Croatian parliament approves 2016 budget

By bne IntelliNews March 22, 2016

Croatian parliament approved the government’s 2016 budget on March 21, with 80 votes in favor versus 51 against.

Croatia’s new centre-right coalition government, which came into power in January following the November 2015 elections, managed to turn the first corner by receiving parliamentary approval for its draft budget. The coalition between the Patriotic Coalition (led by the Croatian Democratic Union, HDZ) and the newly-formed Most party holds only a slim majority, especially following the latter's loss of four MPs, and it is expected to face significant challenges in implementing a demanding reform agenda.

Croatia, which entered the European Commission (EC) excessive deficit procedure (EDP) in January 2014, has been trying to reduce the deficit for the last two years. The EC has recently said that it expects the Adriatic country to narrow its general government deficit to 3.9% of GDP in 2016 from 4.2% in 2015. The gap should further narrow to 3.2% of GDP in 2017.

Croatia is targeting this year a budget deficit of HRK7.5bn equivalent to 2.2% of GDP and a general budget deficit of HRK9.2bn equivalent to 2.7% of GDP when state agencies and municipal authorities are taken into account, according to the 2016 budget framework adopted by the government on February 25. The finance ministry expects the economy to expand by 2% this year. Consumer prices inflation is seen at 0.1% and the government also plans to reduce the jobless rate below 16% this year.

A Reuters poll of 11 analysts published on March 18 revealed a median GDP growth forecast of 1.5% for Croatia this year and 1.8% in 2017. Analysts’ median budget deficit to GDP forecast stood at 3.7% for 2016 and 3.1% for 2017, still above the EU’s ceiling of 3%. Data on the 2015 budget deficit has not yet been published, but it is expected to be around 4% of GDP, down from 5.6% of GDP in 2014, according to the International Monetary Fund (IMF). 

Budget revenues are planned at HRK114.9bn, representing 4.7% y/y increase compared to 2015, and expenditure at HRK122.4bn in 2016.

Croatian finance minister Zdravko Maric said on March 9 that the government plans to borrow from both domestic and international markets in April in order to cover the planned budget deficit. The government also expects privatisation revenues from the sale of 4,000 state-owned properties to cover the budget deficit this year, Maric said. The budget does not include a wage or pension cut and salaries will be increased by 0.5% per year of service, according to Maric.

Related Articles

Croatia raises €1.25bn via 10-year Eurobonds as yields fall to historic lows

The Croatian finance ministry sold €1.25bn worth of 10-year Eurobonds with an actual yield of 3.20% and a coupon rate of 3%, the ministry said in a March ... more

EBRD says 2016 net profit was around €1bn

The European Bank for Reconstruction and Development (EBRD) said it made a net profit of around €1bn in 2016, up by a quarter from the €802mn it made in ... more

CEE lender Erste lifts profit by a third to €1.265bn in 2016

Erste Group reported on February 28 record net profit of €1.265bn in 2016, a rise of 31% on the previous year. The Austrian banking group proposed doubling its dividend to €1 a share for the ... 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