For state subsidies, every employee in Croatia contributes 5,852 kuna

The past year was characterized by subsidies for shipbuilding, which reached 1.4 billion kuna. As much as 4.6 billion kuna was allocated to special sectors, primarily shipbuilding, transport, and tourism.

This expenditure exceeds the average net salary, and the total state subsidies allocated last year grew by 63 percent. Thus, the state allocated 8.58 billion kuna, primarily through guarantees (50.51 percent), followed by subsidies (27.87 percent), tax exemptions, exclusions, tax and contribution relief (17.17 percent), and favorable loans (4.45 percent), while no subsidies were allocated through equity shares in 2006. – The past year was characterized by subsidies for shipbuilding, which reached 1.4 billion kuna. As much as 4.6 billion kuna was allocated to special sectors, primarily shipbuilding, transport, and tourism. The trend of increasing sectoral subsidies should gradually change, as EU countries allocate most subsidies for horizontal objectives, aimed at strengthening the competitiveness and efficiency of the economy as a whole. Croatia allocated only 1.07 billion kuna for these, or 12.5 percent of total subsidies – said Olgica Spevec, president of the Council for the Protection of Market Competition, at a press conference.

Through horizontal subsidies, the most funds went to employment support (334.5 million kuna), followed by small and medium-sized enterprises (244.9 million kuna) and research and development (138.8 million kuna). Agriculture and fisheries received 2.5 billion kuna, but these subsidies are not subject to AZTN control as the Ministry of Agriculture is responsible for those decisions. The share of state subsidies in GDP increased from 1.11 percent in 2005 to 1.68 percent last year, while the EU in 2005 had a share of state subsidies in GDP at the level of 0.42 percent. – In the following year, we expect growth in regional and horizontal subsidies, which is also encouraged by the European Union – stated Spevec, adding that the situation regarding state subsidies is not alarming as similar situations were experienced by new member states before joining the EU, but that Croatia should not hope for membership until it resolves the shipbuilding issue. (Bojana Božanić)