ZAGREB, April 17 Croatia cut its economic growth forecast for 2014 to zero from 0.2 percent on Thursday and squeezed the budget by cutting investments and subsidies and raising taxes.
The new measures should reduce the budget shortfall by some 1.3 billion kuna ($235 million), but Finance Minister Slavko Linic acknowledged they would also stifle growth, which the ex-Yugoslav republic last had in 2008.
"The measures should not affect consumption by households and companies, but they will impact the economy and the GDP. We have therefore cut our forecast from 0.2 percent to zero, which means further stagnation," Linic told a cabinet session.
Croatia, which joined the EU last July, must present to the Comission by the end of April measures to cut the gap in line with the bloc's Excessive Deficit Procedure (EDP), a tool to impose fiscal discipline in budget offending member states.
(Reporting by Zoran Radosavljevic; Editing by Ruth Pitchford)