State of the Nation: PM Delivers 6-Point Crisis Exit Plan

Croatia’s Prime Minister Zoran Milanović has delivered his state of the nation address this morning in parliament in Zagreb, where he has outlined his government’s plan to lift the country out of the current crisis.

Milanović, who has been under the microscope in recent times after getting off-side with European Commission officials over European Arrest Warrant laws, laid out his six-point plan to lift Croatia from the economic doldrums. Here are the PM’s recovery points and exerts from his speech.

 A. Public investment – “In the first 6 months in the public sector we have realised 4.5 billion kuna (600 million euros) worth of investment, which is growth of 30% compared to last year. There are procedures in place to sort out some obstacles and realise projects valued at around 22 billion kuna (3 billion euro). We have signed a concession deal for Zagreb International Airport and investments in the water sector should reach 1.5 billion kuna this year”.

B. Remove administrative barriers for direct foreign and domestic investment – “In the first half of the year we had significantly more direct foreign investment than in 2012, 460 million euros compared to 80 million euros. We are in the process of realising 13 investment projects with a value of 766 million euros. These investments will open up thousands of new jobs”.

C. Tax policies – “We have reduced health contributions by two percentage points. We canceled tax on profits that are reinvested, meaning we have freed up 1.2 billion kuna (160 million euros) for private companies, we canceled or reduced the number of para-fiscal levies, which meant an additional 675 million kuna (90 million euros) into the economy. We have increased the threshold for entry into the VAT system to 230 thousand kuna (38,000 euros). From the beginning of this year, VAT on hospitality and tourism services was reduced from 25 to 10 percent. All our efforts will go further, according to our abilities, towards the tax situation in the economy”.

D. Direct subsidies for private companies – “In addition to what I have said, we have by direct means supported the survival of private companies and the retention of jobs and production. Without money there is no recovery, there is no financing current operations, no new investment. Last year we handed out around 300 million kuna for the entrepeneurs impulse project, and this year there will be 700 million kuna available. The Croatian Agency for Small Enterprises will invest around 2 billion kuna (250 million euros) for projects this year.

E. European Funds – “We will insist on the use of European funds in the areas of water, agriculture, energy, rural development and culture”.

F. Economic Diplomacy – “The government, to reasonable limits, will fight to preserve every job, regardless of whether the jobs in the state, public or private sector. Statistical GDP growth, unfortunately, does not necessarily mean that the largest class of citizens live better, more comfortable and safer. Only full employment guarantees that people are happier and for a happier society. This is our first and highest goal. To conclude, our future depends largely on the proper recognition of our reality, our interests and our potential, without any political or civilizational prejudices. In doing so we do not need any tutoring or sponsors. We need well-intentioned partners and true friends”. said Milanović.