ZAGREB, Dec 15 (Reuters) - The Croatian parliament approved on Monday a revised 2009 consolidated budget envisaging a deficit of 0.9 percent of gross domestic product, down from a previously proposed 1.6 percent.
Slightly more than a half, or 80 out of 153 deputies, voted for the budget proposal, which put the central government budget spending at 126.9 billion kuna ($23.79 billion), with revenues pencilled in at 124.6 billion kuna.
The government had originally sought a zero deficit to reduce the need for fresh borrowing during the global financial crisis, which has made funds more scarce and expensive.
The plan fell through after public sector trade unions rejected a proposed wage freeze and the government drafted a budget with a gap of 1.6 percent of gross domestic product.
It amended the draft and cut the gap last week, after strong criticism from local economists and the media, who said the deficit was too high.
Analysts said the government's move went in the right direction but it was still questionable if this was enough to keep the European Union candidate country on a sound economic footing next year.
In the revised budget proposal, the government slashed expenditures for a costly public health reform and also reduced some infrastructural investments.
Croatia has to refinance more than 8 billion euros ($10.77 billion) of foreign debt next year, including debt of the state, banks and companies. The government itself needs to refinance 1.4 billion euros.
Croatia sailed through the first months of the global crisis largely unscathed due to its ample liquidity reserves, but growth in 2009 should slow to two percent at most, from this year's expected 3.5 percent, which would considerably affect budgetary revenues and threaten jobs.
Many doubt even that level of growth could be achieved.
"Considering the unpredictable economic situation, it is realistic to expect a budget rebalance in the first half of next year," said Zdeslav Santic an analyst at Raiffeisenbank Zagreb.
Croatia runs severe external imbalances with foreign debt amounting to 90 percent of GDP, or some 36 billion euros and the current account gap at 10 percent of GDP.
(Reporting by Igor Ilic, editing by Ron Askew)