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News 28 Jul 17

Croatia Vows to Meet State Asset Sales Target

Ministry says it will meet target of pouring 128 million euros into the budget by selling state-owned property and stocks in non-strategic companies - though some economists have their doubts.

Sven Milekic
BIRN
Zagreb
Grand Hotel Imperial on the island of Rab - one of the hotels on sale. Photo: Grand Hotel Imperial

Croatia's State Property Ministry told BIRN that it intends to meet the goal of earning around 128 million euros for the state budget, by selling state-owned property and stocks in non-strategic companies.

However, a report earlier this year said that by July the ministry had collected only 5.5 million euros out of planned 116.4 million from sales of stocks in those companies plus 5.4 million – out of a planned 12.3 million euros – from real estate sales.

“This budget commitment is foreseen until the end of the year – and we will certainly fulfil it,” the ministry told BIRN.

Howver, the ministry declined to specify the likely dynamic of future sales, saying such predictions “cause speculative activities and damage, affecting the market price [of the property on offer]”.

“We will accelerate the activation and sale of assets by engaging new staff that we will select through ongoing tenders,” the ministry stated.

The ministry concluded that the law on managing state property would make tenders easier, while the ministry’s efficient action would grow with changes to the decree on managing state property, as well as with the decision to sell state-owned apartments.

However, economic analyst Damir Novotny said he doubted the ministry would fulfil the plan, blaming this likely failure on “wrong estimates done by the ministry and a political fallacy that this property can bring in so much money".

“State-owned real estate is usually hard to sell, due to non-resolved ownership issues. As for sales of stocks in companies, we’re talking about minority shares, for which important buyers aren’t showing interest,” he told BIRN.

He said better results would follow if and when the state sells off stocks in companies in which it has the majority share, giving the potential investors management rights.

These strategic financial investors are interested in companies whose shares are listed on the stock market, such as the big food producer, Podravka, in which the state holds around 25 per cent of the company.

Novotny said the state should also give up ownership of highways – whose managing companies are heavily indebted – which could bring in up to 5 billion euros, he said.

The Croatian state is selling off stock in different industries, from hotels on the Adriatic coast to smaller communal companies.

With a large portofolio of property and stocks in different companies, Croatia's last two governments, led by the Croatian Democratic Union, HDZ, announced they intended to fill the budget by selling off much of this property.

The current government has formed a State Property Ministry, giving it an important place.

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