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Parliament debates last year's budget

ZAGREB, June 21 (Hina) - The state budge for 2006 saw order restored in public finances, the settlement of all liabilities, a faster economic growth, and cuts in deficit and unemployment, Finance Minister Ivan Suker said in parliament on Thursday submitting a draft annual account of last year's budget.
ZAGREB, June 21 (Hina) - The state budge for 2006 saw order restored in public finances, the settlement of all liabilities, a faster economic growth, and cuts in deficit and unemployment, Finance Minister Ivan Suker said in parliament on Thursday submitting a draft annual account of last year's budget.

Suker said economic growth in 2006 was 4.8%, 0.5 percentage points above 2005, and between 5.2 and 5.3% in this year's first three months.

He said industrial output in 2006 went up 4.5%, and 8.1% in this year's first five months, with last year's deficit accounting for 3% of GDP. Projections for this year include reducing the deficit to 2.8%, or even lower through a revision of this year's budget.

The minister said that last year the public debt's share in GDP was reduced by 2.7% for the first time, while the collection of tax revenue was up 15.3%.

The unemployment rate was 12.3% in 2005 and 10.5% in the last half of 2006.

Suker said that last year the government increased funds for an equal development of all Croatian regions, notably islands, formerly war-struck areas, and mountain areas.

More was invested in education, science and the judiciary, with 147 million kuna set aside for the Justice Ministry to crack down on corruption.

More funds were also set aside for pensions, health and welfare - 47.2 billion kuna against 37.7 billion earmarked in 2003.

Suker said that last year five billion kuna was set aside for war veterans and victims, and that 550 million kuna more than in 2003 was invested in defence.

In the ensuing debate, the ruling Croatian Democratic Union (HDZ) highlighted positive macroeconomic indicators and faster economic growth, whereas the opposition claimed that much more could and should have been done.

The opposition claimed that the previous coalition government's legacy to the incumbent government were positive economic trends and conditions for a more favourable development of Croatia. The HDZ countered by saying that disorderly public finances, high inflation and unemployment, concealed debts and outstanding liabilities were not favourable conditions.

Dragica Zgrebec of the Social Democrats (SDP) said the EUR 27 billion external debt made Croatia the most indebted European country in transition and that the internal debt, twice the amount in 2003, and growing illiquidity slowed down the state's development.

Damir Kajin of the Istrian Democratic Party (IDS) cited central bank figures indicating that Croatia must set aside about US$ 30 billion annually to service its debt.

Zeljko Pecek of the Peasant Party (HSS) criticised the government for setting aside insufficient funds for irrigation, regional development and shipbuilding, and especially for its agricultural policy and the unsuccessful crackdown on corruption.

Jozo Rados of the People's Party (HNS) criticised the government for increasing imports to the detriment of exports, low pensions and the lack of state administration reform. He underlined that the exploitation of EU financial assistance was only 15%.

(EUR 1 = 7.3 kuna)

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