Prime Minister Zoran Milanovic has told two televisions -- the public Croatian Television and the commercial NOVA TV -- that the first major move of the new government will be to adopt a state budget in February with the reduction of the spending in the real and nominal terms.
The government will very soon inform the public whether it will increase the Value Added Tax rate. Whatever it does, it will take into consideration the protection of the standard of the most vulnerable groups in the society, Milanovic said in the TV interview broadcast on Friday evening.
He said that there would not be increase in the total tax burden for citizens and entrepreneurs.
"We think that we know how they (budget means) can be distributed in a wiser and more efficient way," the new PM said.
He deems the VAT reduction to 10 percent in the tourist sector to be feasible.
Milanovic also announced a more rational spending.
"All countries except for a few ones are living on a sort of debts but the debt must be manageable, and the economic growth must be higher that the borrowing rate. This is where Croatia has carried things too far. We have been spending more than we have been earning for too long," he said.
Milanovic went on to say that things were not too much bleak and Croatia still had time and room to make a turnaround.
"I believe that we can make it by concerted action,"
As for the Croatian National Bank governor's assessment that it would be necessary to make savings up to nine billion kuna in the budget, the new PM said that it was perhaps too much, as the government would avoid "cutting a healthy branch" by making huge cuts.
Asked whether he was afraid of social unrest, Milanovic answered in the negative, adding that his cabinet would rescind the ban on public assembly in St Mark's Square in Zagreb where government and parliament buildings are situated.
He said that his government would focus on the development of the sectors of energy, infrastructure, transport and on connecting the seaport of Rijeka with Central Europe.
Croatia should make use of its beneficial geographical position, he added.
Milanovic expects Croatia to become a stable country for investors in four years' time.
As for high unemployment, he said that this problem could not be solved overnight adding that it was a structural problem.
