Croatian Govt Spending Risks Budget Deficit Hike

As the Croatian government prepares to spend more on 1990s war veterans, as well as purchasing 12 military jets and covering debts in the health sector, it risks increasing the country's budget deficit, experts warned.

"This is the wrong direction for the government's economic and fiscal policy," economic analyst Damir Novotny told BIRN, saying that there is a risk of increasing the budget deficit "if ministers play with public money".

Croatia lowered its budget deficit from 3.4 per cent GDP in 2015 to only 0.8 per cent in 2016, and in June this year, it was able to leave the EU's excessive budget deficit procedure - a series of correctional measures which were imposed on Croatia from January 2014.

Although Novotny noted "positive trends in state finances", he said he was not sure that increases in public spending should be made to finance concessions to war veterans or the purchase of military jets.

"This type of public spending has no [positive] implications on the economic growth," he said.

Public spending would be beneficial for the economy if it strengthened state-owned companies and companies in general, Novotny argued.

"The government should have invested some money in research and the development of companies," he said.

The government has said that it will the tenders for the fighter jets not only according to the price - estimated between 500 million and one billion euros - but also according to the opportunities to enhance economic cooperation with the country that is selling them.

Political analyst Zarko Puhovski said that he believed that the war veterans were being rewarded financially by the authorities because they helped the centre-right Croatian Democratic Union, HDZ come to power.

"In this...