Croatian parliament revises 2020 state budget

ZAGREB, May 18 (Hina) – Parliament on Monday revised the state budget for this year with 79 votes for and 41 against after all the amendments submitted by the opposition had been rejected.

The revised budget decreased revenue by HRK 23.2 billion to HRK 122 billion while overall expenditure will remain at HRK 147.3 billion.

The decreased revenue in the state budget is due to measures taken in the fight against the coronavirus with the deferment or absolute exemption of taxation and contributions as well as decreased economic activity.

The government has estimated that GDP this year will fall by 9.4%. The 2020 budget was prepared on the presumption that economic growth will be 2.5%.

The budget revision takes into consideration the last available information related to budget revenue.

The consequence of the coronavirus epidemic became evident mid-April, affecting finances like never before. For more than two weeks in April, revenue from Value Added Tax (VAT) not only recorded a decrease but was negative in absolute numbers, which means that VAT returns were greater than revenue, which is usually the most plentiful tax income for the state.

The situation improved toward the end of April. However, in that month alone tax revenue decreased by 43.2 percent compared to the same period last year while contributions were 20% lower.

The budget revision foresees tax revenue in the amount of HRK 66 billion which is HRK 18.1 billion less than the original budget had forecast.

The government says the strongest message of the budget revision is that expenditure would remain at HRK 147.3 billion despite pressure to increase spending.

The biggest nominal decrease in budget funds due to the revision will be felt by the ministries of the sea, environment, science and economy.

The only ministries to benefit from the revision and will feel an increase are the Labour Ministry (+HRK 4.75 billion), the Health Ministry with an increase of HRK 93.7 million and the Ministry of Agriculture with an increase of HRK 47.5 million.