ZAGREB, November 20, 2018 – The opposition in the parliament criticised a government proposal for the 2018 budget revision on Monday, saying that the state continued to spend more than it earned and criticising the government over poor absorption of money from EU funds. “When all is added and subtracted, we spend more than we earn, that’s it,” MOST leader Božo Petrov said on government spending.
“If you think that that’s sustainable, I call on citizens to start spending more than they earn and let them see for themselves how that ends,” Petrov told the ruling majority.
He said that Finance Minister Zdravko Marić was like “an octopus trying to plug the holes that are opening up on the ship”, “while smiling to the cameras for PR purposes.”
Petrov said the government lacked a strategy for the management of public finances, that the budget revision did not create conditions for reforms, and that 2.7 billion kuna less than planned had been withdrawn from EU funds.
Social Democrat MP Branko Grčić warned of the same problem, saying that the situation had been similar in 2017. He said that in the past five years of its EU membership Croatia had used up only 14% of EU money available to it and that in the next five years it was expected to absorb and pay out 86% of the total funds at its disposal.
Grčić also warned that tax revenues were growing, meaning the growth of the absolute tax burden on households and the business sector, and that the latest round of tax breaks was insufficient.
Branimir Bunjac of the Živi Zid party claimed the public debt-to-GDP ratio had not declined but had actually increased because the state had paid debts in the amount of 21 billion kuna, and taken loans in the amount of 24 billion kuna. “This is a policy of taking loans to pay loans,” he said.
Commenting on the government’s guarantees for the Uljanik shipbuilding group, in the amount of 4.3 billion kuna, Bunjac said that the government had granted guarantees indiscriminately and that taxpayers would end up paying for everything.
Anka Mrak Taritaš of the GLAS party said that there was nothing dramatic in the budget revision “or any hope of more radical changes in the future”.
Boris Milošević of the Independent Democratic Serb Party (SDSS) said that the problem with planning EU funds was not a new one and that it had persisted for years, calling on the Finance Ministry to help other ministries plan their budgets better.
Ivan Lovrinović of the Promijenimo Hrvatsku (Let’s Change Croatia) party said that the budget was unrealistic. “With the economic policy which Croatia has been pursuing for years we cannot achieve a GDP growth rate of more than 3% no matter what we do, and the economy must grow by 3% so that we can just pay interest on state debt,” said Lovrinović.
Ruling HDZ party whip Branko Bačić said that 2018 had been a challenging year and recalled the agreement on the settlement of the Agrokor conglomerate’s debt, the problem of the Uljanik and 3. Maj shipyards, and the restructuring of the Petrokemija artificial fertiliser company, and commended the management of public finances in those circumstances.
“If we were not faced with the enforcement of guarantees in the amount of 2.6 billion kuna for Uljanik, the budget revision would technically result in a greater surplus than last year,” said Bačić, commending a decrease in spending on interest of 100 million euro.
Ivan Šuker of the HDZ said that the reforms launched had yielded results on the revenue side of the budget while the expenditure side was affected by long-standing structural problems, the health system and the enforcement of government guarantees for ailing shipyards.
For more on Croatia’s budget, click here.
