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Budget Games with Numbers

From today’s Government session, where the framework for the 2009 budget was finally presented, a message was sent – the unions are to blame for the breach of the planned zero deficit as they did not agree to sacrifice for the common good.

However, in the general numerical confusion, the Prime Minister and the Minister of Finance first ‘parted ways’ (the Prime Minister announced a deficit of 4.4 billion, while Minister Šuker stated 4.7 billion kuna), and then the deficit jumped significantly above the costs of the 6 percent wage increase of 1.4 billion kuna. Sanader stated that 1.8 billion kuna is needed just for salaries!? In the end, the total deficit of the central government will be 4.3 billion kuna or 1.3 percent of GDP, and when including Hrvatske ceste, the consolidated state deficit is 4.6 billion, which is 1.6 percent of GDP.

Thus, the final deficit will be three times greater than the amount needed for the agreed wage increase. Clearly, even without the unions’ consent to freeze wages, a balanced budget would be a mere dream. Or did the Government, upon seeing that the agreement with the unions was failing, decide to carry out healthcare reform at one cost, regardless of the expense! That the budget was prepared under quite chaotic conditions is confirmed by the fact that journalists did not receive any concrete paper with numbers for the first time. Although Minister Šuker did not want to answer clearly, it could easily be read between the lines that the budget would be balanced if the collective agreement had not been respected and if healthcare reform had not been initiated.

As it stands, the state will have to additionally borrow (net) 6 billion kuna. Most members of the Economic Council are not satisfied with such a budget, which insists on a zero deficit for the sake of maintaining investor, creditor, and investor confidence. Since they did not manage to cover all topics, the session will continue on December 8. However, many of them are already disappointed, as their role is not what they envisioned; politics is once again winning over economic logic. And the media, where the news about the Prime Minister delegating himself as the president of the Council that advises him has been completely overlooked. (Gordana Gelenčer)