The Bridge (MOST) party and the Social Democratic Party (SDP) on Monday negotiated finance, the budget and the tax policy, with Bridge negotiator Ivan Lovrinovic saying after the meeting that they agreed on the need to better control the public debt and intensify cooperation between the government and the Croatian National Bank (HNB).
Responding to criticism that he was proposing radical solutions in the monetary policy, Lovrinovic denied that he advocated a devaluation of the national currency. "Devaluation is out of the question and no serious economist in Croatia is advocating devaluation," he told reporters, adding that the abolishment of foreign savings was out of the question too and that citizens' deposits were safe.
Lovrinovic said Bridge advocated coordinating the tax and monetary policies, "so that everything is more transparent and responsible," further income tax relief, and encouraging entrepreneurs by non-taxing reinvested profit.
Asked what impression the negotiations with the SDP had left on him, he said Bridge was impressed by the two major coalitions' willingness to carry out reforms.
A reporter noted that contrasting ideas could be heard from Bridge, such as drastic tax cuts alongside higher agricultural subventions, to which Lovrinovic said that "additional taxes are out of the question. We will relieve the burden and review all subventions. What turned out to be effective will stay, while ineffective models won't work. The state is in a difficult situation and any squandering of money is unacceptable."
Lovrinovic said it was necessary to establish a public debt management department, claiming it was incredible that Croatia did not have a clear debt management policy. He added that it was also imperative to open a public discussion on the pension system and its second pillar.
Finance Minister Boris Lalovac (SDP) said he briefed the Bridge negotiators about the current state of the budget and Croatia's obligations towards the European Commission as part of the Excessive Deficit Procedure.
He said today's talks also addressed Swiss franc loans and that the SDP-led coalition was agreed with Bridge that there should be more housing loans in the national currency in future. He said they were also agreed that the Finance Ministry and the HNB should improve their cooperation to deal with high interest rates, and that "the monetary authority should consider in the years ahead how to release a certain amount (of the national currency) onto the market" to stabilise citizens' income.
Lalovac said he agreed that deficit monitoring should be changed and that public enterprises should be included in the deficit and the public debt to better manage public finance.
After negotiations with the SDP, Bridge representatives went to the offices of the Croatian Democratic Union (HDZ) to discuss with the HDZ-led coalition the tax and financial system as well science and education.