Croatian Officials Call for ‘New Deal’

13 November 2008 Zagreb – Croatian President Stjepan Mesic and Prime Minister Ivo Sanader called for what media have dubbed “a Croatian New Deal”, a national strategy to battle the country’s economic crisis.

The two top officials on Wednesday attended different meetings at which they each presented a to-do list to everyone in the country with the power to influence economic policy: employers, union representatives, government officials, bank executives and economic experts.

At the annual meeting of economic experts in Opatija President Mesic said Croatia “urgently needs a concrete and clear economic strategy” which includes “keeping money in the country, investing in export production, not selling state assets and cherishing social policy.”

“These should be the foundations of the new economic and development paradigm, a Croatian New Deal,” Mesic said.

Prime Minister Sanader, who hosted a meeting of labour unions, employers, state administration officials and representatives of state-owned enterprises, singled out ten measures that should contribute to overcoming the economic crisis.

These include freezing all state civil-service salaries, and a zero-deficit 2009 state budget. However, he said projected austerity measures “would not include the pensioners’ fund, welfare expenses or the health system.”

Cost cuts are also proposed for local administration budgets, while state-owned companies and institutions should refrain from excessive expenditure on representation, Christmas bonuses and similar gifts to employees, the Prime Minister said.

Sanader also appealed to local authorities not to raise the cost of communal services and announced new cuts in gas prices.

However, “austerity measures do not mean that the Government will halt infrastructure projects, which are important if we are to realize projected growth of 2.5 percent,” Sanader said.

This means that the privatization of the health system will continue, the expansion of Zagreb’s international airport and the building of the bridge connecting the mainland and Peljesac peninsula will go ahead, and privatization of shipyards will be carried out.

President Mesic did not follow his normal practice of criticising the Government openly, but he did say that the Government hadn’t “prepared itself for the coming of the crisis”.

He also criticized the Government’s ongoing health reform for “imposing additional taxes on pensioners and the unemployed” and called on foreign-owned banks to “refrain from exporting profits created in Croatia and instead reinvesting them back in the country’s economy.”