Needs of Croatian citizens are the focus of my cabinet, says Plenkovic

While presenting the draft budget for 2019 in parliament on Tuesday, Prime Minister Andrej Plenkovic described the budget as development-oriented and socially sensitive, underscoring that the needs of the Croatian citizens will be the focus of his cabinet.

The budget is geared towards "the transformation triangle: fiscal consolidation, structural reform implementation and investment attraction. In other words, we must work better, invest more and be more prudent in managing our assets."

The 2019 draft budget reflects the government's clear policy based on sustainable and consolidated public finances with the aim of strengthening social cohesion and encouraging economic growth, Plenkovic said.

In this context, he called for wiser management of available assets and funds in parallel with public debt reduction.

"We allocate more funds for pension budget, for demographic revitalisation, children's allowances and parenthood allowances, as well as for persons with disabilities, Croatian war veterans, state-subsidised mortgages for young people and for civil servants."

Gov't dedicated to increasing taxpayers' disposable income

The budget is also aimed at increasing the disposable income of citizens and businesses, as the government continues reducing the tax burden, while at the same time increasing funds for employment, public healthcare, agriculture, education, infrastructure projects and capital investments, he added.

"Our economic policy is meant to help Croatia come closer to the standards of the most developed EU countries and catch up soon with central and eastern European countries."

Plenkovic added that the government had projected a medium-term economic growth of 2.9% in real terms, and this projection served as the basis for drawing up next year's budget proposal.

The PM boasted of several good economic indicators such as growing employment, budget gap reduction, and lower public debt.

"In the first half of this year, the number of employed Croatians went up by 3.4%, and Croatia is registering one of the highest employment growth rates in the European Union," he added.

For the economic growth to be stable and the existing macroeconomic imbalances to be reduced, it is necessary to ensure the continuation of growing employment and build a framework for job creation, Plenkovic said.

"A huge budget gap of 17 billion kuna four years ago was a weight dragging us to the bottom, and we have inherited galloping public debt," the premier recalled.

Our success in improving the state of public finance is evident in the fact that we achieved a general government surplus last year, for the first time after 15 years. The surplus was 0.9% of GDP according to the European statistical office Eurostat, he said.

A budget deficit of 0.4% of GDP or 1.7 billion kuna is projected for 2019, and the government will strive to make this deficit lower, he added.

"We project a general government deficit of 0.3% for 2020 and a surplus of 0.3% of GDP for 2021," he said.

"The government plans to reduce the public debt to GDP ratio to 71.6% in 2019, and further to 68.8% in 2020 and finally to 65.6% in 2021, whereby we will reinforce our fiscal viability and reduce the weight of the debt on a permanent basis."

This trend of cutting the public debt puts Croatia among the countries that have managed to achieve the highest annual drops in the public debt to GDP ratio, he said.

Croatia meeting convergence criteria

"We are already meeting the criteria of convergence, thus paving the way for euro adoption in the future," the prime minister said.

Plenkovic recalled that total budget revenues for next year are planned at 136.1 billion kuna.

The revenue side of the budget is based on further economic growth, taking into consideration the effects of the tax reform and other tax brakes, he added.

The expenditure side of the budget is planned at HRK 140.3 billion.

"This budget is a budget of solidarity because it takes care of all sections of the population," he said.

This government has raised the base pay for public-sector workers by 6% for the first time since 2008, Plenkovic said.

He informed the parliament that earlier on Tuesday the government and public sector unions had brought the conciliation process to a successful conclusion after agreeing a base pay rise of 3% as of January 1 and of 2% as of September 1 next year, as a result of which the unions scrapped their plan to begin a strike on November 28.

Text: Hina

News