Can a minister’s associate offend the Government?

‘’The Government doesn’t have guts to reform the state administration, and it trifles with property taxes’’. An author of this statement isn’t an independent economic analyst, but Vladimir Ferdelji, the associate of the Minister of Maritime Affairs, Transport and Infrastructure. He gave this statement for Globus weekly news magazine.

The recent director of an industrial company, Ferdelji wasn’t the original member but he got recently incorporated to Milanovic’s team. And this is the unusual part as he felt free to publicly objurgate the Government he works for, and he didn’t resign from that duty afterwards. I presume that Milanovic isn’t happy when the IDS member directs him some opponent critics or gestures, but probably he gets madder when the member of his own executive reign does such thing.

Furthermore, Ferdelji said something many economists think. And the director of Economy Institute Zagreb Sandra Svaljek says that the Government got stuck in alterations of tax system, while her other colleagues press the Government not to deal such things at all but to make cutbacks of expenditure side of the state budget. While some people mind wage cutbacks, the more radical ‘’stream’’ asks for mass dismissals in the state administration. It is suggested that only such measures could make impression on agencies for credit rating since their decision effects the conditions of further state indebtedness.

So, Ferdelji publicly enhanced the pressure that has already been put on the Government. And his statement ‘’the Government has no guts’’ emphasizes the general impression that the Prime minister’s team hasn’t made some inner adjustments yet. There were so many ‘’brave’’ statements coming from ministers, even with withdrawals of some unclear explanations. Not to mention the property tax that was eventually pushed in the bottom drawer since the same thing happened with VAT’s growth up to 25 percent and introduction of mid rates which could end the same way as the property tax. The most slippery situation is certainly dismissals from the state services considering the fact that Milanovic’s Government surely isn’t open to such options, and considering the fact that there is no reasonable Government which would rush into closing workplaces (this costs as well) in the time when there are hundred of thousands unemployed people and when there is a hope this radicalism can still be avoided. As a matter of fact, the approach is actually the opposite: every workplace is precious...

The thing that helps Milanovic is the fact that the IMF and credit agencies are starting to realize how consumption cutbacks cannot be a key to complete solution as the economic growth and competition strengthening have to be stimulated in the same time. The situation is like in ‘’in-between’’ phase, and in order to create a successful balance between those two demands, it’s not enough to have guts but it is necessary to adjust knowledge, team work and the certain amount of time.

The Government has much bigger problems than Ferdelji’s critics and it is a certain relief that the Prime minister was about to propose the directions for this year’s budget. And with this proposition everything should become clearer. It is good that before the final version of a budget policy the minister of finance will consult the IMF experts.

But, when the associate of the ministers gives a public slap to the entire Government, it is fortunate Milanovic surely doesn’t care to present himself as a person who doesn’t tolerate second opinion. This is a question of the left center, where it is almost normal there are different stands and strong personalities which don’t primarily strive for collective discipline and serving a vertical hierarchy. And it is clear that the prime ministers, ministers, their deputies and associates will have to solve some dilemmas among themselves as well.