The government will propose a new fiscal rule to the Parliament this autumn, which will take into account not only the expenditure side but also the revenue side of the budget, announced today in Parliament the Minister of Finance Slavko Linić.
Linić reported in the discussion on the execution of the state budget for 2012 that the share of expenditures in GDP was reduced by 2.1 percentage points last year, thus satisfying the fiscal rule that states this share must be reduced by one percentage point each year.
– This fiscal rule is a huge constraint for the Republic of Croatia and that is why we decided to change it in agreement with the IMF. We achieved it last year, but this year we are unable to do so because we have a very high interest rate growth – said Linić.
He called the fiscal rule static and announced that the new rule, which the government is developing in agreement with the IMF and the European Commission, will take into account the revenue side as well, not just the expenditure side.
His announcement was reacted to by HDZ’s Martina Dalić, emphasizing that the purpose of the rule is to reduce state expenditures, ‘and not to adjust it every year as it suits us’.
– This is a solution provided by the former government and it tells you that you have to reduce the expenditure side by one percentage point in relation to the gross domestic product. No one in Europe has adopted such a rule. It tells you that you must reduce salaries and pensions by 20 percent, which are on average 2000 kuna. The government of Zoran Milanović does not think we can implement this – Linić replied to her.
