Prime Minister Tihomir Oreskovic said on Wednesday he expected a positive opinion from the European Commission on the National Reform Programme.
Speaking at the start of a Cabinet meeting, the prime minister recalled that today the EC would make public its opinion on the proposed reforms, parts of which have been leaked to the public, adding that his government "has expected a very positive opinion because it is a good programme."
"I think that now we will hear not only that these are good reforms but that Croatia is going in the right direction," Oreskovic said. He noted that two months ago the country "was on the verge of corrective measures being imposed, but in a very short time we drew up a good document."
"This document is a further success for this government and both investors and credit rating agencies will see this support," Oreskovic said. He said he would make a more specific statement in the afternoon after the Commission officially published its opinion.
The National Reform Programme contains serious measures to improve public finance, the health system and the business environment, according to the draft document ready for adoption at a meeting of EU commissioners in Brussels today, which was seen by Vecernji List daily.
The newspaper says that the Commission will give Croatia five new economic recommendations.
The Commission recommends that before the end of the year the government impose a real estate tax, take the necessary measures to discourage early retirement and reduce the number of special welfare mechanisms, stop the fragmentation of public administration and make it more efficient, reduce parafiscal charges, and improve the efficiency of commercial and administrative courts. The Commission has no intention of stepping up the monitoring of macroeconomic imbalances or taking corrective measures, according to Vecernji List.
The Cabinet meeting began by adopting reports on the execution of the state budget and the application of the fiscal rule for 2015, which show that budget expenditure was reduced by 3.6% from the previous year, while GDP increased by 1.8% in nominal terms, whereby the fiscal rule was satisfied.
The temporary fiscal rule requires that the year-on-year increase in general budget expenditure not be higher than the projected year-on-year GDP growth rate.
Finance Minister Zdravko Maric said that both the National Reform Programme and the Convergence Plan provided for "a much more rigorous fiscal rule", adding that the European Commission had also noticed that progress should be made in that area.
The report on the execution of the 2015 budget shows that revenues totalled HRK 109.8 billion and expenditure HRK 118.6 billion. The budget deficit was HRK 8.8 billion, or 2.6% of GDP. With the addition of extrabudgetary users and local government units, the 2015 general budget deficit was HRK 7.2 billion, or 2.3% of GDP, falling 1.5 percentage points short of the target.
In this report the general government deficit was calculated according to the national methodology and differed from the deficit calculated according to the ESA 2010 methodology used by Eurostat. According to the ESA 2010 methodology, the deficit was HRK 10.7 billion, or 3.2% of GDP.
Maric noted that because of methodological changes it was very difficult to compare data for 2015 and 2014, citing the exit of the Croatian Health Insurance Fund (HZZO) from the state treasury and the inclusion of various other entities, such as national parks as public institutions.
At the meeting, the government approved a new loan to ensure the normal operation of motorways operators.
The Rijeka-Zagreb Motorway (ARZ) operator was granted permission to borrow EUR 70 million from Erste&Steiermaerkische, Privredna Banka, Societe Generale-Splitska Banka and Zagrebacka Banka to finance its planned operations in 2016.