Croatia's central govt deficit reaches 3.4%/GDP in H1, exceeding 3%/GDP full-year target

By bne IntelliNews July 29, 2013

Croatia’s central government budget deficit amounted to HRK 11.4bn (EUR 1.5bn) in the first half of 2013, the finance ministry said in a statement. The budget gap is equal to 3.4% of the projected full-year GDP versus 3% targeted for 2013.

January-June total revenue dropped by an annual 1.4% to HRK 52.3bn, accounting for 46.1% of the planned revenue in the revised budget for 2013. Total expenditures rose by HRK 4.9bn on the year to HRK 63.7bn, accounting for 51.5% of the planned expenditures.

The 2013 budget plan envisages a budget deficit of HRK 10.2bn. Taking into account the current development of the budget, we believe the targeted deficit of 3% of GDP will be most likely missed as the macroeconomic framework, envisaging economic growth of 0.7% even though downgraded from 1.8%, is still too optimistic.

At the beginning of July finance minister Slavko Linic said that the finance ministry plans to perform a budget revision in the last quarter of 2013 in order to cover HRK 3bn liabilities of the public healthcare sector. He stressed that the finance ministry will reschedule HRK 3bn liabilities of the health sector as it does not expect to have an additional HRK 3bn on the revenues side of the budget by the year-end. Linic said that the revision will be technical and will be done to register the payment of the health sector liabilities in the last quarter of 2013, when a draft budget for 2014 and projections for 2015 and 2016 budgets will be made.

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