Last week, the main, albeit unofficial HDZ pre-election program was presented – the Proposal for the State Budget for 2024. Andrej Plenković is going into the elections with a powerful backing of 32.6 billion euros, which is planned to be spent in the next super-election year, an increase of 11.2 percent. The most indicative figure is 5.2 billion euros, which is allocated for salaries in the state and public sector. This is an increase of 1.3 billion, or as much as 32.2 percent! It will be the most beautiful Christmas gift for an army of about 240,000 employees, or for two to three times more voters from households whose salaries will rise on average by almost a third next year.
Repercussions of Salary Increases for Private Companies
Salaries have been growing faster under state auspices even in times of double-digit inflation, so this announcement will have even more serious repercussions for entrepreneurs. Based on the average gross salary for August (1614 euros), an increase of 32.2 percent translates to an additional monthly cost of 526 euros, and an annual cost of 6312 euros per employee. This is more than the gross profit per employee for as many as 216 of the 1000 largest companies, along with another 83 that reported losses. Those who can bear this will certainly try to make up for the shortfall elsewhere, most likely on the development side, in investments, so it could happen that Plenković’s pre-election gift triggers longer-term negative repercussions for the Croatian economy.
There is, of course, also the EU boost of 2.7 billion euros, which the government did not even mention in its budget presentation, but has incorporated every cent into revenues for 2024.
The 2024 budget revealed another pre-election trump card that will delight all potential buyers and sellers of apartments, as well as the entire construction and real estate sector. Namely, subsidies for APN loans, which according to current regulations last until this year, will be continued. The budget allocates 46.5 million euros for this purpose, with an explanation that legislative changes are already in the works to enable this. Just when there were indications that the real estate bubble had stopped inflating, a new round of subsidies will again be used as a new pump for square meter prices.
The Ministry of Economy Has Suffered the Most
From the pre-election announcements, it is now clear that the construction of fast roads will remain promises, as only 68.6 million euros have been secured for this, just 3.4 percent more than this year, while a real boom can be expected in 2025, when nearly double that amount – 131 million euros – will be spent. It is also unclear what will happen with toll booths on highways. Namely, HAC has announced that by the end of 2024 it will switch to electronic toll collection, but does not plan to reduce employee expenses until 2026.
With every budget, ministers seem to compete over who will receive more. In this context, the Ministry of Tourism and Sports has lobbied the best, receiving 85 percent more money for its operations than this year, while the Ministry of Economy recorded the largest drop, losing 25 percent of this year’s allocation. However, changes in the financing of ministries are not always identical to the state of the entire sector. Thus, the Ministry of Health received 15 percent more money, but the entire sector received 42 percent more. The difference lies in the 22 hospital institutions that the state will take over from counties and the City of Zagreb starting next year, which cost about one billion euros annually.
Incorrect Indices
Budget documents will still be adjusted until adoption in the Parliament. Thus, incorrect data in the table showing expenditures by functional classification will likely be corrected. For example, for environmental protection in 2024, 173 million euros are planned, which is almost half of this year’s 339 million, yet the document states an index of 131, or an increase of 31 percent. All indices in that column are incorrect.
