FinMin says IMF, WB satisfied with stable gov't as prerequisite for reforms

Caretaker Finance Minister Zdravko Maric held talks with World Bank and International Monetary Fund representatives in Washington on Saturday, saying that they viewed positively the fact that Croatia was in a position to have a stable parliamentary majority and government, that the 2017 budget was being drawn up and that, despite tight deadlines, he would do his utmost to implement tax changes.

Speaking to Hina on the phone, Maric said the WB and IMF representatives had shown "big interest in the political situation in Croatia" and that "they view very positively the outcome of the parliamentary election and the fact that Croatia is in a situation to have a stable parliamentary majority and government because they identify that as a prerequisite for the implementation of the measures and steps forward that are necessary to the Croatian economy and society."

Maric said that, based on economic growth in the first half of 2016, annual growth could exceed the 2% the government projected in the 2016 budget. He said the WB and the IMF closely followed Croatia's public finances. "The budget execution in the first six months shows a deficit of only 0.2% of GDP and it's very certain that we will fulfil our promise about the annual deficit, to which everyone responded positively."

He said that in drawing up the 2017 budget the accent would remain on fiscal consolidation and efforts to stabilise and cut the public debt to GDP ratio, "which will be visible at the end of this year already."

The general government public debt at the end of June 2016 was HRK 285.7 billion, down 0.6% on the year. The public debt to GDP ratio was cut from 86.7% at the end of 2015 to 84.5% at the end of June.

Maric said he had also talked with representatives of financial institutions and investors, and that they were interested in investing in Croatia.

He said the 2017 budget was being drawn up and that the new government was expected to comply with European Commission recommendations and pursue fiscal consolidation so that next year the deficit could be about 2% of GDP.

Maric said the amendment of laws to cut income and profit taxes would depend on the formation of a parliamentary majority and the government because deadlines were tight. "We are looking for ways so that the bulk of the Croatian population can feel the tax reform and its benefits. On the other hand, we wish to hold consultations with political parties and a public discussion."

He said the government financing plan for this year had been carried out to a great extent and that it was focused also on 2017, when due payments would total about HRK 36 billion. He said the borrowing plan would be known when the 2017 budget was adopted and that, given the high debt and capital price, "we will look for optimal solutions so as to additionally save on interest rates."

Maric said the talks with WB representatives had also addressed Croatia's road companies since a big part of the debt of motorway operators is due next year. He said their restructuring plans were not finalised yet, underlining the importance of good financial and business restructuring.

Maric was in Washington at the helm of a Croatian delegation at the WB and IMF annual meetings on October 6-9.

Last update: Sat, 08/10/2016 - 19:25
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