Budget credibility under scrutiny: comparative analysis of Croatian and Slovenian local units

The present Note analyses budgetary credibility of Croatian and Slovenian local units (cities and municipalities) in 2023, observing the differences between planned and executed revenues and expenditures. In general, Slovenian units plan their budgets more accurately, with smaller deviations - especially with regard to tax revenues, total revenues and operating expenditures - while Croatian units have larger deviations, especially in categories such as expenditures on non-financial assets, operating revenues and total expenditures. Deviations are more pronounced in smaller and economically weaker local units. To what extent the plan will deviate from reality depends also on the size and wealth of the local unit, but also on politics - especially ahead of elections, when budget plans are often more optimistic. It is therefore necessary to ensure more transparent and cautious budget planning, especially in smaller municipalities and cities and in politically sensitive times. All data used in the analysis, including deviations in revenues and expenditures of local units in Croatia and Slovenia as well as relevant economic and political determinants, are available in the Excel spreadsheet.