Author: Ana Potočnik
COVID-19 statistics across the region as of 30 March 2020
Number of infected
Number of deathS
Slovenian government adopts a new stimulus package
The government has adopted a new stimulus package to mitigate the impact of coronavirus on the economy. The measure will be in place until 31 May 2020. The additional measures for companies include entire pay compensation for temporary lay-offs (80% of the salary), tax and loan payment deferrals, loan guarantees and financing of social contributions. The self-employed will be eligible for temporary basic income, while pensioners, large families and students will get allowances.
In addition, for two months the government will cover all social contributions for workers who continue working. The total amount of loan guarantees to be provided to companies affected by the crisis is EUR 200m. The temporary basic income measure provides the self-employed with EUR 350 for March if they prove at least a 25% drop in income over February and EUR 700 in April and May if their income is down at least 50%. The state will also cover all of their social contributions. The students will get a one-off allowance of EUR 150, while families with three children will get an additional one-off allowance of EUR 100 and those with four or more EUR 200. Pensioners getting less than EUR 700 per month will get a one-off bonus between EUR130 and EUR 300, while those on welfare will get an extra EUR 150.
Pay bonuses of up to EUR 200 are also planned for workers in the private sector who are disproportionately exposed and are working overtime during the epidemic. The funds will, however, be provided by employers, who will in turn be exempt from pension contribution payments. Sick pay for those who fall ill during the crisis will be fully covered by the public health insurance rather than employers having to cover the first 30 working days of absence. Unemployment benefits will automatically kick in on the first day of unemployment. The package also includes a special set of measures for agriculture sector, including the three-month temporary basic income aid for farmers. Famers who fall ill due to coronavirus will, in addition, be eligible for financial aid, direct transfers and cancelled contributions. The measures also include a 30% pay cut for holders of public office and a 30% cut in fees for members of supervisory boards in state-owned companies. Although the judiciary is exempted under a Constitutional Court ruling on the former, Janez Janša, the country’s prime minister, has called on decision-makers there to voluntarily join the effort.
Most of Croatian businesses affected by coronavirus crisis
The survey conducted by the Croatian Chamber of Economy (HGK) showed that the coronavirus pandemic is increasingly affecting the Croatian economy. Raiffeisenbank Austria analysts estimated that the economy is likely to contract by 5% this year, state agency Hina reported in March. The survey covered around 2,700 companies, and as many as 95% reported declines in turnover, with small businesses suffering the most. Over a quarter of the surveyed businesses reported they had suffered declines of 100%. Three quarters reported a decrease in production, while for a fifth of companies production fell by 100%. Supply chains have also been hurt by the outbreak, with 61% of companies reporting problems. As a result, 42% of surveyed companies are considering layoffs and as many as 37% are considering closing down their operations completely. The nationwide restrictions imposed in an attempt to fight the spread of the corona virus will have the biggest impact on Croatia’s tourism and hospitality industries, which account for approximately 20% of the country’s GDP. Transport and export businesses have also suffered downturns. The survey also showed that around 27% of companies are suffering problems caused by sick leave or self-isolation. Last month, the government proposed measures to help the economy worth EUR 4 billion. The rescue package includes a three-month grace period for tax payments valued at EUR 1.6 billion, wage subsidies for struggling business worth EUR 660m, grace periods for payment of loans to commercial banks and the state-owned development bank HBOR, and others. Some businesses, however, have criticised the measures, arguing that the response is too weak to stem the dire impact the pandemic will have on the economy.
EU endorses opening of negotiations with Tirana and Skopje
European Union leaders gave the green light to Albania and North Macedonia to begin accession talks, after three prior attempts to agree on the issue failed. The exact date for the start of the talks is yet to be set. “We approve the decision of the (EU foreign ministers) Council from March 25 about the enlargement and stabilisation in the accession process”, is written in the joint statement by EU leaders. According to the EU regulations, the European Commission should “as soon as possible” organise an international conference to formalise the decision, but only after it prepared the negotiation framework for those two countries. Earlier, Albania was asked to additionally reform its judicial and electoral systems, increase anti-corruption fight, and also address the issue of illegal asylum seekers in the EU member states. North Macedonia did not receive additional demands. The first to greet the EU’s decision was the US Secretary of State Mike Pompeo. He tweeted that Washington remained their partner at every step of the way.
