ZAGREB, September 12, 2019 – Croatian government budget revenues reached 65.1 billion kuna in the first half of 2019, an increase of 8.5% on the same period in 2018, while expenditures increased by 8.3% to 66.9 billion kuna, according to a report on budget execution adopted at a government session on Thursday.
The budget deficit was 1.88 billion kuna, roughly the same as last year.
Presenting the report, the State Secretary at the Ministry of Finance, Zdravko Zrinušić, said that positive economic developments had continued in the first half of the year, with real GDP increasing by 3.1% compared with the first half of 2018.
Tax revenues increased by 4.8% to 37.1 billion kuna, with VAT revenues going up by 4.7% to 23.5 billion kuna. This was mainly due to increased spending as a result of positive economic trends, Zrinušić said, recalling that additional tax reliefs had become effective at the start of the year.
Profit tax revenues reached 5.3 billion kuna, up 8.3%, and revenues from special taxes and excises rose by 2.2% to 7.3 billion kuna.
On the other hand, revenues from contributions declined by 2.2% to 11.9 billion kuna, which Zrinušić said was due to the effects of the tax reform at the start of the year, namely the abolition of contributions on employment and safety at work. The health insurance contribution was increased at the start of the year, but it does not count as a budget revenue, the report notes.
The 8.3% rise in expenditures was due to the better absorption of EU funds. Expenditures financed by EU funds reached 6.2 billion kuna, an increase of 1.8 billion kuna or 42% on the first half of 2018, the report says.
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