January 1, 2018 / 7:22 PM / in 2 years

Croatia sees first budget surplus in 2017: finance minister

ZAGREB (Reuters) - Croatia is likely to post its first general budget surplus in 2017, Finance Minister Zdravko Maric said on Monday.

FILE PHOTO: Croatia's Minister of Finance Zdravko Maric is seen at the government building in Zagreb, Croatia May 4, 2017. REUTERS/Antonio Bronic

“The official statistical data will be released later on, in the spring but, according to our current data, Croatia has recorded a general budget surplus for last year,” Maric said in an interview for the state television.

The government’s previous forecast was for a deficit of 0.6 percent of gross domestic product.

“It is certainly the first time that we have ever had a general budget surplus since we have used European Union methodology, but to my knowledge it is also the first such case since Croatia became independent (in 1991),” Maric said.

Croatia joined the EU in 2013.

Maric said the surplus was the result of higher revenues from an excellent tourist season and improved tax collection.

He said public debt at the end of 2017 was now forecast to be 78 percent of GDP instead of 80 percent.

At the end of 2016, public debt was close to 83 percent of GDP, and reducing it is a priority for Croatia as it wants to adopt the euro within seven or eight years.

The budget plan approved in November foresees a budget deficit of 0.5 percent of GDP in 2018, a balanced budget in 2019 and a surplus of 0.8 percent in 2020.

Strong fiscal consolidation in the last three years has helped to reduce the fiscal gap from more than 5 percent of GDP.

However, some analysts say the budget is still overly reliant on better revenues, and that expenditure needs to be cut harder.

Many cite the need to slim down a costly public sector as a key to improving the investment climate and growth prospects.

Economic growth is currently around 3 percent, but many analysts say that, without reforms, it will be hard to maintain growth above 2 percent in the longer term.

Reporting by Igor Ilic; Editing by Kevin Liffey

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