Tomislav Ćorić, PhD Minister of Economy and Sustainable Development in the Government of the Republic of Croatia: Sectors threatened by the pandemic can count on help

In the coming period, we will go ahead with a combination of measures to preserve jobs and with an impulse to maintain the liquidity of companies through HAMAG and HBOR credit lines.

In terms of the strength of measures in relation to the size of its economy, Croatia was among the most generous in the European Union, and it should be noted that we were among the first countries in the European Union to implement measures to maintain employment and liquidity. What’s most important is that the sectors threatened by the pandemic will continue to be able to count on help from the state, stated Minister of Economy and Sustainable Development Tomislav Ćorić for Diplomacy&Commerce.

  1. You took over the Ministry during the coronavirus pandemic, when the great crisis was announced, and it seems that it has also begun. How do you rate the condition of Croatian economy at this moment and how do you see it by the end of this year? What are the greatest challenges for the Ministry and the Government of the Republic of Croatia generally in terms of economy?

The Government reacted on time and reached three sets of measures in order to help the economy due to the COVID-19 virus epidemic. In terms of the strength of measures in relation to the size of its economy, we were among the most generous in the European Union, and it should be noted that we were among the first countries in the European Union to implement measures to maintain employment and liquidity. We are talking about a total of 30 billion HRK that the Government directed towards entrepreneurs, and most measures refer to preservation of liquidity and work places, tax exemptions and other public benefits. The measures that were undertaken saved more than 600 thousand work places and 100 thousand employers. The key is to overcome this crisis and ensure the functioning of the economy and its recovery.

  1. Specifically, what measures were you planning as necessary for recovery and combating the consequences of the crisis? Will the current measures for entrepreneurs be expanded to some new activities, and when can we expect this to happen (the support for entrepreneurs)?

Sectors threatened by the pandemic can continue to count on our support. The measures for co-financing part-time work of a maximum of HRK 2,000 per employee will continue with corresponding contributions. Measures for micro-entrepreneurs will also be extended until 31 December, and these amount to HRK 2,000 per employee if they had a drop in turnover of more than 50%. Also, we will continue with subsidies of HRK 4,000 per worker for particularly vulnerable activities, and the support of HRK 4,000 will also be provided to entrepreneurs and activities closed by decisions of the Civil Protection Headquarters on local or national level. So, over the upcoming period we will proceed with a combination of measures for the preservation of work places on one hand, and with the impulse for maintaining the liquidity of enterprises through HAMAG and HBOR credit lines on the other. A great role in economic recovery of Croatia will be played by more than EUR 22 billion from the European Union. This is twice more than we had at our disposal in the 2014 – 2020 Multiannual Financial Framework, and it also represents one of the highest amounts per capita and the intensity of support that member countries managed to secure during these negotiations. The received funds will be used for the implementation of national recovery program that’s underway, and its implementation will start at the beginning of 2021. With increased absorption of funds from the European budget and from the EU Recovery and Resilience Facility program, we will continue to incite investments and export that contribute to strengthening of Croatia’s global competitiveness. This situation is a challenge, but also an opportunity for Croatia. We must now work to increase our competitiveness through reform packages and rationalization, and also by strengthening production capacities of different industries. Ministry of Economy and Sustainable Development will be the biggest promoter of this direction.

  1. How do you comment on the 15.1% GDP drop in Q2 and how big of a drop do you expect in Q3?

That was not unexpected because the economy was under lockdown for over a month. The key is that by implementing measures for economic recovery, we largely managed to preserve jobs. In the coming period, I expect the GDP drop to be smaller because the economy has begun to function, and we also have good results for the tourist season. The year 2021 will be the year of recovery.

  1. Even though there are many challenges at this time, what are your Ministry’s plans in the next four-year term and what will be your priorities?

Regardless of which sector we are talking about, all our activities will be focused on economic growth and improving the quality of our citizens’ lives. We will incite the development of new technologies in order to enhance industrial production and export, here giving priority to those industries in which Croatia can develop competitive advantage. In our future activities, among other, we will focus on self-sufficiency of sectors such as energy and agriculture, but also on the development of ICT and the creative industry, which has huge potential. We will continue to take measures to encourage innovation, industry and exports, as they are the foundation for strengthening economic growth on a realistic and sound basis.

The European Green Deal, which is planned to mobilize at least a thousand billion euros of investments in environmental and climate protection over the next decade, is an opportunity for Croatia’s accelerated energy transition towards clean energy. We will use the market premium model to incite further installation of production capacities from renewable sources and their increase from current 900 MW to 2250 MW, and contribute to the fight against climate change through energy transition to low-carbon energy. I would also like to remind that the project for Krk LNG terminal construction, which will contribute to reducing energy dependence through diversification of supply routes, is almost completed.

