Croatia plans to narrow 2016 budget deficit using increased government revenue fueled by economic expansion and by cutting technical expenditures and benefits, according to the budget proposal submitted by the cabinet.
The budget deficit is forecast to narrow to â€œwithinâ€ 3 percent of gross domestic product this year, Finance Minister Zdravko Maric told the cabinet in Zagreb on Thursday, from preliminary estimate of about 4 percent for 2015. Revenue is seen at 115 billion kuna ($16.7 billion), a 6 percent increase from last yearâ€™s plan, to be boosted by economic growth, which is estimated at 2.1 percent. Expenditures are seen at about 122 billion kuna.
â€œThis is a winnersâ€™ plan as we also managed to cut 2.5 billion kuna in technical expenditures and subsidies from this yearâ€™s budget,â€ Maric said. â€œThese are structural savings that will be reflected in future budget plans.â€
The Adriatic nation, that joined the EU in 2013, hopes to accelerate modest recovery that started in 2015 after six years of recession. PM Tihomir Oreskovic said last week the countryâ€™s goal is to meet the euro-area budget deficit criteria and reduce public debt, seen by the central bank at 85 percent of GDP.
The European Commission in February forecast Croatiaâ€™s 2016 budget deficit at 3.9 percent of GDP, narrowing from 4.2 % in 2015. It also estimated Croatiaâ€™s economy to grow 2.1 % this year, while public debt is seen rising to 87 percent of GDP from 86 percent last year.