A crisis is no time for talks on cutting VAT, Economy Minister Tomislav Coric said on Croatian Radio on Wednesday.

Asked for a comment on bar and restaurant owners’ complaints about the government’s refusal to discuss cutting VAT to help the economy, he said “the VAT amount should be discussed in stable economic conditions.”

“VAT is the main source of budget financing. In conditions of a record high budget deficit in 2020 and the fact that in 2021 we finally have to stabilise expectations, it’s not correct to take VAT out of that context and say that it would be a short-term model for the survival of the hospitality sector.”

Coric said the government’s room for manoeuvre to help businesses see the crisis through “is not in question at all,” but added that it was narrower due to a 2.9% budget deficit projected for 2021 and the question of how long the crisis would last and if it would spill over into next year.

He said he did not expect this year’s GDP to fall 10% but “around” 8% and that next year it would depend on when Covid vaccination would begin and when life would go back to normal, among other things.

He said that if vaccination in the EU began at the turn of the year, 2021 “should not be marked by lockdowns.” He added that economic growth in Croatia next year could be 5%.

Asked if the government was talking with banks about extending a moratorium on loan repayments after March 2021 if necessary, Coric said he hoped it would not come to that and that “the situation in January and February will provide a clear perspective on the direction to take.”

He added, however, that if the health crisis lasted longer, the moratorium would have to be discussed.

Coric said the government was not late with its measures to help businesses affected by the Covid crisis.