2010.11.1510:16:00UTC+00Croatian Govt Sees 2011 Budget Gap At 4.3% Of GDP

The Croatian government on Monday tabled in Parliament the draft budget for 2011, envisaging a public sector deficit of 4.3% of the gross domestic product.

As per the budget draft, the shortfall will amount to HRK 14.8 billion. Along with the draft budget for 2011 and budget projections for 2012 and 2013, the government also sent to parliament a bill putting on hold the proposed adjustment of pensions to salaries and living costs.

Pension insurance contributions worth HRK 19.3 billion will be collected next year and HRK 35.1 billion will be needed to pay pension allowances, Finance Minister Ivan Suker said. The deficit of HRK 15.7 billion would be covered by budget funds, Suker told the cabinet.

The government's total borrowing needs will be HRK 23.2 billion next year, of which HRK 9.9 billion would be used to pay old debts, the minister said.

The revenues is expected to be around HRK 107.4 billion and expenses in the amount of HRK 122.3 billion. The 2011 budget was drawn up on the basis of a projection of 1.5% economic growth, Prime Minister Jadranka Kosor said in Parliament.

The frozen government spending in 2011 will include two billion kuna for Croatia's EU accession process, an extra 1.1 billion kuna for the payment of interest, funds for military equipment, an increase in funds for pensions of HRK 163 million, as well as funds for maternity allowances, parliamentary elections, the referendum on EU accession and a census, Kosor noted.

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