In the latest Press Release entitled Commentary on the Croatian Government’s Economic and Fiscal Policy Guidelines for the 2011-14 Period, Katarina Ott comments on the Guidelines adopted by the Government at its session on July 27, 2011.


Accession to the European Union has two effects on the general government budget of a new member state. A new member state is obligated to transfer a part of its revenue to the EU budget according to predefined criteria, while on the other hand it can draw funds from the EU budget. Harmonization of the tax and customs system with EU standards has also significant impact on the general government budget of a member state. From 2005 to 2009, the ten new member states observed drew from the EU budget more funds than they paid in, by an average amount of about 1.5% of GDP.


Petar Sopek in the Newsletter entitled Assessment of impact of accession to the EU on Croatian budget estimates that the expected impact of Croatian accession to the EU on the general government budget in the first full year of membership is negative, amounting to about -0.15% of the GDP. Considering the high deficit of the general government budget, Croatia should ensure good preparation for EU entry in order to maintain the level of the deficit below 3% of GDP. However, the good news is that Croatia should be a net recipient of funds from the EU budget in the amount of 0.83% of GDP in the first full year of membership.


In the Press Release entitled A New EU Budget for 2014-2020 Proposed, Marina Kesner- Škreb reports on the EU Budget Proposal for the next seven-year period.


Do the persons with higher incomes bear greater tax burdens than those with lower incomes? What is the contribution of different taxes to the overall tax burden for different income groups?

Ivica Urban in the Newsletter entitled Distribution of Tax Burden in Croatia presents preliminary results of research on the distribution of the tax burden in Croatia 2008, which is based on data from the Household Budget Survey of the Croatian Bureau of Statistics and covers the main groups of taxes – personal income tax with a surtax, value-added tax and excise taxes, whereby the social security contributions and broadcasting fee are also treated as taxes.


Mihaela Bronić in the Newsletter entitled Collected and Uncollected Taxes in Croatia and in the European Union explains that in the last few years, uncollected taxes have been much on the rise in Croatia and need to be incorporated into analyses for the sake of a more precise comparison with taxes in the EU.


In March 2011, 320,018 people drew disability pensions, that is, 27% of all pensioners. The shares of disability pensions in GDP and in total expenditures for pensions are higher in Croatia than the EU average. The objective of the Newsletter entitled Why are there so many disability pensions beneficiaries in Croatia? is to attempt to find out why there are so many beneficiaries of disability pensions in Croatia.

Marijana Bađun in the new Newsletter provides possible factors leading to the numbers of people with disability pensions like health indicators, conditions of work, socio-economic status, war, the regulations and corruption.


Institute of Public Finance organized the Conference Croatian Public Debt: Management and Challenges of Market Development on Friday, 8th April 2011. The goal of the Conference was to encourage argued discussions about the public debt, point out the necessity of developing transparent market and good practices of wise public debt management and incite the Government, the Parliament and the public to understand the significance of public debt for long-term development, sustainability and stability of Croatian financial system that will influence the development, sustainability and stability of the entire economic system.

The incentive for the Conference is the book Public Debt: Management and Challenges of Market Development by Anto Bajo, Marko Primorac and Ana Andabaka Badurina, published by the Institute of Public Finance in 2011.

All the presentations of the participants and other material is available on the Conference's web page.


In the new issue of the journal Financial Theory and Practice you can find some of the articles that have been competing for the annual prof. dr. Marijan Hanžeković Foundation award in 2010. Davor Kunovac won the prize in the regular category for the article Asymmetric correlations on the Croatian equity market. Rafael Ravnik and Ivan Žilić won the student prize for the article The use of SVAR analysis in determining the effects of fiscal shocks in Croatia. Besides the awarded articles, this issue of the journal contains the article by Vjekoslav Klaić Estimating the size of non-observed economy in Croatia using the MIMIC approach and Vuk Vuković's article Political economy of the US financial crisis 2007-2009, which took part in the student's cathegory.

The prof. dr. Marijan Hanžeković Foundation has published the competition for the annual award 2011. All the candidates' papers can be published in Financial Theory and practice if they are positively reviewed by the peer-reviewers.


Marina Kesner-Škreb and Ivana Jović in the Newsletter entitled Industrial Policy and State Aid in Croatia analyze state aid in the period 2002-09 and compare them with those in EU.


The Republic of Croatia is a fiscally centralised country with the lowest local unit debt in Europe and fairly restrictive borrowing criteria for local units. In order to be able to make high quality decisions concerning future borrowing, the finding of alternative sources of financing and a more realistic setting of criteria and budgetary constraints it is high time to draw up a unified review of the programmes of capital investments financed from central and local government budgets and of central and local government companies. The findings of the State Audit Office also indicate the need for such an approach. You can read more in the Newsletter written by Anto Bajo entitled Capital investment plans and local government debt in Croatia.


