The government on Thursday unveiled a plan aimed at eliminating macroeconomic imbalances because of which Croatia risked corrective action from the European Commission, the plan containing reforms and measures and deadlines for their implementation.
The government said in a press release it was aware of the significant macroeconomic imbalances in its economy which demanded that it take resolute action.
To that end, a constructive dialogue was launched with the European Commission, resulting in a consensus on a strong determination to implement policies and measures necessary for ensuring sustainable public finances, correcting macroeconomic imbalances and strengthening the potential GDP, the press release said.
The government's economic programme envisages investing efforts in two key areas - stabilisation of the public debt and structural measures.
A particular challenge is the need to precisely define economic policy measures for the purpose of respecting the principle of fiscal consolidation which does not negatively impact growth.
In that respect, the government has adopted a series of measures regarding the 2016 budget in spite of existing fiscal challenges. This year the government has decided to freeze all expenditures which contribute to the fiscal deficit at the level of the execution of the 2015 budget.
Those efforts will reduce the general government budget gap to below three percent of GDP, according to the ESA 2010 methodology, contributing to the stabilisation of the public debt's GDP share.
Furthermore, the government will prioritise structural reforms in public finance management, health care, the labour market, public administration, advancement of the investment climate, reduction of the burden on companies, and higher EU fund absorption.
The government plans the adoption of a Fiscal Responsibility Act in the third quarter of this year. A bill on the State Audit Office envisaging penalties for failure to act on its recommendations is ready and its adoption is planned for mid-July.
The government plans to reform the pension system to increase penalties for early retirement by the end of this year. It will compile a list of demanding and dangerous jobs and ensure consistent disability and benefits criteria. The government also plans to step up the equalisation of the retirement age for men and women.
All those reforms measures are visible in the 2016 draft budget which the government endorsed today and will be elaborated in greater detail in two strategic documents, the Convergence Programme and the National Reform Programme, which the government will submit to the European Commission in April.