Budgetary deficit at the end of June amounted to 2.27 billion kuna, 3.08 billion less than in the first half of 2005. Of the 3% of the budgetary deficit, 1.7% accounts for the central government, 1% for the Croatian Highways and the Croatian Roads companies and extra-budgetary funds, while 0.3% accounts for local self-government units. The budgetary deficit is expected to continue falling to 2.8% in 2007, 2.6% in 2008, and 2.4% of GDP in 2009.
Tax revenue, which makes up around 57% of budgetary revenue, grew by 12.5% in this year's first half, while contributions rose by 7.7%. The most important type of revenue, VAT revenue, rose by 11.4% or 1.6 billion to 16.16 billion.
Income tax revenue rose by 8.8%. Profit tax revenue went up by 30.6%, which is mostly the result of the cancellation of a one-time tax write-off during the first year of equipment purchase and the abolishment of dividend taxes. Revenue from excise duties grew by 280 million or 7.6%, and its structure changed. Since the start of this year, leaded petrol (Super 98) is no longer sold at gas stations, which has reduced excise tax revenue by 30 million. Data on the sale of cars indicate an increase in the sale of cars using diesel fuels, with excise taxes for diesel being lower than for unleaded petrol.
Issued guarantees in the first half of the year amounted to 256 million, of which 100 million were guarantees for the economy sector (mostly the shipbuilding industry and ironworks), 66 million were guarantees for the tourism, 62 million for agriculture, 28 million for local self-government units, and 10 million for transport.
Livelier economic activity is expected to result in a growth rate of some 5% this year and a growth rate of 4.5% next year. Budgetary revenue is expected to rise to 100.7 billion next year, 107 billion in 2008, and 114 billion in 2009.
Expenditure is expected to grow from 99.2 billion this year to 105 billion in 2007, 112 billion in 2008 and 119 billion in 2009. Subsidies are expected to remain at the same level, while expenditures for pensions are expected to increase by 6.3% next year and amount to 30.15 billion. Health costs are projected at 15.22 billion, or 9% more than this year. Interest-related expenditures are expected to rise by 500 million next year and amount to some 5 billion, while expenditures for salaries are projected at 26 billion, up 1.7 billion.
(1 EUR = 7.27 kuna)