Economists for reducing budget outlays by EUR 400-500 mln in 2016

The government should reduce the expenditure side of the budget by 3-4 billion kuna this year, and also by the same amount in 2017, so as to achieve the goal of a  budget gap below 3% of BDP and halting the growing public debt in 2018, said participants in a round table discussion on Croatia's fiscal adjustments in Zagreb on Monday.

An advisor to the Croatian National Bank (HNB) governor, Ante Zigman, said that while drawing up the budgets for this and next year, the cabinet of Prime Minister Tihomir Oreskovic should be guided by the targets defined by the European Commission which put Croatia into Excessive Deficit Procedure, having in mind also the expectations of lenders and credit rating agencies.

"And they expect the deficit to be lowered below 3% of BDP, which means that the budget gap should be reduced by 3-4 billion kuna, or 7-8 billion kuna on the aggregate," Zigman said at the round table organised by the association of tax payers called "Lipa".

In order to reach those goals, it is necessary this year to conduct smaller cuts in ministries' (budgets), in parallel to launching structural measures which will pave the way for "the automatic decrease of the deficit" in 2017 and 2018, Zigman said citing reforms in the healthcare system, subsidies, social welfare outlays as well as in the wage budget.

Analyst Velimir Sonje said that the new government's goals "on the strategic level are well-defined", and now it remained to be seen which measures would be implemented.

Sonje quoted the new Finance Minister Zdravko Maric as admitting that there would be no financial adjustments if there were no interventions in  budget outlays.

"This is true," Sonje said reiterating that alongside a certain economic growth, it is necessary "to correct expenditures".

Lipa association representative Davor Huic said the first goal should be to reduce the expenditures side of the budget by HRK 3-4 billion.

(EUR 1 = HRK 7.6)

Last update: Mon, 25/01/2016 - 16:23
Author: 

More from Business

Trump's sons in Dubai to launch golf course

The two eldest sons of US President Donald Trump were in Dubai on Saturday to open the 18-hole Trump International...

Croatian food company Podravka opens EUR 4 mn factory in Tanzania

The Croatian food company Podravka on Wednesday opened a food seasonings factory in Tanzania worth four million...

Lufthansa reaches settlement with pilots' union in salary dispute

German airline Lufthansa and pilots' union Vereinigung Cockpit have agreed to a settlement proposed in mediation,...

OPEC members produced less oil than production limit in January

OPEC members have more than fulfilled their plan to lower its oil output in January, according to a report that the...

Ford set to invest in artificial intelligence company Argo AI

Motor company Ford announced Friday it would invest 1 billion dollars in new artificial intelligence company Argo AI...