| |
Wednesday,2nd Decembre,2009.
Reuters:analyst comments
The Croatian parliament adopted a 2010 budget
-Budget has lower gap at 2.5 pct of GDP,
-Analysts say no real reforms in sight
-Some 550 mln euros earmarked for EU adjustment
ZAGREB, Dec 2 (Reuters) - The Croatian parliament adopted a 2010 budget on Wednesday which analysts said signalled little will to tackle vital economic reforms before joining the European Union, expected in 2012.
The government cut the planned deficit to 2.5 percent of gross domestic product, or 8.6 billion kuna ($1.77 billion), from 3 percent expected this year.It will also need to find some 2 billion euros ($3.01 billion) to finance debt maturing in 2010.
Next year's spending will remain virtually flat based on an assumption of 0.5 percent economic growth, which analysts said was too optimistic after this year's expected contraction of between 5 and 6 percent. For the first time, the government has earmarked some 550 million euros for adjustments needed for joining the EU. Croatia hopes to conclude accession talks next year
However, analysts said that Prime Minister Jadranka Kosor, who has won praise for tackling widespread corruption since she took office in July, had failed to cut public spending as much as she had earlier promised.
They also said the government's macroeconomic assumptions were too optimistic as there were few indications of an early recovery from recession.
"In a climate of falling consumption and gross domestic product, the government expects a 5.4 percent increase in revenue from value added tax, which is unrealistic," the Nacional political weekly wrote.
Furthermore, the budget shows that Kosor is not planning to start reforms needed to leave behind our long economic and social crisis," it said.
|
|
REFORMS ON BACKBURNER?
Reforms recommended by economists include an overhaul of welfare policy and better targeting of welfare funds, lower subsidies to firms, farmers and shipyards, lower public administration costs and a reduction in the number of municipalities, many of which are unable to finance themselves.
"Without an indication of any concrete reforms, it was difficult to expect different budget figures," said Zdeslav Santic of Splitska Banka, a local unit of Societe Generale.
Analysts said it would be hard for the government to stick to the budget. |
"It will be a success if spending remains within target, but there will be pressures because we expect higher unemployment, more welfare, more subsidies to companies because of recession. We can realistically expect a corrective budget next year, which will hopefully include the price of some reforms," Santic said.
An analyst at a major local bank, who asked not to be named, said Kosor had put together a solid economic team, including former finance minister Borislav Skegro and Sandra Svaljek of the Zagreb Institute of Economics, but it was unclear to what extend the government would heed their advice.
It is particularly worrying that there is no word about the shipyards, whose debt the government will have to pay back," the analyst said.
The EU requires Croatia to sell off its six heavily subsidised shipyards, five of which have been accumulating losses for years. The first attempt fell through amid little investor interest in September. A new round is expected soon.
Reporting by Zoran Radosavljevic, Editing by Paul Taylor
|
| |
|
|
 |
|
|
