development (EBRD) revised upward its projection of Croatia's economic growth in 2016 to 1.5% because of the country's good performance in Q1, adding that the money pouring into the state budget in Q1 was in accordance with the expectations and that Croatia would take Brexit into account in its further borrowing activities.

The European Bank for Reconstruction and Development (EBRD) has revised upward its projection of Croatia's economic growth in 2016 to 1.5% from its initial forecast of about +0.5%.

Maric, who is in London for the annual EBRD meeting, told Hina in a telephone interview that Croatia's economic performances in Q1 2016 indicate a 7% growth in industrial output, a 3.3% growth in retail sales, a 5% growth in the construction sector, and expectations for the tourist season were also good which is why the EBRD had revised upward its projection of Croatia's economic growth.

"They have revised upward their projection, admittedly, only to 1.5% which is a little below our current projections. To be honest, I don't have the same level of talks with them as I do with the IMF or the European Commission...so I can't conclude immediately what they saw as the main propellers of the growth, but I believe that we are all pretty much somewhere there when it comes to projections," Maric said.

The EBRD projections are somewhat lower than those made by the European Commission and the Croatian National Bank which this year expect an economic growth of 1.8%. The International Monetary Fund (IMF) expects a 1.9% growth, while the government based the state budget on a 2% economic growth in 2016.

Commenting on the state budget, the finance minister said that the money that poured into the budget in Q1 was in accordance with the expectations. 

"I do not want to create an excessive euphoria, everything is in line with our expectations. When looking at individual elements, tax revenues are growing, particularly excise taxes, as well as income tax and contributions. VAT is on the most part at the same level as last year when it included some one-off elements, so I believe we will get a better picture at the end of May. However, it is important to say that everything is in accordance with our expectations and that we are on the track of the budget that the parliament adopted," Maric said.

He also said that at the moment there is no danger of a budget revision.

Commenting on the EBRD meeting, Maric told Hina that he had held a series of bilateral talks with investors, investment banks and the business community in general.

Earlier this week, Reuters reported that Croatia had hired Citigroup, HSBC, Societe Generale and UniCredit to lead manage a euro bond that could amount to one billion euro.

"We said that we planned to tap international markets this year. Despite the fact that the planned deficit hasn't been this low since 2008, some obligations are maturing, namely in the amount of HRK 17 billion, so along with a 9 billion kuna deficit we have those 17 billion kuna to think of, not counting treasury notes. With the combination of domestic and international sources, we will meet this financing plan," Maric said adding that the government also counted on HRK 1.6 billion from privatisation and activation of state property.

Speaking about recommendations the European Commission is expected to release next week regarding Croatia's national reform programme and the convergence programme, Maric said he was confident the Commission would issue a positive opinion.

Minister Maric is taking part in the annual EBRD meeting which is being held in London on May 10-12.

Croatia joined EBRD in 1993 and since 1994 the bank has invested nearly EUR 3.5 billion in Croatia, thus supporting 186 projects. Currently the EBRD is co-financing projects valued at around 1.3 billion euro. 

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