The State is Selling 3.6 Percent Stake in HT

The deficit in the state treasury in the first eight months of this year exceeded 8.6 billion kuna, which was the amount planned for the entire year before the budget rebalancing, according to the latest data from the Ministry of Finance.

With the budget rebalancing, the deficit has been brought down to more realistic, šire frameworks, and by the end of the year, it is expected to amount to around 14 billion kuna, or 4.2 percent of GDP (currently at 2.6). It should be noted that this is a deficit of the central government budget, excluding off-budget funds that will further deepen the minus, analysts say, likely by another eight to ten billion kuna. 

In revenues, corporate income tax continues to significantly underperform (23 percent less collected than in the first eight months of last year), income tax (11.5 percent less), and contributions (4.5 percent less), confirming that the real sector continues to bear the greatest burden of the crisis. Overall, revenues fell short by 816 million kuna.
At the same time, expenditures increased by 0.6 percent, with the fundamental tails remaining the same – the costs of financing pensions and healthcare. In the first eight months, a total of 23.3 billion kuna was paid out for pensions, of which only 12.6 was collected from contributions. Additional funds had to be allocated for healthcare, so the budget had to secure an additional 11.5 billion kuna for these two largest consumers.

– If it weren’t for that, there would be no deficit; in fact, we would be 3 billion kuna in the black – they explained their alibi in the ministry. They still hope for a somewhat better situation by the end of the year, as confirmed by comparative data for August 2008, 2009, and 2010, which show that revenues in that month generally – increase.
What the situation will be by the end of the year largely depends on the number and amount of protested guarantees for shipbuilding. The ministry states that around 500 million kuna has been settled so far, but how much more could be collected depends on agreements with banks. Last year, 2.2 billion kuna was settled in the budget. However, no matter how much the deficit expands, it should remain within the rebalanced framework of 14 billion kuna.

This means that by the end of the year, the state will once again venture into the debt market to finance the deficit. According to the Budget Execution Act, the state planned to borrow a total of 35 billion kuna this year. So far, it has utilized almost 26 billion. However, the ministry angrily clarifies that this amount is not the total new debt, as most of the new borrowing is used to refinance old obligations. New debt is only what is borrowed to finance the deficit. The deficit will also be partially financed by selling 3.6 percent of the state’s stake in HT, which will bring between 820 and 860 million kuna to the budget. (Gordana Gelenčer)