Economic and Fiscal Policy Guidelines for the period 2010-2012

Economic and Fiscal Policy Guidelines are a fundamental document of the Croatian Government, defining the fiscal policy direction in the forthcoming three-year period.

So far, the Guidelines have represented the first step in the State budget planning process by providing economic and fiscal assumptions on which further State budget preparation rests. By applying the new Budget Act, the Guidelines have been produced, for the first time, by taking into account the Strategy of the Government programmes for the period 2010-2012 which was adopted by the Government at its session held on 10 September 2009.

Through the Strategy of the Government programmes in the strategic planning process, the Government has identified the most important goals, that is, it has determined the priorities. These Guidelines establish a stronger link between the mentioned priorities and the Budget, and it places the strategic planning within the three-year budget framework.

Economic and Fiscal Policy Guidelines contain strategic economic and fiscal policy goals of the Republic of Croatia, basic macroeconomic indicators, basic indicators of fiscal policy, estimation of revenues and expenses and of receipts and expenditures of all the general government budget levels, financial plan proposals for budgetary users for next three years, as well as anticipated changes in the public debt and its management strategy.

Basic macroeconomic assumptions defined by this year's Guidelines are the real decrease in gross domestic product of 5.0% in 2009 and the slight increase of 0.5% in 2010, 3.0% in 2011 and 3.5% in 2012. At the same time, the inflation at the level of 3% is expected throughout the whole observed period.

Considering the projections of economic activity and the effects of impacts of the legislative measures adopted in July 2009, the increase in total revenues of the State budget is projected at the rate of 1.7% in 2010, 2.2% in 2011 and 5.0% in 2012. On the other hand, total State Budget expenditures in 2010 are brought down to the level slightly below the 2009 plan. In 2011, it will increase by 2.2% and in 2012 by 2.4%.

In accordance with the aforementioned, the total general government budget deficit will decrease from 2.9% of GDP in 2009 to 2.3% of GDP in 2010. In 2011, it will register the level of 2.2% of GDP, and in 2012, 1.4% of GDP.

Fiscal policy defined by these Guidelines will insure the stability in current altered economic conditions and will lay foundations for the recovery of economic growth in the forthcoming period.

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