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Zagreb - Finance Minister Zdravko Marić reiterated on Wednesday that the budget revision was not primarily related to COVID-19 but to the problems in healthcare and settling debts to drug wholesalers after all the legal possibilities of resolving that through budget reallocation had been exhausted.
Hence the major part of the proposed increase in expenditure will go to the health sector, with an additional HRK 2.8 billion secured for that, Marić said in Parliament.
"We will settle existing liabilities but the problem is new debts that are incurred from month to month, which cause additional pressure," he said, reiterating that a significant step needs to be taken on the expenditure side in the health sector.
The budget revision secures an additional HRK 2 billion for job keeping and shorter working week measures too.
Marić said that more than HRK 11 billion has been paid out to date for job keeping measures and shorter working weeks, and for fixed costs of businesses affected by the corona crisis.
The revision ensures an additional HRK 800 million for public and state servants' salaries with the base wage increasing by 4% as of the beginning of the year.
Over the past four years, the government has increased the base wage for public and state servants by 18.4%, and by more than 20% for some sectors such as education and health.
However, some public services have filed legal proceedings and Marić said that he cannot be certain that these increases will be sufficient.
The revision also ensures an additional HRK 250 million to co-finance European projects and Marić announced support from some sectors such as the event industry, temporary transport, travel agencies with HRK 150 million allocated for that purpose, which should help them overcome hardships.
Gov't stands by its forecast of 5.2% growth in 2021
The government stands by its forecast that GDP will increase by 5.2% this year and 6.7% in 2022.
The budget revision foresees an increase in total revenue of HRK 3 billion to HRK 150.3 billion while expenditure will increase by HRK 9.4 billion to HRK 167.4 billion.
The revenue side increase can mostly be attributed to aid of HRK 4.1 billion, with the majority of this referring to EU funds while tax revenue and contributions will increase by HRK 750.9 million (HRK 336.7 million taxes and HRK 414 million in contributions).
It is estimated that the budget deficit with the revised budget will increase from the initially planned 2.9% to 3.8% of GDP.
The share of public debt to GDP is set to decrease from last year's 88.7% to 86.6%.
"This revision and fiscal policy will keep us in the zone of financial and fiscal security. I hope, and it is our responsibility to continue pursuing this policy," said Marić.
(€1 = HRK 7.493408)