"The government will propose a budget deficit with a zero deficit as a higher deficit would mean further borrowing, while [economic] growth is estimated at two to 2.5% thanks to infrastructure works," state TV broadcaster HTV quoted Sanader as saying. In a similar vein, the government is also proposing to freeze the growth of salaries in both the public and private sectors for a year, the head of government told the annual conference of the association of the Croatian economists in Opatija.
Budgetary expenditures, except for pensions, social contributions and the health sector, will remain unchanged, and some may even be cut, Sanader added. The government's budget billl proposal will have to be approved by Parliament. This will be the state's first balanced budget since Croatia gained independence in 1991.
Last month, the finance ministry said it would target a budget deficit equivalent to less than one percent of gross domestic product (GDP) next year, down from a projected deficit of 1.3% of GDP for this year. It also projected economic growth between 4.0% and 4.5% this year and a range of 3.5% to 4.0% for 2009.
Sanader also told the conference that Croatia has no reason to seek assistance from the International Monetary Fund.
The judiciary reform and fight against corruption remain government priorities, Sanader said, adding that the local shipyards should go private as their current state is not financially sustainable and their privatisation is one of the conditions of the European Union.
The Union has repeatedly asked accession candidate Croatia to cut subsidies to the shipbuilding sector to comply with competition rules in the bloc.
Croatia started accession talks with the EU in 2005 and hopes to join the bloc around 2011.