2022 Essential due to membership of Schengen and the euro area

ZAGREB, December 14, 2021 – Next year is very important as we await a final decision on Croatia’s accession to the Schengen area and the euro area, Prime Minister Andrej Plenković said on Tuesday, recalling that the Croatia had access to around 25 billion euros from European sources for this decade.

Addressing a kick-off conference for the annual Croatian-language special edition of global magazine The Economist, Plenković said Croatia has around € 25 billion for this decade, including regular funds from the EU budget. seven years, funds from NextGenerationEU, and around one billion euros for reconstruction following the devastating earthquakes of last year.

“It’s more than we’ve ever had … and it’s mostly grants,” he said.

This year’s conference addressed the transformation of the Croatian economy through the National Recovery and Resilience Plan (NPOO) 2021-2026 as the basis for the absorption of funds from the NextGenerationEU mechanism, under which Croatia has access to 6.3 billion euros in grants and another 3.6 billion euros in advantageous loans.

The NPOO has been approved by the European Commission and the Council, Croatia has already received a down payment of HRK 6.14 billion, and in the first half of 2022 it will receive a new tranche, Plenković said, adding that some countries in the ‘EU have yet to deliver their national plans.

The NPOO is the basis for reform and the basis for financing economic growth and is expected to increase Croatia’s GDP in 2022 and 2023 by 1.4 percentage points.

The economy has proven to be exceptionally difficult

Plenković said the national economy is showing exceptional strength, agility and resilience, especially as the tourist season has exceeded all expectations. He also mentioned growth in personal consumption and economic growth which is expected to exceed nine percent, more than the eight percent drop in GDP last year.

Most importantly, Croatia has maintained its image with international organizations, financial institutions, markets and rating agencies, he noted.

“All those who follow us see our credibility and the direction of our actions,” said Plenković and stressed that the direction is based on a rapid return to the path of public debt reduction and a balanced budget, this which cannot be expected this year or next year. .

He recalled that the Fitch agency raised Croatia’s credit rating to its highest level since rating agencies rated Croatia.

“This is the framework Croatia enters in 2022, which should be very important institutionally as we await a final decision on joining the Schengen area and the euro area,” Plenković said.

He stressed the importance of political stability, noting that the period from 2021 to 2028 will only feature one intensive period of around 12 months of electoral campaigning.

The government faced incredible challenges last year

Speaking about last year, Plenković said all governments face an incredible challenge due to the coronavirus and need to find solutions to allow normal functioning and economic trends.

This has led to a drop in all trends and a weakening of economic activities, but the government has managed to overcome this and it does not regret spending due to the coronavirus crisis which has exceeded HRK 40 billion.

“We have no regrets because we have not seen massive layoffs or bankruptcies,” said the Prime Minister, recalling the government’s support for wages in the private sector, among other measures.

The challenges of climate change and demographic revitalization

Globally, the pandemic continues and no one can know when it will end and what new variants we will encounter, or what actions we will need to take. However, we will do all we can to protect the health of citizens while ensuring economic, financial and social flows, he said.

Everyone has had to learn to balance – governments, businesses, educational institutions and international institutions, he said.

In the global context, Plenković reflected on the relations between the United States and China, the need to strengthen the strategic autonomy of the EU in all possible aspects, relations with Russia in the context of the stability of Europe, and issues of migration, climate change and demographic revitalization.

Polarization of society during the coronavirus crisis

Plenković said the coronavirus crisis has led to an exceptional polarization of the social and political environment, both in Croatia and globally.

He pointed out the impact of the internet, social media and fake news that deceives people which is why they don’t trust institutions, public health and science.

The latest edition of The Economist was presented by Ivan Vrdoljak of the Livit company. The edition is published in Croatian and provides analysis and forecasts for the next year.

Vrdoljak said The Economist was wrong in its projection of Croatian growth for this year due to a surprisingly rapid recovery.

The Economist expects growth of 4.7% while the government expects growth of around 9%. The Economist has projected Croatian GDP growth for next year at 4.1% and inflation at 1.7%, Vrdoljak added.

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