New Croatia president urges national consensus to revive economy

ZAGREB - Croatia's new president, Kolinda Grabar-Kitarovic, appealed for a "wide national consensus" to revive the European Union member's battered economy as she formally took office on Sunday.

Grabar-Kitarovic, a 46-year old former diplomat, was sworn in Zagreb's mediaeval St. Mark square, home to government and parliament, packed with foreign visitors and thousands of flag-waving, cheering citizens.

"Our economy has been hit by crisis for the last six years. Thousands of young people are leaving, many companies are going bankrupt. This requires urgent action from the government, employers, unions," she told the gathering.

Grabar-Kitarovic won the presidential election in January as a candidate for the conservative opposition HDZ party, pledging to prod the Social Democrat-led government into doing more for the economy, which has been in recession since 2009.

"We need a wide national consensus about the key issues, there is no time for divisions. We must overcome party interests and implement changes that cannot be postponed. We must stop living off the money we're borrowing from future generations."

She did not get specific but urged the government to remove red tape and make taxes less onerous for investors.

After six years of recession, unemployment is running at 19 per cent in the former Yugoslav republic of 4.4 million people, which joined the EU in July 2013.

High taxes and poor administration hamper business and the economy is not expected to grow in 2015 as the government struggles to rein in spending and cut the budget deficit.

Public debt is expected to surpass 80 per cent of gross domestic product this year.

Grabar-Kitarovic, Croatia's first woman president, previously served as foreign minister, Zagreb's ambassador to Washington and as a NATO official.

In Croatia, the president is largely ceremonial, with a say in foreign policy and defence but no power to veto laws.

The president also has the right to seek and attend special cabinet meetings, but that right has rarely been exercised. Grabar-Kitarovic said during the campaign she would seek such a cabinet meeting to focus on economic issues.