Budget expenditure increases by another three billion euros, primarily due to pensions

Higher revenues, but also expenditures summarize the budget for the next year that the Government presented on Thursday. The revenues of the state budget for 2026 are planned at 35.7 billion euros, while expenditures amount to 39.8 billion euros, said Prime Minister Andrej Plenković at the Government session, presenting the Government’s proposal.

The revenues of the state budget for 2026 are planned at 35.7 billion euros, which is an increase of 2.7 billion euros compared to the recent rebalancing for 2025. The expenditures of the budget for 2026 amount to 39.8 billion euros, said Plenković. This is three billion more than the expenditures in the current budget.

Most of the increase goes to pensions

As Plenković emphasized, the increase in revenues is a result of strong economic growth and business activity and high employment, which allows for greater investments in citizens and all development priorities, but without undermining fiscal stability. He added that the largest part of expenditures goes precisely to areas that most directly support the standard of living of citizens.

Thus, for pensions, 10.2 billion euros is secured, which is an increase of one billion euros. – By the end of this year, with the annual supplement, the total average pension will exceed the threshold of 700 euros – said Plenković. For employee salaries, 8.8 billion euros is allocated, which means an increase of 400 million euros compared to 2025.

Allocations for demographic revitalization, i.e., increasing parental leave benefits and doubling support for newborns, are rising from 692 to 804 million euros, while social benefits and unemployment benefits amount to 1.5 billion euros.

The budget, as he said, ensures investments in generators of sustainable growth – in the economy, infrastructure, energy, and other sectors, which provide us with greater competitiveness, but also resilience to crises, including an increase in defense spending to 2.06 percent of GDP. – As in previous years, the new budget will be social, sustainable, and developmental – said Plenković.

Expected GDP growth of 2.7 percent

Speaking about the macroeconomic framework, Plenković said that in 2026, a continuation of stable GDP growth of 2.7 percent is expected, which means that Croatia remains among the faster-growing economies in the European Union.

Inflation is expected to decrease to 2.8 percent according to the Government’s expectations.

The Government expects employment growth of 1.6 percent, a general government budget deficit of 2.9 percent of GDP, the same as this year, and public debt is expected to fall to 56 percent of GDP.

Croatia remains within the framework of European fiscal rules and shows that it responsibly manages public finances, said Plenković.