The Croatian government sent the 2015 budget revision bill to parliament on Tuesday, increasing both revenues and expenditures by 1.8 billion kuna and keeping the planned deficit at 12.5 billion kuna or 3.8 per cent of GDP.
The government revised upwards its GDP growth projection from 0.5 to 1.1 per cent, citing better macroeconomic conditions than planned and economic indicators for the third quarter showing continuation of positive trends in the national economy, Finance Minister Boris Lalovac said at a Cabinet meeting.
Explaining the proposed revision, Lalovac said that the budget revenues were much more positive than initially planned. "The new budget for 2015 projects an increase in revenues from 106.4 to 108.2 billion kuna, or by 1.8 billion kuna. Of the 1.8 billion kuna, 1.2 billion relates to increased tax revenues, while 600-700 million relates to an increase in own revenues," he said, adding that the latter related to the inclusion of new budget beneficiaries.
The largest increase in revenues, of nearly 750 million kuna, relates to VAT revenues as a result of a marked increase in consumption following amendments to tax legislation and the successful tourist season, the minister said. He added that revenues from profit tax had gone up by 440 million kuna as a result of government measures relating to exemption from the taxation of reinvested profit. "This means that the government's economic policy measures over the last three years have produced positive effects."
Expenditures are being increased by the same amount as revenues, that is by 1.8 billion kuna, Lalovac said. He specified that expenditures would be increased for the staff of two ministries -- for the Ministry of the Interior by 111 million kuna and for the Ministry of Science, Education and Sport by 131 million kuna. The latter ministry would also receive 300 million kuna for awards for years of service. Lalovac noted that all the government departments had considerably lower outlays for their employees than in 2011.
"It will be the first time that we won't have an increased deficit. We will provide all the services to the most vulnerable groups, including pension indexation, just as we have promised," Lalovac said.
The government also adopted a report on budget execution for the first half of 2015. Lalovac recalled that in that period GDP had increased by 0.8 per cent, inflation had stabilised at around zero, while industrial production and retail sales had increased, unemployment had dropped and exports had gone up by 11.5 per cent.
"This means that all the macroeconomic indicators have a positive trend," Lalovac said, adding that the same could be expected for July and August and that growth in the third quarter was expected to be higher than in the previous ones. As a result, the GDP growth rate could eventually be higher than the 1.1 per cent projected in this budget revision, the minister stressed.
"All the figures from the first six months of the year indicate that the budget execution for 2015 will be positive," Lalovac concluded.
Because of forthcoming parliamentary elections, the government adopted a decision on interim financing for the first quarter of 2016, projecting both revenues and expenditures at the levels of the first quarter of 2015.
(Text: HINA)
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