In the new issue of IPF Notes, Katarina Ott comments on the uncertainties caused by legislative changes aiming to reform the EU’s economic and fiscal governance framework. The main objective of the reform is to ensure sound and sustainable public finances, simultaneously promoting sustainable and inclusive growth in all member states. Therefore, the question arises as to how this reform will affect the budget process this year, and what kind of state budget will be adopted for 2025.

A budget is always the result of a political negotiation process. Estimating how might Croatia’s budget for next year look like is an ungrateful task, especially in a situation where the parliamentary election saw the instalment of a new Government, of a slightly different political structure compared to the previous two. In previous years, mid-July was usually the period when the public – awaiting instructions for drafting the next year budget - had a pretty clear overview of the macroeconomic, fiscal and budgetary framework for the upcoming three years However, this year this is not the case. The websites of the Ministry of Finance and the Government make no reference to the 2025 state budget and 2026-2027 budget projections nor to the convergence programme that the Government usually sent to the European Commission by the end of April. The decision on the budgetary framework, which was to be adopted by the end of June, is also missing. If the reason why this information is lacking is related to EU-level events, the Ministry of Finance and the Government should keep the public informed.

The public should know when and on what grounds will the Ministry of Finance be able to issue the instructions for drafting the next year’s budget. Ministries and other government bodies used to receive these instructions (or were supposed to receive them) by 15 or 20 August. If the instructions for drafting next year’s budget arrive toward the end of the current year, financial offices of budget users will once again be in a difficult position. This was often the case in previous years when these instructions used to arrive late or at the last minute with extremely tight deadlines for drafting budget users’ own proposals, leading to users drafting less than realistic financial plans.

The timeframe to draft the state budget, discuss it in the Parliament and adopt it always used to be extremely short; this year, it could end up being even shorter. We cannot but refer here to the recommendation of the authors of a recent IPF Note on the results of the international research on central government budget transparency: “The Parliament can assume a more prominent role in the process of budget oversight only if it becomes involved in the process of budget policy planning, i.e. in the initial stage of the budget process. As a start, the Government should send a draft proposal of the budget to the Parliament at least two months before the start of the new fiscal year so that the MPs would have enough time to analyse the document.”

The Ministry of Finance should make known the deadlines and plans regarding the new budgetary framework as soon as possible, so that the public would know what to expect this year.