Croatia adopts 2013 budget

(ZAGREB) - Croatian lawmakers on Tuesday adopted a budget for 2013 based on a wider deficit of 3.1 percent of output and a forecast of a 1.8 percent growth in the recession-hit economy.

The centre-left government of Prime Minister Zoran Milanovic said the increase in deficit, up from this year's projected 2.9 percent of gross domestic product, was due to higher debt payments, restructuring costs for the country's ailing shipyards and Zagreb's contribution to the EU budget, that it is set to join next July.

The 2013 budget puts spending at 124.5 billion kunas (16.5 billion euros, $21.6 billion) and revenues at 113.7 billion kunas.

Finance Minister Slavko Linic told lawmakers last week that the budget would "fight to maintain and increase jobs ... not through public and private spending but through investments."

The budget was backed by 83 MPs of those present in the 151-seat parliament. Six deputies voted against and six abstained.

The economy of the former Yugoslav republic of 4.4 million inhabitants, where unemployment is over 19 percent, has not seen growth since 2009 and contracted by 1.9 percent in the third quarter of this year compared to the same period of 2011.

Ratings agency Fitch in November revised Croatia's credit outlook from stable to negative after the government announced the wider budget deficit for 2013.

Economists say the government needs to reform the country's huge and inefficient public sector and improve the overall business climate.

Croatia is set to join the EU on July 1, 2013.