Asked to comment on the Croatian National Bank's (HNB) latest GDP predictions for 2012, Linic said "the projections are still positive, but not as high as 0.8 per cent as we previously predicted."
The HNB predicts that economic activity will gradually improve in the second half of the year based on stronger exports and investments, but the poor results in the first half could reduce real GDP by 1.6 per cent on the annual level. In May, the HNB predicted that GDP would fall by about one per cent.
"We knew the economic circumstances would be tough, that a good part of industrial plants is either closed or inactive, which was why we focused on state investment in water management, railways and energy. But evidently, we need time and we have quite poor results in the first six months. It's on us to catch up and launch investments and turn those negative trends around in the second half of the year. If we do that with state investments, I'm confident that the private sector, too, will begin investing," said Linic.
A model has been agreed with the European Commission whereby the 3. Maj shipyard will be privatised through the privatised dock Uljanik, which would enable both "to survive on the market," said Linic.
He went on to say that the increase of excise taxes on diesel fuel and cigarettes, an obligation stemming from European Union membership which Croatia must meet before joining on July 1, 2013, would probably be a one-off operation.
Asked about changes in the pension system, Linic said health contributions must be cut, with one part of that cut steered towards businesses and the other towards the second pension pillar.
"The biggest problem is early retirement. We have too many pensioners and their average age is 51. When we know that the retirement age is 65, then the basic problem in the number of young pensioners," he said, adding that this must be changed.
Speaking of the Brussels meeting, Linic said Croatia, too, would have to prepare for the European Semester, a new instrument for the coordination of macroeconomic and fiscal policies aimed at predicting a possible crisis in time.
The European Semester envisages that EU countries submit draft budgets to the European Commission at the beginning of every year for evaluation before their passage in the national parliaments. The Commission then prepares recommendations for the budgetary and economic policy for each country, which they must adhere to.
"European Union membership also means bigger responsibility for stopping crises... We will have to prepare to be evaluated by the Commission, which isn't pleasant, because we have seen that many countries weren't that happy with that," said Linic.