The Croatian government on Wednesday adopted a new public debt management strategy for the next three years, under which the public debt to GDP ratio is expected to be reduced to below 70 percent by 2020.

“We are reducing the public debt at an accelerated rate – from approximately 85 percent in 2015 to 78 percent today. We are managing this process responsibly and will bring the debt down to 65 percent of GDP by 2021,” Plenkovic said at a cabinet meeting, adding that this process would continue in line with the Convergence Programme and the National Reform Programme.

Croatia’s public debt reached its peak in 2015, with a debt to GDP ratio of 86.7 percent. At the end of 2017, public debt stood at 283.3 billion kuna (), with the debt to GDP ratio falling to 78 percent, its lowest point since 2012.

Under the Convergence Programme for 2018-2021, the general government budget deficit is expected to reach 0.5 percent of GDP in 2018 and 0.4 percent in 2019 before breaking even in 2020.

The public debt to GDP ratio is expected to further decline to 75.1 percent in 2018, 72.1 percent in 2019, and 69.1 percent in 2020. That will meet the government’s basic strategic goal to reduce the debt to GDP ratio by more than 10 percentage points by the end of 2020, and the government intends to reduce it more than planned, according to the public debt management strategy.

Finance Minister Maric said the government had managed to reduce the budget deficit to 0.9 percent of GDP in 2016 and that for the first time in its recent history Croatia had recorded a general government budget surplus of 0.8 percent in 2017.

“That is certainly one of the main reasons why public debt has continued to fall for the second consecutive year, by a total of some six percentage points, to 78 percent. At the same time, that was also one of the main reasons why Croatia came out of the excessive deficit procedure and why two rating agencies increased its credit rating for the first time since 2004,” Maric said.

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