Government Adopts Budget Review in Croatia

By 16 September 2015

Minister of Finance Boris Lalovac presents budget review.

The government has adopted a review of the budget for 2015 and an interim budget for the first quarter of 2016. The budget review was presented by finance minister Boris Lalovac, reports Vecernji List on September 16, 2015.

"We have better macroeconomic conditions than we had planned. The initial projections of economic growth of 0.5 percent have been increased to 1.1 percent", said the minister at the beginning of the cabinet meeting, and added that the higher growth was the reason for the budget review. He pointed out that household consumption, government consumption, gross investments in fixed capital and exports and imports were all higher than expected.

"For the first time, all GDP components are showing significant growth, especially in relation to the planned levels. Revenues are much more positive than we had originally planned, which means that we have planned conservatively. The new plan for 2015 envisages an increase in revenues from 106.4 to 108.6 billion kuna", said Lalovac. "The most significant increase in revenues is from the VAT, by almost 750 million kuna due to higher consumption than expected", said the minister.

"The expenditures are to be increased by the same amount as the revenues. For the most part, we have made corrections in spending on employees in two ministries. For the Ministry of Interior, the correction is about 111 million kuna, and for the Ministry of Science around 131 million kuna", said Lalovac.

"When we look at the overall deficit, it will remain at the same level, around 12.5 billion kuna or about 3.8 percent of GDP", said the minister. "For the first time, we will not increase the deficit, even though we will deliver all the services, including those to the most vulnerable groups, as well as the indexation of pensions, as we have promised."

"This is good news. These are things that have actually taken place", said prime minister Milanović.

"Growth could be even higher than 1.1 percent", said minister Lalovac and stressed that the government is conservative in its estimates. "The utilization of EU funds is much better. In just half a year, we have reached 3 billion kuna, while the last year we were at 1.2 billion kuna", said Lalovac. "Last year, we had a deficit of 9.6 billion kuna, and this year we are at 5.6 billion. This is the level of interest we pay. We have reduced primary deficit to zero. Public finances have been brought to the level of the primary surplus", said Lalovac, adding that the execution of the budget in 2015 "will be positive".