Croatian government’s draft 2021 budget includes 4.5% deficit

The government’s draft budget revision for 2021 raises the general government budget deficit from the previously estimated 3.8% to 4.5%. [Shutterstock / Dmitry Demidovich]

The government’s draft budget revision for 2021 raises the general government budget deficit from the previously estimated 3.8% to 4.5%. It also foresees a 3 billion kuna (€400 million) rise in revenue and a 6 billion kuna (€800 million) rise in expenditure, with the debt to GDP ratio expected to be 83.1%.

“At the moment, we expect real GDP growth in 2021 to be even slightly higher than expected, 9%, as against a GDP decline of 8% in 2020. That is a very good achievement, exceeding the real GDP level from 2019,” PM Andrej Plenković said.

Finance Minister Zdravko Marić said that all GDP components were expected to increase except for investments, more specifically private non-construction sector investments.

The previously projected GDP growth rate for this year was 5.2%.

The average annual inflation rate in 2021 is projected at 2.4%, with an unemployment rate of around 7.5%.

Croatia’s draft budget for 2022 envisages revenues of 164.5 billion kuna (€22 billion), and expenditures of 173.8 billion kuna (€23.2 billion), as a result of which the gap is set at 12 billion kunas (€1.6 billion) or 2.6% of the country’s Gross Domestic Product.

The draft is based on projections of the growth of 4.4% next year.

Croatia’s public debt-to-GDP ratio in 2022 is estimated at 80.7%, or 2.4 percentage points lower than this year’s projection, and this ratio will fall to 78% in 2023 and to 75.3% in 2024.

These numbers suggest growing convergence with the conditions for entering the eurozone.

(Željko Trkanjec | EURACTIV.hr)

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