Prime Minister Andrej Plenkovic said on Thursday the 2020 draft budget ensured further tax cuts and public debt reduction as well as higher salaries and compensations, i.e. sound growth, bigger investments and better living standards.

Revenues are projected at HRK 145.1 billion and expenditures at HRK 147.3 billion, he said presenting the document in parliament.

Revenues will go up by HRK 7.4 billion, 5.4% more than in the revised 2019 budget, while expenditures are HRK 8.3 billion higher, up 6% on the revised 2019 budget.

Plenkovic said the 2020 budget would be in the function of growth and development as well as the creation of more stimulating conditions for doing business, as well as contributing to the protection of the most vulnerable citizens.

Further unemployment decline

He said favourable labour market trends were expected to continue and that the unemployment rate would drop towards 6.3% in 2022.

Plenkovic reiterated that his cabinet had reversed negative trends, generated a budget surplus in 2017 and 2018, and that it was continuously reducing the public debt-to-GDP ratio.

Average salary went up 15%

Pension expenditures are HRK 1.7 billion higher than in the revised 2019 budget and the same amount is envisaged to raise the base pay of public employees. That will amount to a 18% pay rise for them in this government’s term, when the average pay has also gone up, by 15%. Plenkovic reiterated.

He also reiterated that the government had scrapped plans to slash the general VAT rate from 25 to 24% so that salaries could go up.

Draft budget proof of stable and responsible fiscal policy

This budget sent to you is the best proof of the stable and responsible fiscal policy we pursue, the premier said, recalling that the economic growth is no longer based on borrowing but on reforms, investments and the absorption of EU funds.

He said that before the start of his cabinet’s term, Croatia was faced with high unemployment, high debts a budget deficit, growing public debt and an unfavourable business climate.

“We have turned those trends around and made marked headway,” he told the parliament, which is expected to discuss the government-sponsored budget for 2020.

He also boasted that the budget expenditures were controlled and that the budget gap was reduced from the planned 0.3% of GDP in 2019 to 0.1%.