Croatia's Parliament Adopts 2009 Cons Budget Bill with 0.9% Deficit

The government's budget draft was adopted in a 80-52 vote with no abstentions, Parliament Speaker Luka Bebic said in a live TV broadcast from the 153-seat chamber.

On Friday, the Croatian government cut the proposed deficit target in the consolidated budget draft to 0.9% from the initially set target of 1.6% of the projected GDP after a number of economists and media said the initial gap was too big. By a number of amendments to the original version the government slashed the projected budget deficit by 2.3 billion kuna [$431 million/320 million euro]. The sectors that will see their funding cut include healthcare, science and education, and farming.

The government, which expects to end 2008 with a budget deficit of 1.3% of GDP, said earlier it would aim to turn to balanced budget next year in order to avoid fresh borrowing in the context of the global financial turmoil. However, it failed to persuade trade unions to give up their demand for a 6.0% rise in wages in the public sector.

Croatia’s foreign debt-to-GDP ratio is equivalent to 88% of GDP and the country runs a current account deficit equivalent to some 10% of GDP.

(1 euro = 7.1824 Croatian kuna)