The Press Release entitled Public Debt Management in Croatia, brings a commentary by Anto Bajo and Marko Primorac on the Public Debt Management Strategy for the period 2011-2013, adopted by the Government at its session on February 10, 2011.



The Professor Dr Marijan Hanžeković Foundation announces its competition for the award of the annual prize for 2011. Papers, in Croatian or in English, must be submitted by June 1, 2011 at the latest.


Articles and review articles from the domain of public sector economics can be entered for the competition. Also acceptable are applied and theoretical research papers oriented to a broader group of economic topics, such as economic growth and development, the role of institutions, the transition to a market economy and European integration. Empirical analysis should be connected with the experiences of the countries of Central, Eastern and South-Eastern Europe, but does not have to be restricted to them. All papers on economic, legal and institutional topics related to the development of Croatia will be considered particularly worthwhile.


All the details regarding the competition can be found on Foundation webpage.



Anto Bajo and Marko Primorac in Newsletter entitled The Financial Operations of Local Utility Companies in Croatia presented the financial operations of the local government-owned utility firms in Croatia and to draw attention to the problems of liquidity and high liabilities in some counties, problems that are capable of bringing about a rise in the prices of local public services. This preliminary analysis is based on data from the financial reports (profit and loss accounts and balance sheets) of the utility firms that in 2008 and 2009 were published by the Financial Agency. Population estimates were drawn from figures of the Croatian Bureau of Statistics. 


The new edition of the journal Financial Theory and Practice contains articles by Ruben Atoyan Beyond the crisis: revisiting emerging Europe’s growth model and Gancho Todorov Ganchev The twin deficit hypothesis: the case of Bulgaria. The papers were presented at the Conference Finance and Growth in Central and Eastern Europe in Zagreb, held on 29th and 30th April 2010, organized by the Institute of Public Finance and Friedrich Ebert Stiftung. The new issue also contains the articles by Anto Bajo and Marko Primorac Local government borrowing practice in Croatia and Bruno Ćorić Investments and capital market imperfections, identification issues: a survey. In the Public Finance Glossary, Marina Kesner Škreb explains the term Economic and social cohesion of the European Union.


In the Press Release entitled How Easy Is It to Pay Taxes in Croatia?, Mihaela Bronić presents the scores on the ease of tax payment, published within the WB's Doing Business Project on  November 4,  2010.


In the Press Release Marijana Bađun and Ivica Urban comment on Croatia's score on Open Budget Index 2010, published by the International Budget Partnership, Washington, on October 19, 2010.   


In the Press Release entitled Companies of Special National Interest in Croatia Anto Bajo comments on the Report on the Operations of Companies of Special National Interest for 2009, which is on the parliamentary agenda, the first time in history for such a report.   


In the Press Release - Commentary on the Economic and Fiscal Policy Guidelines for the Period 2011-2013, Katarina Ott comments on the Guidelines the Government adopted at its session of October 6, 2010.


We are happy to inform you that our publications will be available for purchase in our web-shop. All you have to do is register and choose the titles from our offer. We offer the possibility of paying by credit card, credit transfer or cash on delivery.
You can use this opportunity to buy the selected titles for prices reduced up to 50% until the end of the year, without paying for the postage.


In the Press Release entitled What Is Expected from New Excise Duty Regulations in Croatia? Danijela Kuliš comments on the new Regulations adopted by the Croatian Government at its session of August 24, 2010.


The third issue of Financial Theory and Practice published articles Properly pricing country risk: a model for pricing long-term fundamental risk applied to central and eastern European countries by Debora Revoltella, Fabio Mucci and Dubravko Mihaljek; The efficiency of emerging Europe’s banking sector before and after the recent economic crisis by George Anayiotos, Hovhannes Toroyan and Athanasios Vamvakidis; Determinants of small and medium sized fast growing enterprises in central and eastern Europe: a panel data analysis by Miroslav Mateev and Yanko Anastasov; and The effect of market power on bank risk taking in Turkey by Elmas Yaldιz and Flavio Bazzana. In Public Finance Glossary Marina Kesner-Škreb explains Employment policy in the European Union.

All published articles were presented at the conference Finance and Growth in Central and Eastern Europe, organized by the Institute of Public Finance and the Friedrich Ebert Foundation, in Zagreb on April 29 and 30, 2010.


According to figures from the International Labour Organisation (ILO), in 2008 Croatian general government employed 17% of all people in work, while the average of other countries was 19%. In the same year, 12.5% of all employed people worked in Croatian public corporations, while the average in other countries was 6.2%. In 2008 compensation of employees in Croatian general government came to 9.8% of GDP, which is lower than the average of other countries, which came to 11.2%. But because of the various problems related to the definition and scope of the public sector, particularly of public corporations, figures from international comparisons need to be treated with circumspection. You can read more in the Newsletter written by Predrag Bejaković, Vjekoslav Bratić and Goran Vukšić entitled Employment in the Public Sector: International Comparisons.


