By Zoran Radosavljevic
ZAGREB, Feb 27 (Reuters) - Croatia's anti-recession package hinges on the government enforcing spending cuts but signals a welcome commitment to balance the budget, analysts said on Friday.
Prime Minister Ivo Sanader unveiled the measures on Thursday and said the government of Croatia, a candidate to join the European Union, would rebalance the budget in the second half of March.
A top government official, who asked not to be named, said the government would aim for a zero deficit, if possible.
Analysts said the package lacked details and timetable, but cheered the fact the government agreed to rebalance the budget, a move it rejected just two weeks ago.
They said the government had realised its projection of two percent economic growth was way out of reach.
"The good thing is they finally agreed to rebalance the budget. They had to do this because they are preparing to go to foreign banks to talk about refinancing," said Ante Babic of the Centre for International Development, an independent think-tank.
"To get refinancing you have to show commitment and plan. But we still have to see how they will do this, lest we end up with an even higher deficit and spending," he said.
The government originally set the gap at 0.9 percent of gross domestic product, after agreeing a blanket six percent wage rise for the public sector.
Hrvoje Stojic of Hypo Group Alpe Adria said the government should first clarify whether it will cut salaries, welfare, investments, or introduce additional taxes.
"But the bottom line is: To consider a serious stimulus for the economy, the government should cut expenditure by at least 10 percent. Everything below that is just cosmetic," he said.
A member of the national economic council -- the top advising body which helped draft the measures -- said the government had three control points this year.
"First, the budget rebalance in March. Second, the tourist season, which can boost or weigh down the revenues. Third, in the autumn the government can see if it is necessary to make further spending cuts or perhaps seek an arrangement with the International Monetary Fund (IMF)," he said.
Sanader's cabinet needs to refinance some 1.4 billion euros in debt this year but still hopes it can weather the crisis without turning to the IMF for help, as neighbours Hungary and Serbia have done.
Most analysts believe the economy will contract between one or two percent this year, but an even steeper fall is possible if the tourist season is weak.
The crisis package envisages measures to boost tourism and ease its financing, but analysts say it may have come too late to save this year.
The industry, which is under pressure all over the world because of the crisis, accounts for some 20 percent of Croatia's GDP.
(Editing by Jason Neely)