For this year, a budget deficit of 1.3 percent is planned, and for the next year, 0.8 percent. I expect GDP growth to be close to 4 percent by the end of 2008, and inflation around 6.2 percent, while in 2009, growth will range between 3.8 and 4.5 percent, and inflation should be between 3.5 and 4 percent,” said Deputy Prime Minister Damir Polančec at the conference “Who will survive, and who will fail.”
A reduction in the state budget is planned, and the Ministry of Economy will have about 150 million kuna less in 2009 than the realization this year (approximately 970 million kuna). “Lower inflation than this year will positively affect consumption growth, but the government must continue with investments. The budget will be smaller, but focused on infrastructure projects, such as road construction and railways. Small and medium-sized enterprises will also continue to be encouraged, but those engaged in production and export-oriented,” said Polančec.
He noted that times are tough and that it is no longer possible to operate under the old practices, linking this to shipbuilding, in which 400 million kuna was invested in direct subsidies and 2 billion kuna annually for guarantees, while five shipyards operated with a loss of one billion kuna last year. “This can no longer continue, and privatization is the solution. The state has proven to be an insufficiently good owner,” Polančec stated, adding that every kuna invested in the future must be turned three times and that the consequences of the financial crisis will be felt in the next two years, and in such difficult conditions, not everyone will survive, but only those who have knowledge and are on solid ground. (Bojana Božanić)
