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Figures on execution of budget testify to positive economic trends - minister

ZAGREB, Oct 14 (Hina) - A 7.3 per cent budget revenue growth, a 5.1 percent GDP growth, a growth of exports and tax revenue, and a 4.7 percent growth in industrial production testify to positive economictrends in Croatia, Finance Minister Ivan Suker said in parliament onFriday.
ZAGREB, Oct 14 (Hina) - A 7.3 per cent budget revenue growth, a 5.1 per cent GDP growth, a growth of exports and tax revenue, and a 4.7 per cent growth in industrial production testify to positive economic trends in Croatia, Finance Minister Ivan Suker said in parliament on Friday.

Presenting a report on the execution of the national budget in this year's first half, Suker said that despite a problematic economic growth and a slow inflow of money into the budget in this year's first three months, the situation in the second quarter, and notably in July, August and September, was completely different.

Budget revenue in this year's first six months went up 7.3 per cent from the corresponding time in 2004, while in the three summer months budget revenue went up 11 per cent from last year.

As much as 99.4 per cent of income tax revenue has been collected, profit tax revenue in the second quarter went up 33.7 per cent from the same time in 2004, while VAT revenue was up 4.8 per cent.

Suker said that although GDP growth in this year's first quarter had slowed down, in the second quarter it was 5.1 per cent, the highest since 2001.

Industrial output in the first half of the year went up 4.7 per cent, exports went up 13.3 per cent, with the exclusion of shipbuilding, imports went up nine per cent, while inflation stayed at three per cent despite the growth in oil prices.

The external debt at the end of June was EUR24.2 billion, which the minister said showed the external debt growth was considerably slower than in 2004 and especially 2003.

The opposition did not share Suker's optimism, saying the growing national deficit, increasingly growing illiquidity and lack of investment did not corroborate the government's claims about Croatia's economic development.

Discussing the report, the opposition clubs of deputies said the minister's claims were unrealistic, that citizens were becoming increasingly poor and the economy increasingly undeveloped.

Slavko Linic of the Social Democrats (SDP) said 4.8 billion kuna was spent in this year's first six months instead of the planned 3.2 billion.

He said expenditure was growing faster than revenue, that the deficit was growing based on spending and not investment or development projects and that the government incurred 11 billion kuna in debts.

Linic said the government was making the state insolvent because it did not pay contracts signed with entrepreneurs and it allowed prices to grow to the increasing detriment of living standards.

Zeljko Pecek of the Peasant Party (HSS) pointed to lack of subsidies in the economy and agriculture, falling living standards and Croatia's excessive indebtedness.

Miroslav Rozic of the Party of Rights (HSP) said foreign indebtedness was not slowing down.

Milorad Pupovac of the Independent Democratic Serb Party said insufficient budgetary funds had been allocated to areas of special state interest, which he added were barely surviving.

The finance minister dismissed the objections, saying Croatia did not have an insolvency problem and that solvency was the highest in the last 10 years.

He said the deficit was reduced to 4.2 per cent, and that in this year's first six months investments grew 3.2 and GDP 5.1 per cent.

Suker also dismissed accusations that the government was not paying entrepreneurs and that it had incurred 11 billion kuna in new debts. He said the government had borrowed about five billion kuna for the Croatian Highways company and the central government.

(EUR1 = 7.4 kuna)

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