Macroeconomic Forecast Croatia

April 2005 | Macroeconomic Forecasts

The 2004 budget deficit is likely to come in around 4.8-4.9% of GDP, overshooting the official 4.5% of GDP target. While the overshoot was blamed on problems with collection of VAT and excise taxes, a recent World Bank report underlines that social spending remains too high, imposing a heavy burden on the state and perpetuating the misallocation of resources. In the short term, the failure to meet 2004's target throws doubt upon the government's ability to meet the 3.7% deficit limit set for 2005, still less the 3.0% ceiling next year.

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