The total revenue of the Croatian budget for 2025 is estimated at €33 billion and expenditure at €37 billion. This was announced by Prime Minister Andrej Plenkovic at a cabinet meeting on Thursday when he presented the draft budget for next year.

Total revenue would be 8.6% higher than in the 2024 budget thanks to higher tax revenues and a significantly faster absorption of EU funds, the Prime Minister said. Total expenditure would be 10.2% higher.

The budget is primarily focussed on households and has a social, developmental and sustainable dimension, said Plenkovic.

Further investments announced

It aims to improve people’s living standards by increasing pensions and wages, supporting vulnerable groups and implementing measures to regulate electricity, gas and fuel prices. It also aims to facilitate the implementation of the National Housing Programme and help solve the problem of housing for sheltered tenants.

The Prime Minister announced further investment in post-earthquake reconstruction, water supply and drainage infrastructure, healthcare infrastructure, rail and road construction, maritime transport, sport and rural development.

He added that the budget also supports the objectives of the newly established government departments and the government’s strategic goals in terms of demographic renewal, education, the green transition and digital transformation.

For example, the budget of the Ministry of Demography and Immigration has been increased by 202%, that of the Ministry of Justice, Administration and Digital Transformation by 21%, that of the Ministry of Environmental Protection and Green Transition by 81% and that of the Ministry of Science, Education and Youth by 14%.

Growth forecast of 3.2%, inflation of 2.7%

The government is forecasting GDP growth of 3.2% and an inflation rate of 2.7% for 2025. The general government deficit is expected to reach 2.3% of GDP in 2025, falling to 1.9% in 2026 and 1.8% in 2027. Public debt in relation to GDP is expected to fall to 57.4% by the end of this year, 56% in 2025 and 55% in 2026.

At Thursday’s meeting, the government adopted for the first time the national medium-term fiscal and structural plan 2025-2028 in accordance with the new, revised EU economic governance framework, which entered into force on 30 April 2024.

The framework contains innovations in terms of fiscal governance and fiscal rules. Instead of the stability programme and the national reform programme, each EU member state must now submit its national medium-term financial and structural plan.

The reform activities and investments are based on the activities under the National Recovery and Resilience Plan in the first two years and on the improved absorption of the European Structural and Investment Funds.