The budget deficit as at June 30 this year amounted to 0.9 per cent of Gross Domestic Product, which was a whole percentage point less than at the same time last year.
The ministry said that the deficit reduction was a result of a significant increase in revenue in the first half of the year.
Budget revenue reached 45.3 billion kuna, increasing 11.4 per cent from the same period last year. This was the result of accelerated economic activity, as evidenced by all macroeconomic factors, including a GDP growth of 6 per cent in the first quarter, the more effective work of the Tax Authority, and a crackdown on the grey economy.
Revenues from value added tax and profit tax saw the highest growth rates.
At the same time, budget expenditure amounted to 47.4 billion kuna, which was an increase of 5.4 per cent over the same period last year. The ministry said that this was partly due to trends in business expenditures, which rose 5.4 per cent compared to last year as a result of increases in wages and social contributions.
Fiscal policy guided by strong fiscal consolidation and the saving of surplus revenue is successfully achieving its goal of fiscal deficit reduction. Deficit reduction and the continued focus on domestic borrowing will contribute to stabilisation and hence to the reduction of foreign borrowing, the ministry said.
(1 euro = 7.2 kuna)