Total revenues of the state budget in the first half of this year amounted to 17.3 billion euros, with a growth of 15.5 percent compared to the same period last year, while total expenditures reached 19 billion euros, with an increase of 2.1 billion euros or 12.2 percent compared to the first half of 2025, it was stated on Thursday at the Government session.
Presenting the proposal for the semi-annual report on the execution of the state budget for 2026, State Secretary in the Ministry of Finance Tereza Rogić Lugarić reflected on the macroeconomic indicators on which the state budget and its execution are based, emphasizing that the Croatian economy continues to grow for the sixth consecutive year, with the year-on-year GDP increase in the first half of 2026 amounting to 1.9 percent.
Among other indicators, retail trade turnover grew by 1.9 percent, industrial production volume increased by 0.4 percent, construction works by 2.8 percent, and the number of tourist overnight stays by 0.5 percent. Data for the first half of this year indicate a continuation of favorable trends in the labor market, with the average number of registered unemployed persons amounting to 72.7 thousand, and the average monthly gross salary at 2,163 euros, with a nominal increase of 8.8 percent and a real increase of four percent, reported Rogić Lugarić.
Growth of VAT Revenues
When it comes to the growth of state budget revenues on a year-on-year basis, she stated that it is primarily the result of higher revenues from value-added tax (VAT), contributions, and revenues regarding the increased dynamics of European projects and the completion of investments from the National Recovery and Resilience Plan (NPOO).
Thus, according to the Government document, VAT revenue amounted to 6.1 billion euros or 47 percent of the annual plan, with a year-on-year growth of 11.8 percent. “Such movement is the result of growth in personal, investment, and tourist consumption, which also includes inflationary effects,” it is stated. Revenues from contributions in the first half of 2026 amounted to 3.1 billion euros, with a year-on-year increase of 10.9 percent, which is “the result of the labor market situation, i.e., the growth of wages and employment.”
Total revenues from aid, in which the largest part consists of revenues from international organizations and EU institutions and bodies, reached 2.4 billion euros and were achieved at a level of 50.4 percent of the annual plan, with almost double the year-on-year increase, the Government document states.
Furthermore, revenues from special taxes and excise duties reached 1.4 billion euros or 42.7 percent of the annual plan, with a growth compared to the first six months of last year of 0.9 percent. Meanwhile, excise duties on alcohol and alcoholic beverages increased by 10.1 percent, the special tax on non-alcoholic beverages grew by 11.7 percent, and excise duties on tobacco products by 13.4 percent.
Expenditures for Pensions Increased by 561.7 Million Euros
On the other hand, it was emphasized that all other excise revenue recorded a year-on-year decrease. For example, revenues from excise duties on energy products and electricity, which account for 45.4 percent of special taxes and excise duties, were lower by 7.8 percent.
– The realization of revenues from excise duties on energy products and electricity is influenced by the implementation of the Government’s measures to mitigate the rise in energy prices for citizens and entrepreneurs – noted Rogić Lugarić.
State budget expenditures in the first six months of this year of 19 billion euros account for 47.6 percent of planned expenditures, with an increase of 12.2 percent or 2.1 billion euros.
The most significant expenditures in the first half of 2026 were executed within the pension and pension benefits program amounting to 4.9 billion euros, which primarily relates to pension expenditures. For expenditures for employees, including expenditures for employees in primary and secondary schools, 4.4 billion euros were allocated.
General Government Budget Deficit 1.6 Percent of GDP
The increase in total expenditures in the first half of 2026, the Government states, is primarily the result of increased allocations for pensions, amounting to 561.7 million euros, mainly due to pension adjustments, there is also 490.6 million euros for expenditures recorded on sources of financing from the European Union, then increased expenditures for employees, including expenditures for employees in primary and secondary schools, amounting to 261.5 million euros, and expenditures of 127.7 million euros for equipping and modernizing the Croatian Army, etc.
The general government budget deficit in the first half of 2026 amounted to 1.6 billion euros, or 1.6 percent of GDP, measured by national methodology.
Off-budget users of the state budget achieved a surplus of 120 million euros or 0.1 percent of GDP, while local and regional self-government units and county road administrations recorded a deficit of 55 million euros or 0.1 percent of GDP, according to the Government document.
