Zagreb - Prime Minister Andrej Plenković presented the proposed 2023 budget to Parliament on Wednesday, saying that the government's measures will make Croatia even more resilient to crises.
"We are about to join the Schengen area and the euro area, the state is functioning well, and we will continue intervening. We will be more resilient to crises than we have been before," Plenković said while presenting his seventh budget.
He said that next year's budget will play three roles: as a government instrument to mitigate the impact of the crisis, as an anchor safeguarding growth and increasing competitiveness, and as a redistribution tool to achieve social cohesion and prevent social fracture.
"It will be the first budget of Croatia as a member of the euro area and the Schengen Area and the first one to be presented in euro," the prime minister said, adding that the 2023 budget also has elements of a crisis budget aimed at slowing down inflation, which is expected to drop to 6% next year.
Plenković said that the government's priority is to use €25 billion from EU funds for this decade of development, noting that the difference between Croatian contributions to the EU budget and receipts from it is HRK 70 billion (€9.3bn) in Croatia's favour.
Despite the negative global trends and the expected slowing of the world economy, the Croatian economy is forecast to grow at a rate of 0.7% in 2023, 2.7% in 2024 and 2.6% in 2025, the PM said.
The government aims to maintain the standard of living, continue increasing the minimum wage, the average monthly wage and pensions, continue demographic support, and combat inflation. The inflation rate for this year is projected at 10.4%.
Plenković said that the 2023 budget would increase the competitiveness of the national economy, provide care for the most vulnerable social groups, ensure greater investment in pensions, and increase funding for post-earthquake reconstruction and defence.
Fine balancing
Finance Minister Marko Primorac said that the budget proposal was made amid a growth slowdown and increased inflationary pressure, which was why it was important to ensure "fine balancing" between the budget items that would sustain growth without spurring inflation.
Under such circumstances, with revenues forecast at €24.9 billion and expenditure at €26.7 billion and with a deficit of €1.8 billion, or 2.3% of GDP, the proposed budget is reasonable and will not increase inflationary pressure through increased government spending, Primorac said.
About a hundred MPs have requested the floor, which indicates that the discussion will last long into the night.