Croatia Budget 2018: More Money for Health and Defence, Less for Police

Total Croatia News

The budget deficit is expected to decline once again.

The budget proposal for 2018, which the government sent to the Parliament on Thursday, foresees an increase in budgetary allocations for most ministries compared to this year, reports on November 2, 2017.

The government expects that total revenue will amount to 129 billion kuna, 6.1% more than this year, while overall expenditures will amount to 133.3 billion kuna, or 5 billion more, said Finance Minister Zdravko Marić. The government expects the deficit of 0.5 percent of GDP, while the economic growth rate is projected at 2.9 percent.

Tax revenues next year are expected to be 3.4 percent higher than this year, with VAT revenues expected to grow by 7.3 percent to 49.6 billion kunas, said Marić, adding that in 2018 the threshold for entry into the VAT system will increase from 230,000 to 300,000 kuna.

Special taxes and excises are expected to bring in 15.4 billion kunas, while income tax revenues will be zero because this tax will be left to local self-government units. In 2018, the corporate tax is projected to bring in 8.3 billion kuna, salary contributions are planned in the amount of 24.3 billion kuna, while financial assistance, mostly from EU funds, is expected at 13.8 billion kuna.

Total expenditures are planned in the amount of 133.3 billion kuna, which is 5 billion kuna more than in the 2017 budget, Marić said.

Expenditures for employees in 2018 will amount to 27.9 billion kuna, or 1.4 billion kuna more. The main reason for the increase is a change in the collective agreement for civil servants and employees, as well as a higher base salary for public services, explained the Finance Minister.

Material costs are planned to reach 13.2 billion kuna, or 627 million kuna more, mainly due to increased allocations to government institutions, while financial expenses, interest expenses and servicing of debts will be reduced by over 700 million kuna compared to 2017. Subsidies will amount to 6.6 billion kuna, of which 2.9 billion kuna will be spent on agriculture.

Compensation to citizens and households will amount to 47.8 billion kuna or 1.6 billion more. The growth is mostly related to pensions, which will rise by about two percent, or 1.42 billion kuna.

“When all these numbers are added up, including six extra-budgetary users, together with local self-government units, we reach the general government deficit of 0.5 percent of GDP or 2 billion kuna,” the Finance Minister said.

“So, 2018 will be a year of continuation and further improvement compared to the results in 2016 and 2017. In 2019, we plan a practically balanced budget, and in 2020 we forecast a surplus of 3.4 billion kuna or 0.8 percent of GDP,” said Marić. He also added that this government had started “a significant trend of reducing the public debt to GDP ratio, by 2.5 percentage points in 2016.” It is expected that in 2020 the debt will fall below 70 percent of GDP.

Deputy Prime Minister Martina Dalić pointed out that the most critical feature of the 2018 budget proposal was “a firm path to reducing the deficit, which is one of the most important strategic and economic goals of the government and a contribution to economic stability.”

The 2018 budget proposal foresees growth of the budget of most ministries. The highest increase will be received by ministries of economy and environmental protection, by 27.6% and 25.7%. On the other hand, the Finance Ministry will get almost 26% less money than this year.

The Ministry of the Interior’s budget will fall by 1.6%, to 5.18 billion kuna, while the Ministry of Justice will get 0.3% less funds than this year.

The Ministry of Construction and Physical Planning will get 19% more funds, the Veteran’s Affairs Ministry 15.9%, and the Foreign Affairs Ministry 15.7%. The Ministry of Health will receive 11.5 billion kuna, which is 15.3% more than in the original budget for this year.

The Defence Ministry will get 429 million kuna more, of which about 350 million kunas will be spent as the first instalment for the purchase of fighter jets, while the rest will be used for increasing soldiers’ salaries.

The Ministry of Agriculture’s budget will be increased by 11% to 7.2 billion kuna, the Tourism Ministry will get an increase of 9.2% to slightly over 204 million kuna, the Ministry of Demography, Family, Youth and Social Policy’s budget will rise by 8.1%, and the Ministry of Culture will get 6.5% more funds.

The government will receive 354.66 million kunas or 0.6% more than planned for this year’s budget. The Parliament will get 134.7 million kunas, or 5.8% less than this year, while the Office of the President will receive 38.1 million kunas or 1.1% more.

Translated from


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