• Croatian parliament approves Oreskovic's cabinet in late vote
  • Government changes hands immediately after vote on Friday

The Croatian parliament confirmed former pharmaceutical executive Tihomir Oreskovic as the next prime minister and his cabinet after a 13-hour debate in which he pledged to secure economic growth following a record recession.

Lawmakers in the 151-seat legislature made the approval late Friday in a vote of 83 to 61, with five abstentions. Oreskovic, who doesn’t belong to any party, is supported by the Croatian Democratic Union and Bridge parties, which hold 59 and 14 seats, respectively. The party of Zagreb Mayor Milan Bandic, which controls two seats, signed a coalition agreement just before the vote.

“My team is ready to take over and to improve the economy and the lives of Croatian people,” Oreskovic told reporters after the vote, as he walked across Zagreb’s medieval St. Mark square from parliament to the government building. His predecessor, Social Democrat leader Zoran Milanovic, was ready to turn over power.

Oreskovic, an ex-chief financial officer at Teva Pharmaceutical Industries Europe, is the first prime minister who doesn’t hail from the two parties that have dominated Croatia since it broke away from Yugoslavia in 1991. In a speech before a parliamentary confidence vote, he pledged to overhaul the economy and tackle a debt burden that doubled to above the European Union average when an economic downturn wiped 12 percent off the economy from 2008 to 2014. He promised to attract 1 billion euros ($1.1 billion) over the next four years and improve the credit rating by 2017.


Inconclusive Elections

Oreskovic’s nomination last month broke a six-week deadlock among political parties following inconclusive elections. The Bridge party, known as “Most” in Croatian, and the Croatian Democratic Union, which ruled the country for most of its 25 years of independence, agreed to rule together after Bridge leveraged its third-place finish in the inconclusive Nov. 8 vote to play the role of kingmaker. Bridge also insisted on naming a non-partisan prime minister.

“The new government’s first test will be the budget plan for 2016, which they need to bring by end-March,” Zeljko Lovrincevic, a professor at the Economic Institute in Zagreb, said before the vote. “Here we’ll see whether they plan fiscal cuts and how those plans will fare among their coalition partners and in parliament.”

Raised in Canada and holding dual citizenship, Oreskovic, 49, pledged to sell state-owned companies and cut the budget deficit to below the EU’s ceiling of 3 percent of gross domestic product by 2017. The Finance Ministry sees the fiscal shortfall falling to 3.9 percent of GDP this year, from 5 percent in 2015.

Bond Yields

Oreskovic’s plan has investor support. The bonds of the EU’s youngest member have outperformed most emerging markets since his nomination in December. The yield on government Eurobond maturing in 2022 fell nine basis points to 3.608 at 4:44 p.m. in Zagreb on Friday.

Oreskovic has tapped Zdravko Maric, a former executive in Agrokor, the largest retail company in the Balkans, for the position of finance minister. Maric, 38, also served as Finance Ministry state secretary under a HDZ-led government between 2008 and 2011. HDZ leader Tomislav Karamarko was confirmed as deputy prime minister along with Bridge leader Bozo Petrov.

Bridge is pushing for an economic overhaul after Zoran Milanovic’s Social Democrat-led government canceled highway and energy exploration tenders and forgave the debts of the poorest Croats amid the economic downturn. The government that preceded Milanovic’s, led by HDZ, lost a 2011 election after a graft scandal that resulted in the conviction of former Prime Minister Ivo Sanader.

Croatia’s central bank raised its 2015 economic growth estimate last month to 1.7 percent and predicted a 1.8 percent expansion for this year. The country’s debt is rising, fueled by swollen deficits during the six-year slump. It will rise to 92 percent of GDP this year, from 90.5 percent in 2015, compared with an the EU average of 86.9 percent, according to the European Commission.

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