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Fiscal viability and aging population cited as problems at HUB round table

ZAGREB, June 14 (Hina) - Croatia's fiscal policy is currently at the end of viability with the public debt's share in Gross Domestic Product (GDP) of over 50 percent, which is somewhat better than in a majority of European countries, where this share is over 80 percent on average, but trends are not favourable and Croatia has no reputation of being able to make a swift fiscal turnaround to ensure viable development and attract investors, which is why it is a must to correct the fiscal policy immediately, according to participants in a round table organised on Monday by the Croatian Banking Association (HUB).

Analyst Velimir Sonje said Croatia must be fiscally adjusted to new trends in order to avoid problems in the long run.

Sonje called for creating a long-term framework for having the deficit and public debt under control so that Croatia may be a normal actor on financial markets.

He called for better control over budget expenditure and for raising contributions to the second pillar in pension scheme funds, as current contributions would not suffice given the ongoing demographic trends.

Sandra Svaljek, head of the Zagreb-based Institute of Economics, proposed a two-percent fiscal consolidation of GDP.

She pointed to the problem of payments into to the pension scheme funds and pension reforms in the light of the ageing of the Croatian population.

Commenting on the government's Economic Recovery Programme, Svaljek said more patience would be needed for more concrete results but that it would not take long.

Svaljek also said that the focal point of the programme was the reduction of budget spending, although the public and critics spoke more about tax measures.

She said she expected a revision of the budget in the coming period.

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