Draft 2019 budget aiming to raise revenues and cut expenditures

Finance Minister Zdravko Marić said that the situation regarding the budget revision was similar to that of last year, meaning that this year, more revenue was generated than originally planned while. That surplus won't be spent but will retain the expenditure side of the budget which is financed from general sources. When EU funds are added, the revision will lead to cutting the expenditure by HRK 1.6 billion, Marić underscored.

He said that that enforcement of the guarantees issued to the Uljanik Group was the most significant change to the revision.

"If it were not for that element, we could without any problems claim that this year, just as last year, will end with a general government budget surplus," Marić said and added that the effect of paying enforced guarantees is estimated at a minimum of HRK 2.5 billion before the end of the year.

Marić explained that the revised budget should collect HRK 2.1 billion in tax revenue or 2.7% more than originally planned. Planned revenue from VAT is estimated at HRK 51.1 billion or 3.1% more thanks to positive economic trends and increase in disposable income.

Profit tax is planned to rise 1.3% to HRK 8.4 billion.

Revenue from contributions is planned at HRK 24.9 billion, up 2.6% while revenue from administrative fees are planned in the amount of HRK 4.4 billion or 18.2% more.

With regard to the expenditure side, this year expenditure is planned at HRK 131.7 billion following the budget revision, which is HRK 1.6 billion less than originally planned. The reduction is entirely achieved on expenditure financed from other sources, including from EU fund and or specific sources to cover expenses.

The savings achieved will secure additional funds for pensions in the amount of HRK 269.2 million, other labour costs (HRK 183.7 mn) - to be implemented through collective agreements, carers' allowances and disability allowances (HRK 104.5 mn), maternity leave (HRK 92.9 mn), co-financing EU projects (HRK 80.9 mn), salaries in the interior, demography, foreign and EU affairs, culture ministries (HRK 63.1 mn).

At the same time, provisions for guarantees have increased by HRK 2.6 billion from HRK 265 million, hence a total amount of HRK 2.865 billion, resulting from the developments at the Uljanik Group.

The total result for this year is a reduced budget deficit, Marićd.

"We have a higher revenue and the same expenditure. However, referring to European methodology, when we add everything and include the general government and take Uljanik into consideration, forecasts from this revision bring us to the original budget projections for this year and that is a deficit of HRK 2 billion or 0.5% of GDP," he said.

"Regardless of the situation with Uljanik and the fact that that will be included in budget statistics, we expect the public debt to GDP ratio to continue its trend of decreasing, this year falling to 74.6% of GDP," he added.