Finance Minister Zdravko Marić on Saturday assessed the talks with representatives of international financial institutions in Washington as very positive, and informed them that Croatia will achieve a lower-than-expected deficit in the state budget for the second consecutive year.
‘Next week, a regular IMF mission will come to Croatia, and we will, among other things, discuss our plans and projections for the next year,’ announced Marić, adding that he will adhere to the budget framework and the fiscal and economic guidelines established in July.
The Croatian delegation, led by Finance Minister Zdravko Marić, which includes representatives from the ministry and the Croatian National Bank (HNB), is participating in the Annual Meeting of the World Bank (WB) and the International Monetary Fund (IMF) in Washington, taking place from October 12 to 15.
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During the assembly, where finance ministers and governors from around the world gather each year, the Croatian delegation held a series of meetings, including with representatives of the World Bank and IMF responsible for Croatia.
“The talks were very positive, primarily from the perspective that the Croatian economy continues this year on a good trend and trajectory of economic growth. I informed the representatives of these institutions that for the second consecutive year, the results of Croatian public finances are better than expected,” Marić stated in a telephone statement to Hina.
Surplus of 35 million kuna
He reminded that the government accepted the report on the execution of the state budget for the first six months in mid-September, according to which a surplus of 35 million kuna was achieved at the general government level.
“The data to date supports this. All revenues are being realized according to plan, and as I presented earlier, some of them, particularly from profit tax and partly from VAT, are slightly above expectations,” emphasized the finance minister, stating that by the end of October he will have final figures for the budget for the first nine months.
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As he added, it is already evident that efforts to keep the expenditure side of the budget under control are leading to the expectation that “we will again finish this year with a lower deficit than expected.”
“I would not announce any specific figures at this moment, as we still have 2.5 months until the end of the year. However, it is certain, as was the case in 2016, that we have made efforts not only to fulfill the budget as we planned but also to be better than that, which is a very good message to both the domestic and international investment community,” noted Marić.
Let us recall, the planned deficit of the state budget for 2017 amounts to 6.8 billion kuna or 1.9 percent of GDP. If off-budget users are added, the general government deficit in 2017 should amount to 1.6 percent of GDP, or 5.6 billion kuna.
The budget revision for 2016 projected a deficit of 1.6 percent of GDP, while the final general government deficit was 0.8 percent of GDP, which is why Croatia exited the EU Excessive Deficit Procedure (EDP) in June this year.
Budget in Government Procedure in November
According to Marić, the proposal for the 2018 budget will be ready for government procedure in November and will be submitted to the Parliament in accordance with legal deadlines.
“Next week, a regular IMF mission will come to Croatia, and we will, among other things, discuss our plans and projections for the next year,” announced Marić, adding that he will adhere to the budget framework and the fiscal and economic guidelines established in July.
Minister Marić, along with representatives of the IMF and the World Bank, also met with representatives of other development banks, such as the EIB, EBRD, Multilateral Investment Guarantee Agency (MIGA), International Finance Corporation (IFC), and the Inter-American Development Bank.
According to the guidelines, revenues of the state budget for 2018 are planned at the level of 127.9 billion kuna, and expenditures at 132.9 billion kuna, while the general government deficit is projected at 0.8 percent of GDP, with an economic growth rate of 2.8 percent.
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“We will adhere to the targeted level of deficit and debt, as well as the overall limit of state spending that we set in those guidelines,” he emphasized.
Along with global and Croatian macroeconomic topics, Marić discussed, particularly with the World Bank, ongoing and future projects.
“For Croatia, the project of financial and business restructuring of Croatian highways and roads is generally important. We have continued discussions on this, primarily with the World Bank,” he said.
As Marić added, the government expects activities on this project in the fourth quarter of this year.
“Now things are going according to plan, and we will continue on this. We are very active in this area. More or less, we have managed to settle most of the obligations of the state budget in the first half of the year and freed up space to focus precisely on the segment of highways and roads, from which we have considerable expectations. This is a segment where we need to make a breakthrough to set it on fiscally sustainable foundations, and for their business model to be generally sustainable. In the coming weeks, there will be a bit more information, and we will timely inform the public about all our activities,” concluded Marić.
By the way, the debts of the road sector – Croatian Highways, Croatian Roads, and Rijeka-Zagreb Highway amount to 5.2 billion euros, and this year alone, one billion euros is due for payment.
