The government on Thursday sent to the parliament a draft revised budget for 2020 envisaging budget revenues of HRK 131.1 billion, 9.2 billion more than in the previous projection made in May, and expenditures amounting to HRK 155.9 billion, an increase of HRK 8.6 billion.

As a result, this year’s budget gap will stand at HRK 24.8 billion, or 6.7% of the country’s Gross Domestic Product.

When extra-budgetary beneficiaries and the local authorities are added, this year’s budget deficit will total HRK 29.5 billion in accordance with the ESA 2010 methodology, which represents eight percent of GDP.

Addressing the government’s session, Finance Minister Zdravko Maric said that public finances and the budget in 2020 were used predominantly for job retention efforts and for overcoming the situation caused by the COVID-19 pandemic and the consequent crisis.

Maric said that the latest revision was based on projections made in September, when it was assessed that this year, Croatia’s economy could contract by eight percent, while in May, projections were more pessimistic and a contraction of 9.4 percent was expected.

According to the latest revision, tax revenues are likely to amount to HRK 72 billion in 2020, which is 5.9 billion kuna more than in the May projections.

VAT revenues are set to be HRK 46.7 billion or three billion more than planned in May.

Contributions, which are “the best indicator of the state of affairs on the labour market”, make the finance minister happy, as their latest projection is by HRK 1.5 billion higher, amounting to HRK 22.7 billion.

Expenditures 8.6 billion higher than previously planned

The total expenditure side of the revised 2020 budget will be HRK 155.9 billion, 8.6 billion higher than the initial plan of HRK 147.3 billion.

The outlays of the Finance Ministry have increased by 2.3 billion kuna, for exchange rate differences, interest on borrowing, higher contributions to be paid to the EU and more funds for the Croatian development bank (HBOR).

For instance, under the revised budget, the Health Ministry’s outlays have increased by HRK 1.76 billion kuna, including HRK 1.34 billion for the payment of liabilities to drug wholesalers.

The outlays of the Labour and Pension System Ministry have increased by 1.4 billion.

(€1 = HRK 7.5)