North Macedonia becomes NATO's newest member
North Macedonia has become NATO’s newest member after depositing instruments of accession with the US State Department, the North Atlantic Treaty Organization said. Nikola Dimitrov , the minister of foreign affairs of North Macedonia, and US Ambassador to Skopje Kate Mary Burns attended the act via a “video”. “With the US ambassador, I witnessed the last step on our path to NATO, which began in 1993. The 23-year journey is over now. From now on we are NATO’s 30th member,” Dimitrov said.
Bank of Slovenia says banks strong but need to prepare for a drop in profitability
Slovenia’s central bank said in its report for January that the banking system remained strong in terms of capital and liquidity but should now expect a drop in profitability. The central bank wrote that the EUR 596m in pre-tax profit recorded by banks in Slovenia in 2019 had been a historical high but advised them to be prudent about distributing the profit. A drop in loan activity is expected to reflect in a decrease in net interest revenue, while the above average non-interest revenue seen last year was unlikely to be repeated this year even under regular circumstances. “The tough economic situation will impact impairment and provision costs and lead to a higher rate of payment defaults and a fast increase in expected losses arising from credit risk,” the central bank wrote in its report. The central bank reported EUR 15.4m in pre-tax profit for banks in Slovenia for January this year, which is a 61% decrease year-on-year. It pointed out the net easing of impairments and provisions that also marked last year had practically ended. Total assets of the banking system rose to EUR 41.7 billion in January, marking an increase of 7% year on year. The volume of loans increased by EUR 239m in January, “the biggest net increase since June last year”, the central bank said.
Kosovo’s new government loses vote of confidence
Out of 120 MPs in Kosovo’s parliament, 117 attended vote of confidence session session and 82 voted in favour of no-confidence in Albert Kurti’s government. The no-confidence motion was submitted by the MPs of the Democratic Aliance of Kosovo (DAK), coalition partner in the new government, following the dismissal of their member, the Interior Minister Agim Veliu. Kurti fired Veliu without consulting the DAK which he was obliged to do under the coalition agreement. DAK, the opposition, as well as the US, also opposed Kurti’s intention to only partially remove o100% tariffs on imported goods from Serbia and Bosnia and Herzegovina, arguing that the decision harms Kosovo’s relations with the United States.
Wizz Air suspends flights from Serbia till May 1
Air company Wizz Air announced that, due to restricted travel, it would temporarily close down its bases in Belgrade and Niš, suspending flights from those cities until May 1, the Beta news agency reported. The passengers with reserved flights for that period would be informed via email, the company said in a statement, adding that “the amount of 120% of the tickets will automatically be transferred to the WIZZ passengers’ accounts and can be used for buying Wiz Air products and services in the next 24 months.” Passengers can also opt for a cash refund of 100% of the ticket’s price though this procedure will take a longer. The conditions will be sent to those customers in a separate email. Those who reserved tickets via travel agencies, including online ones, should contact the agencies directly.
EIB Group's investments in Croatia increased in 2019
The EIB Group had invested EUR 569m in Croatia in 2019, or 12.2% more than in 2018, Dario Scannapieco, the vice-president of the European Investment Bank, Dario said in an interview with state agency Hina published last month. The group’s investments in Croatia last year were equivalent to 1.05% of the country’s GDP. Scannapieco emphasised that this shows the bank’s intention to remain one of the largest investors in Croatia, and one of the “safest sources” of accessible long-term loans for the sustainable development of Croatia’s economy. Major projects supported by EIB in 2019 included funding for the second stage of the construction of a new building that will house the university clinical centre in the northern Adriatic city of Rijeka. The bank earmarked €50 million for that project alone. Another €177 million was spent for the digitalisation of the country’s school system, an effort which proved to be crucial for online teaching rolled out nationwide during the ongoing coronavirus epidemic. The EIB will make its resources, know-how and competence available to Europe, group’s the vice president added, saying that the EIB has already prepared a EUR40 billion rescue package to help countries cope with the economic fallout from the pandemic.