ZAGREB, April 10 -- Croatia could expect an average revenue drop of 35 to 40 percent due to COVID-19 outbreak, Finance Minister Zdravko Maric said on Friday.
Croatia has introduced two packages to help shore up the economy and save jobs. It has decided to write off tax obligations in the next three months and support people's salaries.
"More than 370,000 workers are using this measure. We have come close to the number of about 600,000 people who should benefit from these measures," the minister said in an interview with the RTL news channel, noting that the state has already spent more than one billion kuna (143.1 million U.S. dollars) for paying part of the salaries of workers in the troubled companies hit by the crisis.
Maric also noted a possible cut in public sector wages. "This topic is on the table. We had a meeting yesterday and I hope that the talks will continue. We will also invite unions with whom we have signed a collective agreement. Solidarity and fellowship are important to overcome this crisis," Maric said.
In another interview with television HRT, the minister said that in the next three months the expenditure side of the state budget will be around 45 billion kuna (6.4 billion U.S. dollars) to ensure the functioning of the state and cover all the measures. He said that a rise in public debt is inevitable and there will be a budget deficit.
In the last few years Croatia has managed to achieve a balanced budget and reduced the public debt to around 70 percent of GDP.
The World Bank reported on Thursday that the Croatian economy will shrink by 6.2 percent in 2020, before rebounding to 4.6 percent growth in 2021. According to its report, the repercussions for the labor market could be severe and the unemployment rate could rise to above 9 percent in 2020. The government measures to help the economy could reach 8 percent of the country's GDP, the World Bank said in a statement.
Croatia has reported 1,495 cases of coronavirus infection and 21 deaths as of Friday afternoon.
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