UPDATE 1-Croatian lawmakers approve 2019 budget, small deficit seen

The Croatian parliament on Monday approved the 2019 budget, envisaging a general budget gap of 0.4 percent of gross domestic product, slightly below this year's plan of 0.5 percent.

In the vote, 79 of parliament's 151 deputies supported the plan, which is based on projected growth of 2.9 percent, up from this year's assumption of 2.7 percent.

The European Union's newest member has promised to pursue fiscal consolidation as part of its plans to adopt the euro within six to seven years.

The government aims to cut public debt by a further three percentage points from the 74.6 percent of GDP envisaged at the end of this year.

Central government budget revenues for 2019 are planned at 136.1 billion kuna ($20.86 billion), or 5.5 percent higher than this year, while expenditure is seen at 141.3 billion kuna, or up 5.1 percent from 2018.

Some analysts and the business community say the government is missing an opportunity to take tougher action on budget spending. They question the sustainability of fiscal policy amid sluggish long-term growth forecasts.

With brakes on business such as red tape, costly public administration and frequently changing regulations, and a growing shortage of skilled workers, many analysts put Croatia's long-term growth potential at little more than 1-2 percent.

($1 = 6.5253 kuna) (Reporting by Igor Ilic; Editing by Mark Potter)

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