tihomir orešković.jpg
Photograph: HINA/ Damir SENČAR /ds

Prime Minister Tihomir Oreskovic said on Monday the Croatian National Bank (HNB) must be independent, brushing off efforts by members of his cabinet’s junior coalition partner to amend laws that would strip the central bank of some of its powers and change monetary policy.

"My position is clear: monetary policy has to be independent, which is the case in all European countries," Oreskovic told Bloomberg.

He also said his government would start a roadshow this summer to drum up interest in a planned sale of 1.5 billion euros of bonds and other investments Croatia, which needs to diversify its economy away from tourism to sustain growth.

The Finance Ministry, which would lead the international sale, would use the proceeds to refinance an equal amount of debt maturing this year, Oreskovic said.

Bloomberg said that the European Union’s newest member was trying to maintain economic expansion after a six-year recession that wiped 12 percent off gross domestic product before it ended in 2015. "Policies include reining in the fiscal deficit, selling about 30 billion euros of state assets and repaying debts. Oreskovic, a former pharmaceutical executive who took office in January, faces his first test as head of government on Friday, when parliament votes on his draft budget."

Oreskovic told Bloomberg he was confident his fiscal plan would be passed, vowing to lock in reforms and attract investors to overhaul public companies and establish new factories in the Balkan country. Among the planned moves are consolidating hospitals, cutting procurement costs, reducing the number of state agencies and cutting redundant programs.

"Croatia has a huge untapped potential," said Oreskovic. "Everyone knows Croatia for its tourism, but we have resources beside just the tourism. Energy has a huge interest, as well as infrastructure projects, and we have a highly skilled and talented workforce that can compete on a global level."

Oreskovic also said he aims to stabilise the debt level, which the central bank calculates at about 85 percent of GDP, before reducing it in the following years.

Croatia’s government will start a roadshow this summer to drum up interest in a planned sale of 1.5 billion euros ($1.7 billion) of bonds and other investments in the Adriatic nation, which needs to diversify its economy away from tourism to sustain growth.

The Finance Ministry, which would lead the international sale, would use the proceeds to refinance an equal amount of debt maturing this year, Prime Minister Tihomir Oreskovic said Monday in Zagreb. The yield on government bonds due 2025 fell one basis point to Friday’s closing levels at 3.786 at 4:10 p.m. in the Croatian capital, compared with 3.810 percent for similar-dated Hungarian debt, data compiled by Bloomberg showed.

The European Union’s newest member is trying to maintain economic expansion after a six-year recession that wiped 12 percent off gross domestic product before it ended in 2015. Policies include reining in the fiscal deficit, selling about 30 billion euros of state assets and repaying debts. Oreskovic, a former pharmaceutical executive who took office in January, faces his first test as head of government on Friday, when parliament votes on his draft budget.

He said he’s confident his fiscal plan will be passed, vowing to lock in reforms and attract investors to overhaul public companies and establish new factories in the Balkan country. Among the planned moves are consolidating hospitals, cutting procurement costs, reducing the number of state agencies and cutting redundant programs.

‘Untapped Potential’

“Croatia has a huge untapped potential,” said Oreskovic. “Everyone knows Croatia for its tourism, but we have resources beside just the tourism. Energy has a huge interest, as well as infrastructure projects, and we have a highly skilled and talented workforce that can compete on a global level.”

Oreskovic said he aims to stabilize the debt level, which the central bank calculates at about 85 percent of GDP, before reducing it in the following years. He wouldn’t give specific targets. Oreskovic also brushed off efforts by members of his cabinet’s junior coalition partner to amend laws that would strip the central bank of some of its powers and change monetary policy.

“My position is clear: monetary policy has to be independent, which is the case in all European countries,” he said.

Brexit Test

Oreskovic, an ex-chief financial officer at Teva Pharmaceutical Industries Europe, is the first prime minister who doesn’t hail from the two parties that have dominated Croatia since it broke away from Yugoslavia in 1991. He grew up along Lake Ontario, just south Toronto, living outside Croatia for most of his life. He was tapped to lead the coalition of the Croatian Democratic Union and the newly formed Bridge party, after the Social Democrats lost elections in November.

