Croatian President Steps In to Defend Central Bank Independence

  • President Kitarovic speaks in Bloomberg TV interview in London
  • Parliament may approve new government as early as next week

Croatia’s president backed the independence of her nation’s central bank, signaling opposition to plans by the new coalition’s junior member as a cabinet lineup is finalized.

The new government, which parliament may approve as early as next week, should steer clear of interfering with the bank, President Kolinda Grabar Kitarovic said Wednesday in a Bloomberg Television interview in London. The coalition is led by the conservative Croatian Democratic Union. Its smaller party in the two-way alliance, Bridge, wants to start auditing the bank’s affairs.

Kolinda Grabar Kitarovic

Photographer: Daniel Leal-Olivas/AFP via Getty Images

“I support the independence of the central bank,” said Kitarovic, whose role is mostly ceremonial and who doesn’t have veto power over government policy. “This is European practice, and the government can’t put it under control. I have a feeling this isn’t going to be one of the outcomes.”

As months of political uncertainty in the Adriatic nation draw to a close following this week’s nomination by Kitarovic of Croatian Democratic Union leader Andrej Plenkovic for prime minister, attention is turning to the details of the coalition’s proposals. Croatia, a European Union member of 4.2 million people, is seeking to head off threats to recovery from its longest recession on record, which ended in 2014.

Plenkovic’s party, known as HDZ, last week decided to form a coalition with Bridge after winning the most votes in an inconclusive general election in September. The two parties won 74 of parliament’s 151 seats, and with the support from deputies representing ethnic minorities, and others, will control 91. Plenkovic has 60 days to win confirmation in parliament, which meets next on Friday.

“Plenkovic has enough support in parliament,” Kitarovic said. “I have very high hopes and expectations from this government, and what I heard from him in our conversation is very encouraging, when it comes to focusing on the economy, improving the business and investment climate, changing the tax system and restoring faith in our institutions.”

Croatia’s previous government, also composed of HDZ and Bridge, fell apart in June in a conflict-of-interest scandal surrounding former HDZ leader Tomislav Karamarko. Kitarovic, a 48-year-old former assistant deputy secretary general of NATO, predicted the new one will last its four-year term.

“I’ve seen from all political parties and everyone else that nobody wants a new election,” she said. “We want a stable government, and the want for a better life is shared by both the potential government and the opposition. We need national unity as we need to do a lot of structural reforms, to reform our labor market, and make Croatia a lot more business friendly.”

Plenkovic, a 46-year-old career diplomat who took over HDZ in July, has pledged to trim the income and value-added taxes, as well as reduce public debt, which reached 97 percent of gross domestic product last year. The economy will grow 2.5 percent this year, the government predicted in August.

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