Croatian government's budget revenue totalled 122.7 billion kuna (€16.6 billion) in 2017, or 5 percent up from the year before, largely thanks to positive economic trends and tax reform. At the same time, budget expenditures were lower than expected, Finance Minister Zdravko Maric said in a government session on Thursday.

The revenue growth is attributed to GDP growth, which increased by 2.8 percent in 2017, as a result of a record-breaking summer tourist season, the growth in household spending, exports, as well as investments, which increased by 7 percent compared to 2016, Maric said while presenting a report on the 2017 budget’s income and spending.

The total revenue of 122.7 billion kuna in 2017 included 75.2 billion kuna in total tax revenue, an increase over 2016. Income tax revenues brought in 2 billion kuna, or 9.7 percent down from 2016 due to new tax regulations which eased the tax burden on personal incomes. However, corporate tax revenue jumped by 15 percent, to 8.2 billion kuna. Value added tax (PDV) brought in 47.6 billion kuna, or 5.3 percent up from the year before, and revenue from financial assistance – largely made up of income from various EU funding programmes – totalled 8.5 billion kuna.

Expenditures amounted to 125 billion kuna (€16.9 billion) in 2017, up by 4 percent from 2016, but still lower than originally planned. Among other things, spending on interests for government loans was reduced by 1 billion kuna.

“In the last two years Croatia managed to reduce its spending on interests by 2 billion kuna, and we need to keep working to lower them even further,” said Maric, and added that the costs involved were mainly related to the re-financing of debts by road-management companies.

Various benefits and fees paid to citizens and households totalled 45.8 billion kuna, including 37.7 billion spent on pensions.

The total budget balance in 2017 was 2.7 billion kuna, which was the first ever budget surplus on record, greatly exceeding expectations which had projected a 2.2 billion kuna deficit.

“So, the result turned out to be better by around 5 billion kuna,” Maric said. Thanks to this result, Maric said, the public debt-to-GDP ratio continued to decrease, and was at 78 percent at the end of 2017, or 6 percentage points less than the year before.

“Regardless of the public debt still above the 60 percent required by the Maastricht criteria (for the adoption of the euro), the debt-to-GDP ratio is falling at double the rate set by those criteria,” Maric said.

(€1 = 7.38 kuna)

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