Finance Minister Zdravko Maric said on Tuesday that under the Economic and Fiscal Policy Guidelines to be presented at a Cabinet meeting later this week, the level of budget expenditure envisaged for 2016 should not be higher than in 2015, when it was slightly over HRK 120 billion, and the 2016 budget gap was projected at 3% of GDP.
It is important to emphasise that the level of budget expenditure financed from so-called general sources such as taxes and contributions will not exceed last year's level, while other expenditure should be covered by EU funding, Maric said in Zagreb at a conference called "A Turning-Point Budget", organised by the EPH news publisher and the Croatian Chamber of Commerce (HGK).
Maric said that details of the new budget would be presented at a government meeting on Thursday.
He said that some of the expenditure items had to be planned higher than last year, citing contributions to the EU budget, interest rate costs and pension indexation, which would be an increase of over HRK 2.5 billion. He added that some savings would be made to offset this increase.
Asked if the projected expenditure accounted for a possible increase in the public-sector wage budget by HRK 1.8 billion as salaries should now be indexed to a 2-percent rise of GDP for two consecutive quarters, Maric recalled that he would meet trade unions on Wednesday to acquaint them with the guidelines and the budget framework.
Addressing the conference, the World Bank's Senior Country Economist for Croatia, Sanja Madzarevic Sujster, called for the implementation of structural reforms, saying that in comparison with other new EU member states, Croatia had much higher allocations for public administration and considerably higher operational costs for the maintenance of highways and railways and higher grants.
(EUR 1 = HRK 7.6)