Data on budget execution in the first 11 months of the year showed that revenues were 2.5 per cent above plan and expenditures 1.2 per cent below plan, so the deficit at the end of November amounted to HRK 7.78 billion and will be about HRK 9.98 billion at the end of the year, as planned.
Although the government has not managed to save as much as planned on salaries and interest expenses because of the shipbuilding industry, HRK 4 billion has been saved through other expenditure cuts, which represents strong consolidation in expenditures, the ministry said.
Material expenses have been cut by HRK 1.2 billion so far and the annual cut will be about ten per cent. Subventions have been cut by HRK 700 million and travel expenses by 25 per cent to a little over HRK 30 million.
The ministry said this was the first time since the crisis broke out that material expenses had been so reduced and that only salary cuts had failed, adding that centralised salary accounting as of January 1 would bring order to this segment as well.
Despite the economic downturn, revenues are bigger than planned, mainly thanks to a better collection of contributions of nearly HRK 1 billion and an 8.2 per cent VAT revenue growth since the general rate was raised from 23 to 25 per cent.
Revenues from excise taxes have dropped 2.2 per cent, including those on cars, which have plummeted 18.8 per cent, and those on oil products, which have fallen five per cent.
Revenues from contributions have declined 1.4 per cent, of which those for health insurance have dropped 4.9 per cent. Revenues from pension insurance have gone up 1.5 per cent and employment contributions by 2.1 per cent. Revenues from concessions have surged 74.8 per cent.
The Finance Ministry reiterated that it had tried to relieve the tax burden on the economy this year through a series of measures by shifting it from production to spending, which significantly reduced state and personal consumption. Since there have been no investments, GDP will contract between 1.5 and two per cent this year.
The ministry said household budgets had mainly gone up because of higher energy and utility prices and not the higher VAT because the prices of food, clothing and other necessities had remained approximately the same.
The ministry expects fuel prices to drop soon, notably gas because of the arrival of a new supplier.
(EUR 1 = HRK 7.5)