In the interview, he touched on a range of issues including the U.K.’s June referendum on leaving the EU, Balkan coordination of the migrant crisis and the country’s effort to join the passport-free Schengen area. Oreskovic said he’s firmly committed to EU problem-solving, which sets him apart from politicians in the post-communist east including Hungarian Prime Minister Viktor Orban, who’s criticized the bloc and urged a claw-back of sovereignty.

“Perhaps a Brexit situation is a good test,” said Oreskovic, referring to the popular term for a possible British EU departure. “We have our challenges and differences, but at the end of the day it is about compromising. That’s an example that Europe, when faced with challenges, comes up with concrete solutions.”

Related stories

HNB governor: Political deadlock would risk recovery

Cen Bank governor doesn't expect pressure from new gov't

Croatian banks see reduced space for financing state

S&P reaffirms Croatia's ratings, negative outlook

Latest news

Alphabet's self-driving car company sues Uber over alleged theft

Alphabet's self-driving car company Waymo said Thursday it was suing Uber and its subsidiary Otto for allegedly stealing its technology and infringing its patents.

US, Mexico take "important steps" even as Trump voices indifference

Top US and Mexican diplomatic and security officials met on Thursday in Mexico City, as President Donald Trump in Washington expressed ambivalence about relations with the United States' southern neighbour.

US Supreme Court's Ginsberg emphasizes value of free press

US Supreme Court Justice Ruth Bader Ginsburg expressed optimism about the political future of the United States despite the polarized and combative political atmosphere that has marked the fledgling presidency of Donald Trump.

Top Trump aide Bannon points to promises kept, media fight

Top White House strategist Steve Bannon said Thursday US President Donald Trump is keeping the promises he made during his campaign on issues from immigration to job creation.

Le Pen promises independent foreign policy, autonomous defence

Marine Le Pen promised Thursday that if elected president of France she would ensure it had a truly independent foreign policy as well as an autonomous capacity for self-defence.

Slovenia for ending lawsuits against Ljubljanska Banka

Croatia is infringing the memorandum of understanding signed with Slovenia in 2013 which they interpret differently, the Slovenian Embassy said on Thursday after a hearing at a Zagreb court in a suit which Croatia's PBZ bank filed against Slovenia's Ljubljanska Banka (LB) and Nova Ljubljanska Bank (NLB) over transferred foreign currency savings.

Marin Pucar appointed as new CEO in Podravka food concern

Marin Pucar is the new Management Board chairman of the Podravka food concern and will take the helm of the company after Zvonimir Mrsic's term expires at midnight on Thursday.

Croatian MEP says Moscow wants to influence in western Balkans

Croatian MEP Ivan Jakovcic said in an interview with the Montenegrin Pobjeda daily on Thursday that Moscow is trying to exploit the political forces in Montenegro and that Russia's meddling in Montenegro's internal affairs was "unacceptable behaviour."

New York Times launches brand campaign for 'The Truth' with Oscars ad

The New York Times is using Sunday's Academy Awards show to launch an advertising drive with an ad spot that capitalizes on President Donald Trump's confrontational relationship with the paper and other mainstream media.

Gambia charges former spy chief with murder of opposition leader

The former head of the Gambian national intelligence agency has been charged with the murder of an opposition youth leader who died in detention last year.

Dutch populist Wilders won't publicly campaign after security fiasco

The Dutch Party for Freedom (PVV) won't make public appearances in support of its election campaign after a security official assigned to protect party founder Geert Wilders was detained by police.

Peace Implementation Council Steering Board calls for defusing tensions in Bosnia

The Steering Board of the Peace Implementation Council in Bosnia and Herzegovina (BiH) met on Thursday, expressing the international community's concern about the situation in the country and calling on local politicians to act rationally to prevent an escalation of the crisis after a motion was submitted to review an International Court of Justice (ICJ) ruling in BiH's case against Serbia for genocide.