Finance Minster Zdravko Maric on Tuesday assessed that the veto by Hungary and Poland to the European budget will not jeopardise Europe's recovery adding that Croatia's projections of GDP growth in 2021 are still valid despite many European countries going into lockdown.

Asked about the veto by Hungary and Poland to the new multiannual financial framework and recovery plan and whether that could jeopardise Europe’s recovery, after an inner cabinet meeting Maric told reporters that he personally does not think it can however, that certainly does not contribute to accelerating procedures however, he believes that the issue will be resolved quickly.

Asked to comment on Germany’s growth deceleration which then generally is reflected in Croatia, Maric said that the key determinant in Croatia’s budget for next year is the preparedness to respond to challenges.

“If some things should become more complicated, the budget has to clearly respond to that,” he said, adding that this year’s budget could not have in any way foreseen the coronavirus pandemic, however ways to bail out the economy were found.

The current estimate is that Croatia’s GDP will rebound by 5% in 2021, Maric recalled after it was determined that the “V-shaped” recovery would not occur next year.

“Depending on further development, if matters improve or deteriorate, we will all together correct not just our projections but our expectations too,” he said.

Considering that most European countries are going into lockdown, reporters asked Maric whether he thinks that the growth forecast for next year could be corrected downwards, to which Maric said, the current forecast is still valid.

He added that everyone, including Moody’s and the European Commission have similar forecasts for Croatia.

SURE funds to finance budget this year

Earlier on Tuesday the European Commission forwarded €510 million to Croatia as part of the SURE instrument adopted in May for job keeping measures during the corona crisis.

“These are funds to finance the budget for this year at much more favourable terms and all on track with what we have been saying all along,” said Maric adding that the current budget revision had taken these funds into account.

Croatia has been approved €1.02 billion in loans in two installments – the first of €500 million for a period of five year at a negative interest rate and the second for a 30 year term at a very low interest rate of about 0.3%.

Everything should be done for National Reform Programme to be fulfilled

Asked how satisfied he was with the implementation of the National Reform Programme considering that only seven of the 75 measures have fully been met, Maric said that the entire semester lasts for one year from April to April and that last year the parameters were similar and that in the second half of the European semester things were accelerated and raised to almost 70% of success which was one of the best results ever. We will endeavour to do the same this time, he added.

He added that progress was evident, however, there is still room for improvement.

Maric underscored that in order to enter the European Exchange Mechanism II (ERM II), Croatia had fulfilled 19 reform measures and that the pandemic had not prevented Zagreb from that achievement.