Minister Linić: It will be difficult to cut public expenditures without growth

04 October 2012

Minister Linić: It will be difficult to cut public expenditures without growth

Minister Linić commented on the Concluding Statement of the IMF Mission which says that Croatia is in a very difficult economic position as well as its environment.

The consequences thereof are reduced export possibilities and interests in investing in Croatia. At the same time, it is estimated that there are obvious administrative barriers to accelerating economic investments and that it is necessary to continue with the reform process in the field of labour market and employment flexibilization in Croatia.

„Regarding the State Budget, the deficit has significantly been decreasing and is under control. This is the result of the savings envisaged by the Government, as well as of higher revenues due to greater fiscal discipline.

The problem regarding the public debt increase still remains because it has finally been calculated how much it is necessary to pay for the losses in the fields of shipbuilding, health care and railways systems, which have so far not been in the process of settlement.

In our efforts to achieve fiscal stability, which has been a priority this year, there is a lack of adequate communication with social partners", said Minister Linić.
It is necessary to continue working on further fiscal consolidation. The Government continues to control the deficit as planned through the Guidelines for the following year, which makes it easier for us and will help us in terms of ratings assigned by credit rating agencies.

„The Government believes that cutting public spending should continue, but that the fight for economic growth is necessary as well. It will be difficult to cut public expenditures without growth. If the growth is not achieved, the Government will have to consider further cuts to public spending.
We will continue to work on the strengthening of fiscal discipline, and it is obvious that the IMF supports the Government policy in the part in which we have to unburden the economy by changing the taxation policy, in order for it to become more competitive, and to direct the taxes towards the wealthy.", concluded Minister Linić.


Croatia - 2012 Article IV Consultation Concluding Statement of the Mission