Croatia’s Budget Deficit Explodes: Spending Soars While Revenues Stall!
Did you know that in the first five months of this year, Croatia’s state budget experienced a financial earthquake? Spending surged by a whopping 11.4%, while revenues barely increased by 1%! Yes, you read that right — expenses are growing almost ten times faster than income!
What’s going on?
Deputy Prime Minister and Finance Minister Marko Primorac openly admits that there has been an expansion in spending, but it’s no surprise. The government implemented a public sector wage reform, which led to increased costs. But did anyone expect expenses to jump by a billion euros in just five months?
Revenues stuck in place
Total revenues rose by only 1%, about 100 million euros, while expenses jumped by 1.5 billion! This means the deficit in the first five months of this year ballooned to 1.5 billion euros, compared to a much smaller deficit in the same period last year.
VAT and delays
Primorac explained that the slowdown in revenues is partly due to technical reasons — VAT is calculated monthly, and the payment for May was delayed due to a non-working day on May 31. But even accounting for this, the picture isn’t pretty.
What’s next?
Despite increased spending, the Ministry of Finance still expects the deficit for the whole year to be around 2.9% of GDP, with public debt falling to 56.9%. Economic growth is forecasted at about 3.3%. However, due to increased defense spending and other priorities, a budget rebalance is expected in the last quarter of the year.
Rebalance and cuts
Will there be additional cuts? Primorac says no one is blaming anyone; it’s about adjusting priorities and further analyzing expenses. Labor Minister Marin Piletić adds that talks are underway about financing defense from EU funds, which could ease the state budget.
Conclusion
Croatia stands at a financial crossroads. Spending is wild, revenues barely keep up, and a budget rebalance looms. Will the country manage to pull out of this financial deadlock, or are bigger deficits ahead?
Got thoughts on how to fix this mess? Maybe a secret recipe to save the state’s finances? Drop a comment — who knows, your idea might be the next big hit in the government!
Slug: hrvatska-proracun-deficit-rashodi-prihodi
