Finance Minister says wage growth should be limited

The Croatian Deputy Prime Minister and Minister of Finance announced on Wednesday that he agrees with the IMF's assessment that wage growth should be limited. He also said that he expects to have a budget proposal for 2026 very shortly, and announced a new Treasury bill auction for Monday.

Speaking at the traditional 33rd Croatian Economic policy conference, which was organized by the Croatian Society of Economists, Deputy Prime Minister and Finance Minister Marko Primorac commented on the conclusions of the recent IMF staff visit to Croatia. Primorac said that he believes that fiscal policy, in terms of fiscal stability and maintaining the budget deficit at the consolidated general government level below three percent, is something that places Croatia among the EU members with more appropriate fiscal frameworks and fiscal policy.

Primorac also said that he completely agrees with the IMF that wage growth should be limited: "Regarding the increase in salaries in the public sector, we agree with the IMF's assessments that we need to carefully weigh this situation. This is something we are continuously trying to emphasize to unions in our ongoing negotiations with them."

He assessed that it is unrealistic to expect, after the increase in salaries that largely occurred due to the salary reform in the public sector that such a trend and dynamics of salary growth will continue in the coming period. "That is not possible. It is unrealistic and furthermore would not be opportune for Croatia," he stressed.

Primorac also announced a new issue of one-year treasury bills, with a yield of 2.6 percent and a target of raising €1.2 billion in new government debt. The minister added that the auction would be presented in more detail on Friday.

With regards to the 2026 state budget, Minister Primorac said that his ministry’s proposal is in the final stage of preparation and will be submitted to Government in short order: "In accordance with the Finance Ministry’s projections, we expect economic growth of 2.7%, inflation of 2.8% and a deficit at the consolidated general government level of 2.9%. Talks are ongoing with all relevant ministers and ministries, the budget should be adopted by the Government by November 15th, and then it will be forwarded into parliamentary procedure."

Reflecting on what has been achieved over the past three years; Primorac said that Croatia can be satisfied from a macroeconomic perspective, as well as with the implementation of reforms. He also said that a number of criteria have been met with regard to accession to the OECD, something he believes will happen next year.

Source: HRT