Even though they were adopted slightly earlier than in the previous years, the 2012-2014 economic and fiscal policy guidelines, adopted at the government session of July 27, are difficult to believe, the IJF said on Tuesday.

"Even though the guidelines underline the need for fiscal consolidation and implementation of structural reforms, they are based on excessively optimistic estimates and give unconvincing projections which are difficult to believe because they do not contain information which they are supposed to contain under the Budget Act," the IJF says in a text signed by Katarina Ott.

Under the Budget Act, economic and fiscal policy guidelines should be made on the basis of a strategy for a three-year period, which the government is expected to adopt by mid-May at the latest. On the government's web site, it is possible to find only a draft strategy for government programmes for the period from 2010 to 2012, while this year's programme strategies are not mentioned, not even in the 2012-2014 guidelines. The Economic Recovery Programme is mentioned on several occasions, but even though more than a year has passed since its adoption, the latest guidelines fail to state its possible results, the IJF says.

The latest guidelines of the government's economic and fiscal policy are twice shorter than in the previous years and lack many detailed tables with concrete items as existed in the previous guidelines.

"This makes it impossible to establish how the planned cuts are going to be made," says the IJF.

The government's guidelines project a 1.5 percent GDP growth in 2011, a 2.5 percent growth in 2012, a 3.5 percent growth in 2013 and a growth of 4 percent in 2014. The European Commission, on the other hand, forecasts a GDP growth rate of 1.1 percent in 2011 and of 2 percent in 2012, while the International Monetary Fund projects growth rates of 1 and 1.8 percent.

"But even without the more pessimistic forecasts of the IMF and the European Commission, the GDP drop of 0.8 percent in the first quarter of 2011, stated in the guidelines, does not justify the government's optimism. In short, if the GDP growth projected by the guidelines does not become a reality, all projections about the share of revenues, expenses, the deficit and the public debt in GDP become useless," says the article.

The IJF goes on to say that as in the previous years, salvation is expected from the recovery in the EU and from Croatia's accession to the EU, but adds that recovery in the EU is uncertain and that benefits from accession could be felt only in the long run and only if Croatia makes significant efforts on its own.

The institute calls for implementing the necessary structural reforms which it says Croatia needs because it is increasingly lagging behind in growth, because high costs make the domestic economy very uncompetitive and because the negative difference between the real and the projected GDP is growing bigger and bigger.