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GDP. Revenues and grants increased by 6.4% y/y to BGN60.1bn. Tax revenue increased by 11.1% y/y, while non-tax revenue moved down by BGN1.4bn. Expenditures increased by 4.2% y/y to BGN61.1bn in January-November, mainly due to increased spending on social spending, as well as capital expenditure.
6.4 Budget and debt - Croatia
Croatia's parliament approved the budget for 2024, setting the deficit at 1.9% of the expected GDP, compared to a budget gap of just 0.3% of GDP for 2023.
Total revenue is projected at €28.5bn, up by 3% from 2023. Expenditure is projected at €32.6bn, up by 11.2% from 2023.
Prime Minister Andrej Plenkovic assured that the budget would cater to economic needs, stressing social sensitivity. He highlighted responsible fiscal management, citing Croatia's year in the eurozone. He also pointed to efforts to create a business-friendly environment for increased investor appeal.
However, the Eurogroup, comprising the finance ministers from eurozone countries, said that the budget plans of Croatia and three other member states will not meet the EU fiscal recommendations.
"The Eurogroup notes that, based on the Commission assessment, the DBPs (draft budgetary plans) of Belgium, Finland, France and Croatia risk being not in line with the fiscal recommendation of the Council,” the Eurogroup said.
In November, the European Commission urged Croatia to limit the nominal increase in nationally financed net primary expenditure to not more than 5.1%.
The government is allowed to borrow up to €7.8bn on the local and international markets in 2024, according to the budget plan for the year.
The public debt-to-GDP ratio is expected to diminish progressively, from 60.7% in 2023 to 58% in 2024, 56.6% in 2025 and finally reaching 55.5% in 2026. The government aims to maintain fiscal responsibility while supporting economic growth and stability in the coming years.
Meanwhile, in November Moody’s Investors Services upgraded Croatia's government outlook to positive, concurrently maintaining the Baa2 long-term issuer and senior unsecured ratings. The shift is fuelled by expectations of a more substantial reduction in Croatia's debt burden, exceeding earlier predictions and strengthening fiscal resilience.
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