The expenditures are being conducted at a slower pace than planned, which confirms that the budget will not need any revision for the first time after several years with revised budgets, Finance Minister Martina Dalic said at a government meeting from which the cabinet of Prime Minister Jadranka Kosor sent to the parliament a report on the implementation of the state budget in H1 2011.

PM Kosor highlighted the fact that the budget would not be changed this year which is an election year.

She recalled that state spending was frozen to last year's level and that the law on fiscal responsibility had been adopted.

Minister Dalic said that the H1 2011 revenues, in the amount of HRK 51.3 billion, were lower by 1.4% than in H1 2010.

Commenting on the lower revenues in H1 2011, she recalled that the so-called crisis tax had been abolished in the meantime and that in 2010, effects were produced by the one-off payment of INA's debt and higher income tax rates.

According to the minister, the collection of revenues in the first half of this year compensated for those differences and trends in revenues collection signal economic recovery.

Although lower tax rates are now in effect, revenues from the income tax increased 5.4% in the first half of this year as against H1 2010. Revenues from VAT went up 1.8% and revenues from profit tax were higher by 15.5%.

Expenditures in H1 2011 totalled HRK 59.9 billion, making up 49% of the plan for state spending for the entire year.

As a result, the state budget gap in H1 2011 was HRK 8.7 billion, which Dalic ascribed to the abolished taxes and to the collection of revenues in the first half of the year, which is usually weaker than in the second half.