Page 142 - SE Outlook Regions 2023

at end-September. The private sector external debt increased 9.8% y/y
to €31.5bn.

The finance ministry reported that the country’s central government
debt increased by 16.7% year on year to BGN36.3bn (€20.5bn) at the
end of September. Domestic central government debt moved up 50%
y/y and 7.8% m/m to BGN11.1bn at end-September. External central
government debt increased 6.3% y/y and by 20.8% m/m to BGN25.2bn.

Moody's, Fitch and S&P rate Bulgaria at Baa2, BBB and BBB/A-2
respectively. S&P and Fitch have confirmed their ratings in November
and October respectively.

4.4 Budget and debt - Croatia

In its plan for 2023, Croatia is targeting a budget deficit of 2.3% of GDP,
projecting revenues at €24.9bn, up by 9% y/y. Spending is planned at
€26.7bn, €2.1bn more compared to 2022, with the deficit seen at
€1.6bn. The higher spending will be to support the most vulnerable
people, pension system viability, post-earthquake reconstruction, the
green and energy transition, stronger defence capabilities and security.

Tax revenue is projected at €13.3bn in 2023, up by 4.8% y/y. In 2024, it
should reach €14bn, while in 2025 it would increase to €14.7bn. At the
same time, the pension insurance contributions are projected at €4bn,
up by 8.2% y/y. The assistance from the European Union next year is
estimated at €5bn.

In 2024, budget revenues are projected at €24.8bn, while in 2025 the
income should reach €25.8bn. The 2024 budget spending is projected
at €25.6bn, while in 2025 it should reach €25.9bn. The budget deficit
should fall to 1.2% of GDP in 2024 and to 0.3% of GDP in 2025.

In 2023, Croatia will borrow €5.5bn with payments for the debt principal
amounting to €3.7bn. The public-debt-to-GDP ratio will drop from 71.3%
in 2022 to 69% in 2023. Croatia’s government intends to keep the fiscal
policy flexible in the coming period to meet the needs of local
companies, Ukrainian refugees and the areas that suffered from two
devastating earthquakes in 2020.

Meanwhile, in November Croatia’s government decided to impose
additional profit tax on all companies that report a revenue above
HRK300mn (€40mn) for 2022. The funds will be used to finance the
government’s aid to vulnerable groups.

Companies with revenue above HRK300mn for 2022 will have to pay
an additional tax of 33% on the part of their 2022 profit that exceeds by
20% the average profit they had reported for 2018, 2019, 2020 and
2021.

The government expects that around 200 companies will be affected by
the measure and the generated revenue from the tax will be around
HRK2bn. The tax will be imposed only once and only on profits

142 SE Outlook 2023 www.intellinews.com