Croatia recorded a consolidated general government budget surplus of HRK 758 million in 2018, which is 0.2% of GDP, and a consolidated general government debt of HRK 284.7 billion, which is 74.6% of GDP, according to figures released by the National Bureau of Statistics (DZS) on Tuesday.

It was the second year in a row that Croatia had run a a consolidated general budget surplus, but it was lower than in 2017, and the general government debt to GDP ratio continued to decline.

The DZS submits a report on general government budget deficit and debt to the European Commission, namely to Eurostat, twice a year, in April and October, using the ESA 2010 methodology and the Manual on Government Deficit and Debt.

General government surplus at 0.2% of GDP

Last year, Croatia’s consolidated general government surplus was HRK 758 million, or 0.2% of GDP, while in 2017, it was HRK 2.9 billion, or 0.8% of GDP.

Previously, Croatia recorded budget deficits, which totalled HRK 3.4 billion, or 1% of GDP, in 2016 and HRK 10.8 billion, or 3.2% of GDP, in 2015.

The 2018 surplus was the result of a further fall in the government budget balance compared with the previous year, from HRK 2.29 billion to 191 million, as a result of positive economic developments, the DZS said.

The surplus was mostly driven by the considerably improved financial result of extrabudgetary beneficiaries and public companies and by increased tax revenues.

In 2018, taxes on production and imports totalled HRK 76.8 billion, an increase of 7.2% on the previous year.

The surplus was also spurred by a decline in interest expenses, which reached HRK 8.88 billion, down by 9.1% from 2017. By comparison, interest expenses were HRK 11.81 billion in 2015, HRK 10.83 billion in 2016 and HRK 9.77 billion in 2017.

Investment grew by 33.8% from 2017 to HRK 13.21 billion.

The DZS noted that last year HRK 2.53 billion was paid for enforced guarantees for the shipyards, which led to the reduction of the surplus.

In 2018, the primary general government surplus was HRK 9.64 billion, or 2.5% of GDP, which is 23.9% less than in 2017.

Public debt at 74.6% of GDP

At the end of last year, consolidated general government debt was HRK 284.7 billion, or 74.6% of GDP, while in 2017 it was HRK 284.3 billion, or 77.8% of GDP. In 2016, debt was HRK 282. billion, or 80.5% of GDP, down from HRK 284.4 billion, or 83.7% of GDP, in 2015.

Despite the debt increase, the share of consolidated general government debt in GDP has continued to decline in the last four years, falling by 3.2 percentage points of GDP from 2017 to 74.6% of GDP in 2018.

In nominal terms, the debt increased by HRK 379 million or 0.1%.

The rise in net borrowing (HRK 2.7 billion) was almost offset by negative exchange rate differences (minus HRK 2.3 billion).

The DZS noted that the level of consolidated general government debt at the end of 2016 and 2017 was about HRK 1 billion higher than the data presented in the October 2018 notification due to further alignment with the ESA 2010 methodology.