Prime Minister Tihomir Oreskovic presented in the parliament on Tuesday a budget proposal for this year, describing 2016 as a watershed year in which Croatia would have the last chance to start dealing with accumulated problems.

"Unfortunately, due to the accumulated problems we have not dealt with for years, the country's credit rating was downgraded last week again. That shows that the year 2016 is a watershed year and it is our duty to take that last chance and use it for the sake of generations to come," said Oreskovic.

He said that the proposed budget was only the first step in implementing the government's four-year economic programme and that it would help reduce the budget deficit to below 3% of GDP for the first time after eight years.

The PM said that budget revenues were planned at HRK 114.9 billion, an increase of 4.7% (compared to preliminary budget execution in 2015), and that they were determined by the expected economic acceleration without the introduction of new taxes and with an increase in revenues from EU funds.

The total expenditure is HRK 122.4 billion, HRK 3.8 billion more than in 2015, the PM said, noting that the expenditure financed from sources affecting the deficit was at the level of last year's budget execution.

"In other words, we have frozen spending," he said.

He explained that the planned increase in the expenditure was exclusively due to the expenditure related to EU funds and the expenditure financed with own revenues and revenues from specific sources.

"In order to achieve that, we had to save HRK 2.5 billion because some expenses rise necessarily, such as pensions, bonuses for years of service, contributions to the EU budget, interest expenses, etc. However, the government  will not stop at the 2.5 billion, it is only a good start and a sign that we will continue looking for room to cut costs in all ministries," the PM said.

He also underlined the need to implement long-delayed structural reforms, underlining as priorities the management of public finances, healthcare, labour market and administration.

The PM also announced stricter implementation of the Fiscal Accountability Act, and quality and generally available healthcare, but also stressed that it could not be an excuse for tolerating problems in a system that had been burdening the budget for years.

"The last in a series of bailouts in the health system, worth several billion kuna, shows clearly that an end must be put to such practice," said Oreskovic.

He stressed that the government had secured sufficient funds for pensions, adding that the necessary changes to the pension system would be aimed at discouraging early retirement.

Oreskovic said that the government had a clear plan of what to do and how to do it.

"We will be the ones to lead the changes, to give ideas and set the direction and pace. But we cannot do it alone and that is why I call on all coalition partners, as well as other representatives and partners in the social dialogue and Croatian citizens to assume their share of responsibility, to support us and help us change Croatia," Oreskovic concluded.

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