PM says every option possible to cut budget deficit

Prime Minister Tihomir Oreskovic said on Wednesday the priority regarding this year's budget was to reduce the public debt, adding that attempts would be made to reduce the deficit to three percent of GDP, with every option open and every card on the table.

"Then we will see where we can increase investments. We have a lot of room with EU funds, while on the other hand, investments will stimulate growth," he said in an interview with Croatian Radio.

In drawing up the 2016 budget, some items where value can be created will be increased, while some departments will be reduced and relocated so that the budget can be strengthened and some value created for the state, Oreskovic said, adding that possible savings in every department would be considered in order to increase efficiency.

"That's our priority. We will have open dialogue with every ministry and see where efficiency and the whole system can be enhanced. Every option is open and every card is on the table," he said when asked what would happen with salaries, pensions and social outlays.

The European Commission has forecast that Croatia's economy will grow 2.1 percent this year. "We will activate some programmes, focusing on about EUR 500 million to increase and stimulate small and medium enterprises, and on EU funds so that GDP can grow over three percent," Oreskovic said.

He said high interest and loan repayments were due next year, which would be a big challenge, and that it was important to increase the credit rating. "If we can increase the credit rating by one notch, that means that we can save HRK 1.5 billion on our debt, which will then make room for other investments and deficit reduction."

Oreskovic said the European Commission would release a report on Croatia on February 24 with recommendations on necessary structural changes. "We will also see how we can make the best and the most efficient budget."

Although ministers said at the first session of the new government that there was no room for saving, Oreskovic said room for that would be found. "I'm not sure there's no room. It's more a question of where to step it up. For example, if EU funds are important to us, we have EUR 10.7 billion that we can draw and I say that we need resources so as not to leave the money on the table. We will step it up where that's useful for the Croatian economy. Elsewhere, we'll see how to reduce those resources."

Asked about the introduction of a property tax, Oreskovic said the government would consider imposing it on unused property. "If it's a flat or a house where someone lives, we won't impose the tax. But if it's land, a flat or a house that is not in use, then we'll impose the tax. If someone has five, six or seven flats or houses, then we'll raise the property tax."

Speaking of the privatisation of state property, Oreskovic said: "The State Property Management Office has EUR 30 billion worth of Croatian property. I asked for 1.5%, the activation of EUR 500 million. All Croatian citizens can see that we have unused property. That's dormant capital which must be put to use in order to reduce the debt. As for strategic and non-strategic companies in the public sector, we will invest in what's strategic. That's the energy sector, (power utility) HEP, where we can even increase investments and be regional leaders. As for what's not strategic, we can either improve the situation the company is in or see that we find partners that will increase the company's value."

Asked how to deal with the overindebted motorways, Oreskovic said the motorways were a huge debt for Croatia and that this problem should be solved. "There are vignettes and some other possibilities to increase revenues. Vignettes are a model that will be analysed. With vignettes, we could get EUR 30 billion in several years, but every option should be examined. The current system should be changed."

Asked if the number of counties would be reduced, Oreskovic said this was not a priority but efficiency and self-sufficiency. "If a town, county or municipality can finance itself, that's a plus. If not, we'll look for other models."

Oreskovic said he had an excellent meeting with the unions and that they had put all the cards on the table. Regarding salary bonuses of 4%, 8% and 10% and a 6% pay rise under a 2009 agreement, he said this depended on the state of the budget and that a discussion on these topics would be launched. "The unions are our partners and I believe we will have a good cooperation with them."

Oreskovic went on to say that as someone coming from the world of business, he would not make any decision rashly, including one on Security and Intelligence Agency (SOA) chief Dragan Lozancic, whose replacement has been initiated by President Kolinda Grabar-Kitarovic. "I think Mr. Lozancic was doing his job and that, at this moment, I need to get well-informed. I will make my decision in due course. I'm not a person who jumps to decisions."

A decision to replace the SOA chief is co-signed by the president and the prime minister, and the president signed it on Friday. Oreskovic confirmed that, under the law, the president could initiate the replacement. "She initiated it and made it very clear that she had lost her trust in Mr. Lozancic. I will consider this, collect additional information and make my decision in due course."

Oreskovic said he did not think that the president had pushed him into a corner by going public with her decision to replace Lozancic just as Oreskovic was telling the press that they would make a decision together.

Oreskovic said he was absolutely satisfied with his relations with the president, reiterating that they were partners and that they had common goals regarding Croatia's foreign policy and economy. "The president, like me, has good contacts regarding the economy and we will use that together in Croatia's interest and we will work together so as to improve cooperation with the neighbours. This situation will be solved, but I think we must be positive. We are partners and work together for a better Croatia."

Oreskovic said he did not think that the Lozancic case would shake the government, although Deputy PM Bozo Petrov and First Deputy PM Tomislav Karamarko have different views of the case. "This is democracy... And I will make the final decision."

As for the fact that the intelligence services are not under parliament's supervision because the chair of the parliamentary Domestic Policy and National Security Committee has not been appointed and there is no civil oversight either, Oreskovic said, "I don't think this is a dangerous situation at all. I think the system is functioning very well and things will move forward." He added that citizens had no reason to fear that the system would be abused.

Oreskovic went on to say that the name of the new war veterans' minister would be revealed very soon. He said this ministry was very important to him and that after Mijo Crnoja's resignation from the post, "the government will focus on what's ahead, the economy, finance and kickstarting the economy."

He confirmed that Culture Minister Zlatko Hasanbegovic enjoyed his full support. As for the protests of some associations and non-profit media against Hasanbegovic, Oreskovic said he had talked with him and that the minister's "comments on antifascism" were taken out of context. "Mr. Hasanbegovic is a staunch antifascist and historian, a very capable man. I think he'll be a great minister of culture."

Oreskovic went on to say that he did not think that the Cooperation Council, comprising representatives of the HDZ, Bridge and other ruling partners, would obstruct or slow down the government's work. "I see this too as a person coming from the business sector. I think this will enhance the quality of the bills that the government will send to parliament. I see this as a big plus."

Oreskovic agreed that rhetoric in political and social life was increasingly escalating, saying that it might never disappear but that he hoped Croatian society would start to focus more on the future, rather than the past. He said that everyone he had talked to made it clear to him that they wanted everyone to have better living standards. "And I think that as a nation and as politicians, we should focus more on that."

Oreskovic said the fact that in Croatia there was too much thinking about the past instead of the future was what disappointed him most. The past must not be forgotten, but I hope all of Croatia will focus on the future, he said. "This is a great country and has enormous potential and we should all build it together."

Oreskovic announced that his first trip abroad would be to Germany to meet with Chancellor Angela Merkel. He said he was looking forward to the talks, which he said would focus on the refugee crisis and the strengthening of Croatian-German relations.

He said it was important to see how German investment in Croatia could be increased. As for the refugee crisis, he said it was a "big challenge" for Europe and that a decision on how to handle it would be adopted at EU level. "I think it's clear to everyone that Croatia will always look after its national interests."

Asked if his cabinet would change anything regarding foreign policy, Oreskovic said there was room to intensify relations with the European Commission and to step up Croatia's activity at all levels within the EU. "That will be one of my goals as prime minister."

Speaking of relations with the neighbours, he said that cooperation should be improved and that steps to that end had already been taken with regard to Slovenia and that similar steps would be taken towards the other neighbours too.

Last update: Wed, 10/02/2016 - 11:19

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