In the next period, we will implement numerous investments in water utility projects – construction of public water supply and drainage systems for which EU grant contracts have already been signed. The total value of these projects is around HRK 24 billion. We will also continue with establishment of a comprehensive waste management system and accelerate the construction of waste management centres, sorting plants, composting plants and other facilities that will enable increased separate collection and recycling and reduce the amount of waste disposed of in landfills.

What I particularly want to point out is that growth and development must be based on principles of sustainability. That is our motto. Everything that will be done will be done in accordance with these principles so we could simultaneously ensure prosperity and preserve our natural resources and the environment.

  1. Which of the currently open economic issues do you perceive as the biggest challenge?

The Government already demonstrated that it has quality programs and solutions which resulted in more than 100,000 new jobs in the previous term, accompanied by the growth of salaries and pensions, billions of HRK in investment projects while successfully resolving and dealing with crises. With the overcoming of the crisis caused by the COVID-19 virus pandemic, we are now facing a transformation of the economy.

Our goal is to achieve a resilient, competitive economy. And this competitiveness should be observed primarily through the strengthening of productivity of the Croatian industry. In order to achieve this, the economy must not be necessarily focused on one sector. In the next period, our focus will be primarily on those who can carry the growth of productivity, employment growth and growth of export. That is why we have decided, at the Government level, to use each euro that Croatia currently has at its disposal to direct the funds to real economy, i.e. to production activities. We are also talking about funds from the upcoming Multiannual Financial Framework, and from all other sources. This is a way to make the economy more resilient.

In addition, let me get back to the European Green Deal, which after a number of years marked a paradigm shift in the functioning of the European economy, this deal precisely opened the possibility for the European economy to transform in the next financial perspective for the period from 2021 – 2027, towards low-carbon, sustainable, green economy of clean technologies. Therefore, the Green Deal creates huge challenges for all the economies that relied on traditional industries. It opens up a chance for small open economies like ours to take a few steps faster and more than some others. This is the direction in which the basic variable in observing the future development of the economy should be the foreign trade balance in the goods segment of the Republic of Croatia. And this is in fact the direction in which we need to focus on industries that have proven to be efficient and competitive in both domestic and foreign markets over the past 30 years of very uncertain business opportunities.

  1. In the domain of sustainable development, where is Croatia when compared to other EU members, and which projects can you announce in this sphere of your actions (Sustainable development strategy, social partnership, etc.)?

A preserved environment and biodiversity have become a Croatian brand, and it’s not without cause. We are extremely proud of this, and what’s key here is that we base our growth and development precisely on the principles of sustainability in order to preserve the resources we have at our disposal. Republic of Croatia, as part of the European Union, supports its activities within sustainable development, and we implement them on a national level. In the past period, with the help of European Union’s funds, we initiated and implemented numerous projects that help us make qualitative progress in all the segments of the society, economy and environmental protection, which will also reflect on indicators of sustainable development.

Despite our and global efforts to reduce greenhouse gas emissions and efforts to limit the rise in temperature, the climate is changing and we need to adapt to this fact and ensure sustainable development of the Republic of Croatia in these new circumstances. At the end of 2019, the Integrated National Energy and Climate Plan 2021 – 2030 was reached. This year, the Strategy for Adaptation to Climate Change was adopted, and the Low-Carbon Development Strategy of the Republic of Croatia will also be sent to the procedure. The goal is to encourage the transformation of society in order to reduce greenhouse gas emissions, especially from energy, transport, agriculture, buildings, general consumption and other.

This crisis has shown us that it is crucial to commit to the protection and restoration of natural ecosystems and the sustainable use of resources to ensure human health. Therefore, investing in adaptation to climate change and in low-carbon development is a prerequisite for Croatia’s sustainable development.

  1. How do you evaluate the public’s reactions to business decisions of certain companies (in this case INA regarding the cutting of 250 jobs in Sisak) and to what extent is it possible, in such circumstances, to separate politics from the economy and interests of private property despite the state’s share in INA’s ownership structure?

INA’s business decisions from several years ago were headed in that direction, and what should be pointed out is that INA is starting new projects, like the bio-refinery in Sisak, whose construction will open around 120 jobs in the plant itself, and up to 1000 indirect jobs tied to logistics and the agricultural chain in Sisak and the surrounding area. So, it is a transformation that will start new production.

  1. What is the perspective of the development of that company and how do you comment on the Sisak bio-refinery project, and the project of building a delayed coker unit within the Rijeka refinery?

Decisions on construction of a third generation bio-refinery plant in Sisak and the delayed coker facility in Rijeka best show the direction where INA is headed, which is a direction to a sustainable, green path. And it is the only right path. When we talk about the facility in Rijeka, we have to say that this is an investment worth around HRK 4 billion. That is the biggest investment in Croatian industry in the past 30 years. With transformation of the Sisak Refinery and with implementation of the bio-refinery project in the coming period, INA will improve its business and further increase its competitiveness in the region.