Total revenues of the state budget last year amounted to 30.5 billion euros, which is 11.5 percent higher compared to the previous year, while total expenditures reached 32.7 billion euros, an increase of 4.6 billion euros or 16.5 percent compared to the previous year, it was stated at the Government session.
Presenting the annual report on the execution of the state budget for 2024, Deputy Prime Minister and Minister of Finance Marko Primorac reported that last year’s budget revenues were 0.6 percent higher than planned, while expenditures accounted for 97.4 percent of the planned.
He reminded that last year the real GDP growth was 3.9 percent, predominantly driven by domestic demand, both through household consumption and investments from the private and public sectors in fixed capital. Inflation last year was three percent, significantly lower than the eight percent recorded in 2023.
Regarding the dynamics of wage growth, Primorac noted that the average monthly gross salary last year was 1,821 euros, which represents a nominal increase of 15 percent and a real increase of 11.7 percent.
Last year, a general government budget deficit of two billion euros or 2.4 percent of GDP was recorded, the share of public debt in GDP at the end of 2024 was 57.6 percent, while its nominal value was 49.3 billion euros. Compared to the end of 2023, the reduction in the share of public debt in GDP amounts to 4.3 percentage points, while compared to the pre-pandemic 2019, the reduction is as much as 13.1 percent, emphasized Primorac.
Economic Growth in 2025 Based on Domestic Demand
The Minister of Finance also presented a report on the progress in implementing the National Medium-Term Fiscal Structural Plan of the Republic of Croatia for 2024 and 2025, which indicates the continuation of favorable economic activity trends this year and GDP growth of 3.3 percent, which is three times higher than the EU and Eurozone average.
He emphasized that economic growth in 2025 will be based on a strong contribution from domestic demand, with a slight positive contribution expected from the category of inventory changes. He stated that the labor market continues to be characterized by favorable expectations related to employment and wage growth, in conditions of existing imbalances between labor supply and demand. Thus, in 2025, the employment growth rate will be 3.3 percent, while the survey unemployment rate is expected to further decrease to a historically low level of 4.7 percent. The nominal growth of gross wages for employees will significantly slow down compared to 2023 and 2024, but it will still grow, according to government projections of 9.1 percent, said Primorac.
Inflation Similar to 2024
Primorac stated that the revenue side of the budget this year is primarily characterized by the implementation of a new round of tax reform in the income tax system, contributions for health insurance, property tax, and short-term tourist rental, thereby shifting the burden from labor taxation to property.
On the other hand, the expenditure side will be determined by the continuation of the wage reform in state and public administration, as well as increased expenditures for the care of the most vulnerable groups in society, especially regarding pensions, incentives for demographic policy, and social welfare benefits. Additionally, activities aimed at ensuring affordable housing are being intensified, said Primorac.
Increase in Budget Deficit to 2.9 Percent of GDP
Regarding investment dynamics, it will be significantly supported by national as well as European funds from the Recovery and Resilience Mechanism, as well as the Multiannual Financial Framework 2021 – 2027.
Fiscal developments in 2025 will result in an increase in the budget deficit to 2.9 percent of GDP, but despite this, the share of public debt in nominal GDP will decrease from 57.6 in 2024 to 56.9 percent this year.
The National Medium-Term Fiscal Structural Plan is a new document, presented for the first time at the Government, primarily aimed at building a resilient, green, and digital economy, as well as modernizing the justice system, public administration, and social services. It includes measures from the National Recovery and Resilience Plan (NPOO), as well as measures outside the NPOO, which will be implemented during the period 2025-2028. The plan contains a total of 290 measures, of which 22 measures have been executed so far, while the others are mostly being executed according to the planned dynamics, reported Primorac.
Approval for Croatian Waters for Credit Indebtedness
Amendments to the Capital Market Act have also been sent to parliamentary procedure, aimed at aligning national legislation with the legal acquis of the European Union. Thus, among other things, deadlines for sustainability reporting are being aligned with the so-called “Stop the Clock” directive, which postpones corporate reporting by two years for certain categories of issuers.
Additionally, the Government has given prior approval to Croatian Waters for long-term credit indebtedness with Privredna banka Zagreb (PBZ) for financing capital investments.
As reported by Minister of Environment and Green Transition Marija Vučković, Croatian Waters will continue to implement projects within the NPOO this year, as well as within other strategic and action plans for the coming years.
This involves a total of 1,171 water management projects, of which 336 are co-financed from European funds, for which purpose the Management Board of Croatian Waters made a decision in April approving credit indebtedness with PBZ in the amount of 113.5 million euros.
