tihomir orešković.jpg
Photograph: HINA/ Slavko VUKADIN/ ua

Prime Minister Tihomir Oreskovic said on Thursday that the budget guidelines, adopted at a Cabinet meeting earlier in the day, were a realistic plan.

"Economic growth of 2% is a realistic plan. Tomorrow we are having a meeting with European Commission Vice-President Valdis Dombrovskis and it is very important to us that we, as a new government, present a realistic plan," Oreskovic told a press conference after the Cabinet meeting.

The European Commission has forecast Croatia's 2016 budget deficit at 3.9% of GDP, which would make it the highest deficit in the European Union, Oreskovic said, adding that the 3% deficit projected in the guidelines was "a very ambitious, yet realistic plan".

"We are growing. We have reduced the deficit and will focus on debt," Oreskovic said. He said that the guidelines absorbed about 2.5 billion of expenditure and added that the planned reforms would be outlined before the presentation of the budget on March 10.

Finance Minister Zdravko Maric said that budget cuts did not affect pensions and salaries and that the pension budget was even increased because the guidelines provided for a 0.5% increase on years of service. He said that savings were made on material expenses, a portion of subsidies and other expenses.

Responding to questions from the press, Maric said that the basic structure of this year's budget would not be the same as before, adding that this budget had to account for HRK 2.5 billion higher expenditure. Citing an expected contribution from EU funds, he said that this year various projects were expected to be co-financed with between HRK 900 and HRK 1 billion of EU money.

Asked what would happen with a possible HRK 1.8 billion increase in expenditure on public-sector salaries due to a 6% pay rise on account of 2% GDP growth for two consecutive quarters, Maric said that dialogue had been launched on this issue at meetings with union leaders on Wednesday, when the government's view on the reform of the public sector and pay policy were presented. He said he was certain that the unions would back the government during the dialogue over the coming weeks.

Maric said that employment expenditure would not be reduced, but would even be increased, adding that a substantial EU component of that item was a novelty.

Commenting on the statement by IMF Mission chief Khaled Sakr at the end of his visit to Zagreb on Wednesday, Maric said that his statement was encouraging and very realistic, adding that the mission's response to the presented budget framework was very positive.

"The improvements in macroeconomic indicators starting in late-2014 and the broad-ranged policy agenda of the new cabinet are encouraging. Speedy implementation of structural reforms will be essential to sustain durable growth and employment, as well as to reduce vulnerabilities and safeguard against downside risks," Sakr said.


(EUR 1 = HRK 7.624)

Related stories

Budget revenues planned at HRK 113b, expenditures at HRK 120.4b

2017 budget guidelines defined, budget gap at HRK 6.8 bn

SDP official says guidelines reflect no serious reforms

FinMin: Budget expenditure projected at HRK 120bn

Government adopts draft 2016 budget

FinMin: Budget almost balanced, expenditures under control

Latest news

Turkey removes restrictions on Islamic headscarves in the military

Female members of the Turkish military, including officers, will be allowed to wear the Islamic headscarf as long as it is color-compliant with their uniform, the Defence Ministry said on Tuesday, according to the state-run Anadolu news agency.

Protesters clash with police in Nepal anti-government shutdown

Anti-government protesters clashed with police in towns across southern Nepal and attacked a municipal building Wednesday as they forced a shutdown in the region over local elections.

Pollster: Trump presidency is causing Germany's AfD to lose support

A prominent German pollster said Wednesday that the "chaotic" leadership of US President Donald Trump has caused an electoral decline for Germany's right-wing Alternative for Germany (AfD) party.

Iraq's powerful Shiite militia attacks Islamic State near Mosul

Baghdad (dpa) - Iraq's powerful Shiite militia launched a major attack Wednesday to recapture areas near the city of Mosul from Islamic State, backing an ongoing government offensive against the radical Sunni group.

11 Bosnian citizens wanted by Interpol for terrorism

Acting on a request by Bosnia and Herzegovina, Interpol has issued an international arrest warrant for a national of that country, Amir Dzinic, for links to the terrorist organisation Islamic State, Bosnian media said on Wednesday.

Pakistani TV channel in hot water for airing film about lesbians

Pakistan's state media watchdog has warned a private TV channel for airing a film on the relationship between two lesbians, saying it was against the "social, ethical and societal norms of the country."

Stolen gate from former Nazi camp returns to Germany

A gate stolen in 2014 from a former Nazi concentration camp will be returned to the Dachau memorial site on Wednesday, after its return to Germany from Norway.

China wants to open 50,000 football schools by 2025

China plans to open 50,000 football schools by 2025, as part of a long-haul effort to become a world leader in the game, Chinese state media reported Wednesday.

Airbus profits take hit after write-off on new military aircraft

Airbus Wednesday announced that its profits for 2016 were down 63 per cent to 995 million euros (1,046 million dollars) after a major write-off on a troubled programme to develop a new military transport aircraft.

Monitor: Israeli jets hit arms depots near Damascus

 Israeli warplanes Wednesday hit arms depots near the Syrian capital Damascus, a monitoring group reported.

S African court invalidates International Criminal Court withdrawal

South Africa's government must seek legislative approval before it can withdraw from the International Criminal Court, ruled a court Wednesday, throwing up a roadblock to attempts to part ways with the international tribunal.

Senior Yemeni army commander killed while fighting rebels

A senior commander of Yemeni government troops died Wednesday while fighting rebels in the war-torn country's south-west, according to military sources.