17:07 / 03.06.2023.

Author: Branko Lozančić

Plenković: Continued reduction of inflation and raising of citizens' standards

Prime Minister Andrej Plenković

Prime Minister Andrej Plenković

Foto: Grgo Jelavic / REUTERS

On Saturday at the conference "Creating politics in troubled waters: fostering resilience in Central, Eastern and Southeastern Europe,” it was pointed out that strengthening resilience to crises is an important lesson of COVID and the war in Ukraine, and for that political stability is important. The two-day meeting was organized by the Croatian National Bank and the International Monetary Fund. In his speech, Prime Minister Andrej Plenković said that the Government, as part of the wider European political family to which it belongs, followed three principles in its policies: individual responsibility, freedom of entrepreneurship and the development of the social market economy.

In addition to representatives of the Croatian Government and the organizers of the Croatian National Bank (CNB) and the International Monetary Fund (IMF), the governors of central banks and finance ministers of the countries of Central, Eastern and Southeastern Europe, representatives of the European Commission, the European Investment Bank, the academic community and civil society also participated in the conference. “They discussed strengthening the economy through so-called green transitions, then about changes in the economic conditions in the world, they focused first of all on large exporters such as China, but also something that unfortunately we are witnessing more and more often, namely "shocks" in supply,” said Croatian Television journalist Ivana Brailo Drnas from Dubrovnik.

Since the last conference in 2019, many unexpected things have happened, such as the COVID pandemic and the war in Ukraine. This strongly affected the surrounding countries, and the solution to the challenges faced by the participants of this conference was found in strengthening the economy, i.e. a resilient and adaptable economy and, of course, international cooperation. Of course, they also mentioned the Republic of Dubrovnik as a good example of a resilient economy and openness to trade with other countries.

“In these unpredictable times and in this environment, I believe that strengthening resilience becomes a priority for both business entities and governments. We should focus on resilience. And there are two elements here: preventing the growth of vulnerability and preparing for the absorption of shocks when they occur,” said CNB Governor Boris Vujčić at the conference.

“When we plan priorities, we concentrate on three points. The first is inflation. How to fight it without undermining the prospects for growth? These are very difficult choices. The second is energy transition, and the third is how to "navigate" in the new era of a fragmented world,” pointed out Kristalina Georgieva, the president of the International Monetary Fund.

“The biggest strategic decision at the European level was made in December when we finally agreed on limiting gas prices. Croatia advocated this for almost eight months. Speculators and traders immediately reacted to this most important strategic measure of the market. When everyone realized that the European leaders were serious and united, prices started to fall,” said Prime Minister Andrej Plenković.

“In the last few years, descriptive principles were put to the test due to the pandemic and the Russian invasion of Ukraine, but during that period the Government reacted strongly to protect citizens and the economy and preserve social peace,” Plenković said.

“In general, we would not want to interfere much in market trends, we would be happy if we didn't have to, however, everything we have done in the past few years since the beginning of the pandemic, and especially after the beginning of the Russian aggression against Ukraine, was the opposite,” said the Prime Minister.

“It was a time of unprecedented state intervention in the economy and the preservation of social peace, while at the same time trying to achieve the strategic goals that we had set ourselves,” Plenković said.

He pointed out that the key to the Government's successful moves is political stability and the stability of public finances. “When you have political stability, you have the capacity to use your political power to achieve strategic goals,” he said. He also emphasized the significant role of European funds in the financing of economic and social projects.

Plenković also reported on the Government's projections, according to which the Croatian economy will grow at a rate of 2.2 percent this year. He pointed out that he expects good results from tourism and added that Croatia is becoming increasingly important as an energy hub and one of the points through which Europe wants to ensure energy independence from Russian energy sources. He believes that the most important strategic decision of the EU in energy was the agreement on limiting gas prices, to which speculators and traders reacted. “When everyone realized that we were serious, the prices started to drop,” Plenković said.

Vujčić: The focus is on the energy transition

CNB Governor Boris Vujčić said that in unpredictable times, strengthening resilience becomes a priority for businesses and governments. The president of the IMF, Kristalina Georgijeva, said that when planning priorities, the fund concentrates on three points: the fight against inflation while at the same time ensuring that the foundations for growth are not undermined; energy transition and finding a way "to navigate in the new era of a fragmented world".

In his statements during the break of the conference, Governor Boris Vujčić emphasized that energy transition is a topic that is in focus, especially after the start of the war in Ukraine. He agreed with Plenković that political stability is important in economic policy. According to him, the latest data on inflation shows that it continues to fall, which is a very good trend, but it will take time to come down to the target level that the CNB sees as two percent. He expects it to be until 2025, as does the head of the IMF, Kristalina Georgieva. She, on the other hand, congratulated Croatia on the successful introduction of the euro and excellent economic indicators in the last year, pointing out that the Government's growth projection for this year is many times higher than the IMF's estimate for the entire Eurozone.

Georgieva: If you have more, you should contribute more

“With the Russian invasion of Ukraine,” according to her, “the topic that has arisen is inflation, which not only threatens economic growth, but is a problem for vulnerable groups of the population.” She believes that energy security is also important for the region to which Croatia belongs, and the IMF wants an accelerated transition towards green energies. She believes that increased investments in real estate are good news for Croatia, but she also said that the question is what the Government's fiscal response should be in this context. “If you have more, you should contribute more,” she said.

Plenković: There will be no real estate tax during the mandate of this government

Prime Minister Andrej Plenković announced the continuation of the policy of reducing inflation and raising citizens' standards, in which the announced tax changes are important. He pointed out that there will be no real estate tax in the current mandate of the Government. As for inflation, he said that in May it fell for the sixth month in a row, and that energy products do not affect inflation, nor does the replacement of the kuna with the euro. He called for responsible price formation.

Source: HRT

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