Croatia's 2018 Government Surplus at 0.2%, Debt at 74.6% of GDP

By 23 April 2019

ZAGREB, April 23, 2019 - Croatia recorded a consolidated general government budget surplus of 758 million kuna in 2018, which is 0.2% of GDP, and a consolidated general government debt of 284.7 billion kuna, which is 74.6% of GDP, according to figures released by the National Bureau of Statistics (DZS) on Tuesday.

It was the second year in a row that Croatia had run a consolidated general budget surplus, but it was lower than in 2017, and the general government debt to GDP ratio continued to decline.

The DZS submits a report on general government budget deficit and debt to the European Commission, namely to Eurostat, twice a year, in April and October, using the ESA 2010 methodology and the Manual on Government Deficit and Debt.

Last year, Croatia's consolidated general government surplus was 758 million kuna, or 0.2% of GDP, while in 2017, it was 2.9 billion kuna, or 0.8% of GDP.

Previously, Croatia recorded budget deficits, which totalled 3.4 billion kuna, or 1% of GDP, in 2016 and 10.8 billion kuna, or 3.2% of GDP, in 2015.

The 2018 surplus was the result of a further fall in the government budget balance compared with the previous year, from 2.29 billion kuna to 191 million, as a result of positive economic developments, the DZS said.

The surplus was mostly driven by the considerably improved financial result of extrabudgetary beneficiaries and public companies and by increased tax revenues.

In 2018, taxes on production and imports totalled 76.8 billion kuna, an increase of 7.2% on the previous year.

The surplus was also spurred by a decline in interest expenses, which reached 8.88 billion kuna, down by 9.1% from 2017. By comparison, interest expenses were 11.81 billion kuna in 2015, 10.83 billion kuna in 2016 and 9.77 billion kuna in 2017.

Investment grew by 33.8% from 2017 to 13.21 billion kuna.

The DZS noted that last year 2.53 billion kuna was paid for enforced guarantees for the shipyards, which led to the reduction of the surplus.

In 2018, the primary general government surplus was 9.64 billion kuna, or 2.5% of GDP, which is 23.9% less than in 2017.

At the end of last year, consolidated general government debt was 284.7 billion kuna, or 74.6% of GDP, while in 2017 it was 284.3 billion kuna, or 77.8% of GDP. In 2016, debt was 282 billion kuna, or 80.5% of GDP, down from 284.4 billion kuna, or 83.7% of GDP, in 2015.

Despite the debt increase, the share of consolidated general government debt in GDP has continued to decline in the last four years, falling by 3.2 percentage points of GDP from 2017 to 74.6% of GDP in 2018.

In nominal terms, the debt increased by 379 million kuna or 0.1%.

The rise in net borrowing (2.7 billion kuna) was almost offset by negative exchange rate differences (minus 2.3 billion kuna).

The DZS noted that the level of consolidated general government debt at the end of 2016 and 2017 was about 1 billion kuna higher than the data presented in the October 2018 notification due to further alignment with the ESA 2010 methodology.

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