Revised 2018 Budget Presented to Parliament

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ZAGREB, November 19, 2018 – Finance Minister Zdravko Marić, who on Monday delivered the revised 2018 budget in the national parliament, said that the planned budget deficit of 0.5% of the country’s GDP would not be changed, despite the enforcement of the guarantees which the government gave to the ailing Uljanik Group. Thus, the budget gap in 2018 would be 2.23 billion kuna.

Marić told lawmakers that the contingencies set aside for guarantees were insufficient to offset the enforcement of the collateral, and therefore the revised budget would increase those contingencies from the originally planned 2.6 billion kuna by 265 million kuna to 2.865 billion kuna. “The sole reason for this increase is the enforcement of guarantees for the Uljanik Group,” Marić said.

He went on to say that the government was committed to its plan to reduce the public debt-to-GDP ratio. “Our latest figures show that this could stand at 74.6% of GDP this year.”

During the debate on the draft budget revision in 2018 and the execution of the budget in 2017, Marić underscored that in the first half of 2018, Croatia’s GDP rose by 2.7% and, in parallel, inflation went up by 1.4%, while industrial production grew by 0.4%, retail sales by 3.9% and the construction industry by 3%, whereas overnight stays by tourists jumped by 8.8% in H1 2018.

The total budget revenues in H1 2018 increased by 2.9% year on year to 59.9 billion kuna, Marić said, adding that the revenues from taxes came to 35.4 billion kuna. The good H1 trends continued in the rest of the year, the minister said.

The revised budget envisages the rise of total revenues from the originally planned 129 billion kuna to 129.2 billion, said Marić.

Under the revised budget, expenses are to be cut by 1.6 billion kuna to 131.7 billion kuna.

The biggest additional allocation under the revised budget is 405.3 million kuna for the healthcare system, the minister said.

During the debate, opposition lawmakers criticised the government for failure to absorb more funds from European Union sources.

Peđa Grbin of the Social Democratic Party (SDP) criticised Marić for relying on an annual economic growth of 2.9% which is lower than the economic growth in some of the countries in the neighbourhood.

Marić replied that Croatia based its economic growth on realistic foundations. “All of us would like to have higher growth rates and I believe Croatia can achieve higher rates. However, this is our current reality,” the minister said.

For more on Croatia’s finances, click here.


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