New law on fiscal responsibility to introduce 3 new rules

New law on fiscal responsibility to introduce 3 new rules

New law on fiscal responsibility to introduce 3 new rules Izvor: Morgue File (Ilustracija)

The government on Thursday put forward to the parliament a new draft bill on fiscal responsibility introducing three new rules: structural balance, budget expenditure and public debt.

The first Croatian law on fiscal responsibility was adopted in 2010, and it was amended upon Croatia's admission to the European Union in mid-2013.

The new draft act is fully adjusted to the obligations stemming from the Stability and Growth Pact.

The Stability and Growth Pact is an agreement among the 28 EU states to maintain the stability of the Economic and Monetary Union (EMU).

Under the Pact, the European Commission and the Council of Ministers monitor the members and issue annual recommendations for policy actions.

The new law will implement everything we have experienced over the past years, Finance Minister Zdravko Maric said.

The first rule refers to structural balance whereby the targeted value becomes a medium-term budgetary objective.

The second rule regulates budget expenditure, and general government budget expenditure growth must not exceed a referential potential growth rate of the country's economy.

The third rule does not allow public debt to exceed 60 percent of the country's GDP. At the end of Q1 2018, Croatia’s public debt stood at 76.2 percent of GDP.

The government also said it was fully committed to improving the independence of the Fiscal Policy Commission, whose main task is to evaluate the implementation of fiscal rules.

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