Croatia ditches savings plans
The Croatian government has shelved plans to adopt savings measures and achieve a balanced budget.
Friday, 05.12.2008.
15:47
The Croatian government has shelved plans to adopt savings measures and achieve a balanced budget. The reason is that a six-percent salary increase has been given to public and state services, in a concession to unions, while Christmas bonuses will be given to pensioners after all. The government has also dropped plans to impose an added tax on cigarettes that would have gone to bolstering the health fund. Croatia ditches savings plans Even though the plans to freeze wages were a big part of the plan for next year’s difficult financial year, the government gave in to demands from the unions, stating that it was better to avoid terminating collective agreements than go through interminable court actions that would ultimately cost more than the wage increases themselves. The increase in wages means that the budget deficit in 2009 will be between 1.3 and 1.7 percent of gross domestic product (GDP). The Economic Council has criticized the move to increase wages in the public sector, which covers just under half of Croatia’s total working population, since the private sector is suffering most from the current economic crisis. The Council warned of a meltdown, with Croatia unable to take out any more credit because it was already in serious debt. While Finance Minister Ivan Suker talked to banks about refinancing state bonds and covering the deficit, the business sector faces billions of euros of matured bonds in 2009 that will need to be reprogrammed or covered with another new loan.
Croatia ditches savings plans
Even though the plans to freeze wages were a big part of the plan for next year’s difficult financial year, the government gave in to demands from the unions, stating that it was better to avoid terminating collective agreements than go through interminable court actions that would ultimately cost more than the wage increases themselves.The increase in wages means that the budget deficit in 2009 will be between 1.3 and 1.7 percent of gross domestic product (GDP).
The Economic Council has criticized the move to increase wages in the public sector, which covers just under half of Croatia’s total working population, since the private sector is suffering most from the current economic crisis.
The Council warned of a meltdown, with Croatia unable to take out any more credit because it was already in serious debt.
While Finance Minister Ivan Šuker talked to banks about refinancing state bonds and covering the deficit, the business sector faces billions of euros of matured bonds in 2009 that will need to be reprogrammed or covered with another new loan.
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