COMMENTARY: Croatia into Excessive Deficit Procedure – IMF Arrangement an Option

In his dominant, charismatic, and aggressive nature, Linic publicly opened the door to a possible International Monetary Fund (IMF) stand-by arrangment, which is essentially a sort of “bail-out”.  According to Linic: “We are surely confronted with large indebtedness in the coming years.  By working with the IMF, financing conditions could be considerably more favourable and we can use every assistance we can get. Every options should be considered, but, of course, the final decision will be made by the government (cabinet).

During the last two years of its mandate, the government has experienced difficulties in significantly reducing public spending, be it cuts in the state bureaucracy and/or social benefits across the board i.e. civil servant benefits and public sector overstaffing). Two areas of economic policy that have shown success is the traditional success of the tourism industry and tax collection (to the point of repression) by the Finance Ministry.  Otherwise, the government macro-economic policies have not resulted in an upswing in the economy and investments…

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