20th Position Paper of the Fiscal Policy Commission on the Draft Budgetary Plan of the Republic of Croatia for 2023
At its 15th session held on 24 October 2022, the Fiscal Policy Commission (hereinafter: the Commission) examined the Draft Budgetary Plan of the Republic of Croatia for 2023 (hereinafter: the Draft) which was adopted by the Government of the Republic of Croatia (hereinafter: the Government) at its 159th session held on 19 October 2022.
The Fiscal Policy Commission evaluated the first Draft Budgetary Plan of the Republic of Croatia for 2023. Considering the current global circumstances and 2023 being characterized by a pronounced economic uncertainty and high geopolitical risks, it is appropriate to continue the former practice of conservative budget planning. After a strong recovery and growth in 2021 and the first half of 2022, the prospects for 2023 are less favourable. This creates an uncertain framework for econom
ic and fiscal policy and could necessitate its adaptability. In such circumstances, the main task of fiscal policy will be to mitigate the effect of external shocks on the Croatian economy and help the most vulnerable groups which will be most affected by those shocks. Because of the economic slowdown, cyclical general budget income will grow at a slower pace, while the growth of the general budget expenditure will depend on intensified investment spending related to EU-funds, which represents the main lever of countercyclical action. Therefore, the Commission highlights the need to prepare, as realistically as possible, as many quality and sustainable investment projects as possible. The Commission repeats its warning about certain challenges in the existing capacities and the key stakeholders’ readiness to undertake the necessary structural reforms within the framework of the overall public sector (especially in healthcare and public administration, but also in the other sectors).