DZS: Budget deficit at 2.4% of GDP, debt below 60%

The Croatian consolidated general government deficit at the end of 2024 amounted to 2.026 billion euros, which represents 2.4% of GDP, returning almost to the level of 2021, while the consolidated debt increased by nearly one billion, to 49.3 billion euros, representing 57.6% of GDP or 4.2 percentage points less than in 2023, the Croatian Bureau of Statistics (DZS) reported on Tuesday.

DZS published this data in the Report on Excessive Budget Deficit and General Government Debt Levels for the period from 2021 to 2024 according to the methodology of the European System of National and Regional Accounts (ESA 2010) and the Manual on General Government Deficit and Debt, based on which the European Commission conducts fiscal oversight of EU member states. The Maastricht Treaty established two main criteria for fiscal oversight: the share of the general government budget deficit of member states must not exceed three percent of GDP, and the consolidated general government debt must not exceed 60% of GDP.

In 2023, a deficit of 618 million euros or 0.8% of GDP was recorded, while in 2022, the Croatian budget recorded a surplus of 82 million euros or 0.1% of GDP, and in 2021, the deficit was 1.5 billion euros or 2.6% of GDP, according to DZS data.

– Following the deficit that was present in 2023, a noticeable trend of significant increases in both revenues and expenditures of the state is observed in 2024, but state expenditures are growing at a higher rate. This is primarily due to the increase in employee compensation, cash social benefits with in-kind social transfers, paid capital transfers, and intermediate consumption, the effect of which has been mitigated by the growth of tax revenues and social contributions. Measures introduced in 2022 due to rising energy prices continue into 2023 and 2024 and mainly affect the increase in subsidies paid for products and the increase in social benefits paid to the unemployed and pensioners – noted DZS.

As they add, from the perspective of general government sector revenues, the measures had a negative impact on tax revenues due to the reduction of VAT and excise duties on energy in 2022, 2023, and 2024, while the amount of income and wealth tax in 2022 was positively influenced by the additional profit tax.

In 2024, taxes on production and imports were collected in the amount of 16.5 billion euros, which is an increase of 9.5% compared to 2023, while current taxes on income and wealth were collected in the amount of 6.4 billion euros or 12.6% more than in the previous year. Furthermore, net social contribution revenues in 2024 amounted to 9.84 billion euros, which is 17.5% more than in 2023.

Additionally, capital transfer expenditures based on guarantee payments, debt assumption, and capital injections in 2024 amounted to 84 million euros, which affected the generation of the deficit, as well as the inclusion of expenditures for incentive housing construction. In 2024, interest expenditures amounted to 1.32 billion euros, which is 1.9% more than in 2023, DZS reports.

The consolidated debt at the end of 2024 amounted to 49.28 billion euros or 57.6% of GDP, thus falling below the limit set by the Maastricht criteria of 60%. Although it increased in absolute terms, its share in GDP has decreased due to economic growth.

In 2023, the consolidated debt amounted to 48.26 billion euros, or 61.8% of GDP. In 2022, the debt amounted to 46.35 billion euros, or 68.5% of GDP, while in 2021 it amounted to 45.6 billion euros, or 78.2% of GDP.

– The state of the consolidated debt of the general government sector (so-called Maastricht debt) at the end of 2024 amounted to 49.28 billion euros, representing an increase of one billion euros or 2.1% compared to the debt level at the end of 2023, which is almost entirely related to net borrowing, while the impact of exchange rate changes is negligible. The share of general government debt in GDP at the end of 2024 fell below the Maastricht criteria and amounted to 57.6%, a decrease of 4.2 percentage points compared to the share of debt in GDP at the end of 2023, when it was 61.8% of GDP – stated DZS.