Croatia to reduce 2014 budget gap to 4.6%/GDP, cuts GDP growth estimate to 0.2%

By bne IntelliNews January 31, 2014

Croatia should pass a revision of this year's budget by the end of February, planning to cut the deficit to 4.6% of GDP from current 5.0% of GDP in order to meet the EC recommendations linked to its excessive deficit procedure, finance minister Slavko Linic said on Jan 30 as quoted by state broadcaster HRT.

In the revision, the government will also cut the 2014 GDP growth outlook to just 0.2% from current 1.3% due to the lower government and household spending. It also plans to further reduce the budget gap to 3.6% in 2015.

The government plans to raise this year's budget revenue by HRK 4.7bn (EUR 615mn) and reduce spending by HRK 3.6bn, Linic said when presented the measures to reduce the deficit after a Jan 30 cabinet meeting.

The fresh revenue should come from transferring funds from the second to the first pension pillar of those with early reduced retirement rights like army and police employees and fire-fighters (HRK 2.6bn), a new tax on lottery winnings (HRK 300mn), collecting the profit of the state-owned companies (HRK 1bn) and raising concession rates (HRK 200mn).

Under the plan, the profit from the state-owned companies will flow to the budget not only in 2014, but in 2015 and 2016 as well. Linic also announced introducing taxes on property, interest rates on savings and profit in 2016.

The 2014 savings in expenditure are planned to come from - lower costs for employees (HRK 370mn), lower travel and material expenses (HRK 1.3bn), lower subsidies (HRK 550mn), savings in the health sector (HRK 600mn), lower capital spending (HRK 455mn) and other savings (HRK 320mn).

The Council of the European Union opened on Jan 28 an excessive deficit procedure (EDP) for the country and set deficit targets of 4.6 % of GDP for 2014, 3.5 % of GDP for 2015 and 2.7 % of GDP for 2016, consistent with an annual improvement in the structural balance of 0.5 % of GDP in 2014, 0.9 % of GDP in 2015 and 0.7 % of GDP in 2016.

Related Articles

OTP’s Croatian subsidiary to buy Splitska Banka

The Croatian subsidiary of Hungary’s OTP Bank has signed an agreement to buy Splitska Banka, owned by the French Société Générale Group, OTP announced on December 21. Hungary’s largest ... more

Telekom Austria’s Vipnet acquires controlling stake in Croatian Metronet

Telekom Austria Group’s Croatian unit Vipnet has agreed to acquire a controlling stake in ... more

Belgrade Stock Exchange joins SEE Link platform

The Belgrade Stock Exchange (BELEX) has become an active member of the regional SEE Link network, SEE Link announced on December 5. SEE Link is a project started by the Bulgarian, Macedonian and ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss