Reforms of the Croatian Budgetary System

The Institute of Public Finance deals with economic research and analysis related to various forms of public finances such as the budget, taxation and customs duties. Its orientation is thus to the various economic, legal and institutional topics that are important for the sound long-term economic development of the Republic of Croatia. So that the public should be able to have a better insight into certain issues, the Institute of Public Finance is launching its Newsletter, in which it will from time to time publish informed and independent analysis of economic questions. The views expressed in the articles published in the Newsletter will reflect the opinions of the authors, which do not necessarily coincide with those of the Institute as institution. Full text of Newsletter is also available on Institute’s Web site: http://www.ijf.hr/newsletter. Since 2000, Croatia has been carrying out reforms to the old budgetary system. The objective of this paper is to cast light on the bases of the reform process in the budgetary system. This in particular refers to the new way of recording budgetary transactions, the establishment of the functions of the government treasury and the making of payments from the Single Treasury Account (STA). To this one should add the adoption of the new chart of account on which the system of financial and fiscal reporting is founded and the beginning of budgeting according to programmes, which institutions within the budgetary system are slowly mastering. We shall endeavour to explain the basic difference between the old budget system, based on the cash principle, and the new system of budgetary recording, which is based on a modified accrual system, using as an example the budget of general government and its deficit. At the end we will make some suggestions and recommendations.