In the 1999 to 2009 period, Croatia did not pass a single year without a revision of the central government budget – in these 11 years, there were 14 revisions. Almost always, they involved augmented expenditures – both in years in which revenue rose and at times when it declined. An exception came in 2009, when both revenue and expenditure were cut, if expenditure to a much smaller extent than revenue. In every revision except in 2009, particularly in years in which there were general elections, expenditures for employees and welfare payments rose. The overfrequent revisions indicate the need to create mechanisms for the planning of a longer-term and more trustworthy fiscal policy. You can read more about revisionss in the Newsletter written by Katarina Ott and Dunja Beš entitled A Short History of the Revisions of the Croatian Central Government Budget from 1999 to 2009.


Predrag Bejaković in the Press Release entitled Does it pay to stay longer in the world of labour? comments on the changes to the Retirement Insurance Law that the Government of Croatia in session on July 29, 2010, sent to the Parliament.


In the Press Release entitled Croatian Pension System and the Economic Crisis, Marijana Bađun summarises the situation in the Croatian pension system based on the data from the latest Croatian Pension Insurance Agency's publications of 16 July 2010.


The student association eSTUDENT organized a Case study competition 2010 that was held from January until May 2010. Many successful Croatian enterprises and institutions took part in the competition. This year the Institute of Public finance supported the competition too.

The students were faced with business problems which had to be solved in the best possible way, with the help from the mentors from the enterprises/institutions and faculties. The Institute of Public Finance asked the students to research the transparency of the local budgets for the 33 biggest Croatian cities, primarily using the information available on the Internet. We were interested in finding out how have the information on local budgets been presented to the public. Are they available to the citizens? Are they comprehensible for the readers? Are they accurate and timely? One of the assignments for the students was to rank the cities according to the transparency of their local budgets and recommend what can be done in order to help the public in better understanding of the local budget information.

We were most pleasantly surprised by the quality of the students’ works. It was a close call, and in the end the winners were Goran Luburić and Domagoj Kunštek. The students found that the most transparent information about the cities’ budgets were available in Kutina and Rijeka. The cities with the least transparent budgets were Vinkovci, Vrbovec and Makarska. The students also suggested what could be done to improve the level of understanding about the local budgets – the laws should prescribe the unified contents of the local budgetary documents which should be available on the official Internet pages of every city, easily accessible from the main page. Of course, this suggestion should be followed by the obligation for every local unit to have an official Internet page.


The effects of recession in 2009, together with a late fiscal policy reaction, led to a Croatian general government budget deficit of 11 billion kuna. Financing this deficit and other liabilities by new borrowing resulted in a public debt increase of 18% from 2008 to end-2009. Especially concerning might be the public debt denominated in foreign currencies which increased by 36% in only a year. You can read more about Budget deficit and public debt in Croatia in Newsletter written by Petar Sopek.


The Financial Theory and Practice published articles How hard does the tax bite hurt? Croatian vs. European worker by Ana Grdović Gnip and Iva Tomić; Do countries catch cold when trading partners sneeze? Evidence from spillovers in the Baltics by Kingsley I. Obiora; Direct pollution cost assessment of cruising tourism in the Croatian Adriatic by Hrvoje Carić; and Employment of the project finance model in the supply of residential and commercial premises by Damir Juričić and Damir Brajković. In Public Finance Glossary Marina Kesner-Škreb explains Taxation policy in the European Union.



The Institute of Public Finance and the Friedrich Ebert Stiftung have organized an international scientific conference on Finance and Growth in Central and Eastern Europe which was held in Zagreb, April 29-30, 2010. The discussed topics have covered areas such as financial crises, banking sector efficiency, financial integration, and economic growth. Fourteen papers were presented at the conference, by authors arriving from various European universities and international institutions. List of papers presented at the conference and their abstracts can be found here.

Our special guest and invited lecturer, Professor Fabrizio Coricelli from University Paris 1 Panthéon-Sorbonne (France), has presented his research on the implications of the global financial crisis for emerging European markets.

A thematic issue of the journal Financial Theory and Practice containing selected conference papers will be published later this year.


In the Press Release entitled Which Government to Trust? Katarina Ott comments on the “Economic Recovery Programme” presented by the Government on April 19, in the context of “Guidelines for Aid to Ailing Companies” of April 15.


Institute of Public Finance and Friedrich Ebert Stiftung have published the new edition of The Citizens' Guide to the Budget. The Citizens' Guide assists the citizens to learn about their rights and possibilities in the budget watch but also to find out what their obligations to the state are. The Guide encourages the citizens to join and actively participate in the budgetary process, to communicate with the authorities, to ask questions, to demand the important information about the budget to be published and publicly discussed before adopting budgets. The Guide can be useful to the representatives of legislative and executive branches of government, NGOs, academic community, students, media and, of course, the citizens.


In this Press Release entitled A Reversal of State Aid Trends in Croatia and EU, Marina Kesner-Škreb comments on the Croatian Competition Agency’s Annual Report on State Aid for 2008 which was discussed in the Parliament on February 24, 2010.