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* Croatia cuts subsidies, investments, seeks more revenue
* Cuts part of EU budget monitoring
* Government now sees 2014 as sixth year without growth
By Zoran Radosavljevic
ZAGREB, April 17 Croatia will cut investments
and subsidies and raise excise on petrol and telecom operators
to reduce its budget deficit to meet European Commission
requirements, it said on Thursday.
The new measures should reduce the shortfall by some 1.3
billion kuna ($235 million), but Finance Minister Slavko Linic
acknowledged they would also stifle growth, which the
ex-Yugoslav economy last achieved 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
Commision 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.
Last month it revised the budget and cut the general budget
gap to 4.5 percent of gross domestic product from an earlier 5.7
percent target, but said it might not be enough. Brussels wants
Zagreb to bring the gap below three percent of GDP by the end of
The Social Democrat-led cabinet will now cut subsidies for
farmers and shipyard restructuring, as well as planned funds for
the state development bank, roadbuilding and business
incentives, altogether saving some 650 million kuna.
It also plans to boost revenues by more than 650 million
kuna through raising excise on petrol by about 0.2 kuna per
litre, and higher radio frequency fees for telecom operators.
"With these measures we will be in line with the
Commission's recommendations," said Prime Minister Zoran
"But in the longer run, the only solution is to cut
expenditures because even the acceptable deficit of 3 percent is
too high if you don't have growth," he said.
Croatia has suffered five recession years in a row, losing
more than 12 percent of output since 2008, and is the only EU
member unlikely to grow this year.
Analysts say Croatia's economy is largely unreformed, with
too much red tape, high tax bite, slow courts and an expensive
and inefficient public administration, which makes the country
an unattractive investment destination.
($1 = 5.5215 Croatian Kunas)
(Editing by Ruth Pitchford)