Europe > Southern Europe > Croatia > Vice prime minister Branko Grcic, Croatia

Croatia: Vice prime minister Branko Grcic, Croatia

2015/05/03

Croatia's government on Thursday agreed an economic convergence programme for the 1015-2018 period, which will be submitted to the European Commission for approval.

The statement assessed the major economic indicators, planned mechanisms for controlling negative trends and planned reforms aimed at keeping the budget deficit and public deficit in check.

Deputy Prime Minister Branko Grcic presented the convergence programme, which shows improvements in some economic indicators and national finances.

He said Croatia's GDP would rise from 0.4 % in 2015 to 1.5 % in 2018.

Regarding the large budget deficit, amounting to 5.7 % of GDP in 2014, Grcic predicted a significant development.

“The programme projects a reduction of the budget deficit from 5.7 %, as it was in 2014, to 5 % this year, 4 % in 2016 and 2.7 % in 2017,” he stated.

Croatia’s public deficit, which was equivalent to 85 % of annual GDP in 2014, will continue to rise until 2017, next which point it will decline, he claimed.

“Public deficit should grow until 2017 at the same time as it should reach a maximum of 92.6 % of GDP, and again it should start to fall,” he said, adding that measures of fiscal consolidation in the excessive budget deficit procedure would have an influence on this.

According to the convergence programme, household consumption - as one of the generators of economic increase - will grow by 0.5 % this year and by 1.1 % a year by 2018. On the other hand, national spending will fall continuously over the four-year period.

Although investments are expected to fall by 1.3 % in 2015, by 2018 investments are estimated to grow by some 3.6 %.

Exports, one of the majority positive current economic indicators, will continue to grow by 3.7 % in 2015 to 4.7 % in 2017 and 2018.

The high unemployment rate, which currently stands at 18.5 %, is predicted to fall to 14.3 % in 2018.

This paper as well envisages a number of structural reforms to be implemented in the following years for cutting the budget deficit and correcting economic imbalances.

Some of measures are: new excises on fuel and tobacco products, taxes on gambling winnings and bank savings, alterations to the pension system, the withdrawal of subsidies to national companies and curbs on national government salaries.

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