The government sent a draft report on the execution of the 2020 state budget to parliament on Thursday, and the document notes that total revenue amounted to HRK 131.6 billion, expenditure to HRK 153.6 billion and the general government deficit amounted to HRK 25.4 billion or 6.8% of GDP.

“On the one hand, we all know very well how many and what challenges public finances were faced with. However, they managed to withstand and will continue to do so, even with all the challenges that COVID-19 and the earthquake have put before us,” Finance Minister Zdravko Maric said.

Everything the government achieved in the past term to reduce public debt to GDP ratio was almost completely neutralised in one year, he added.

However, if we had not done what we did, Croatia’s public debt would be more than 100% of GDP and would have narrowed our manoeuvring space to react to the situation in health and the economy at the same time, said Maric.

He added that all expenditure items were under absolute pressure, however, in 2020, a year marked by the COVID pandemic and the earthquakes, expenditure for interest was reduced by HRK 2.2 billion. That, he underscored, supports what the government is doing and that is maintaining responsible and sustainable public finances.

The report on the execution of last year’s budget noted that total revenue amounted to HRK 131.6 billion which is 0.4% more than planned and about 6% less than in 2019.

Total expenditure amounted to HRK 153.6 billion which made up 98.5% of the planned expenditure for 2020 while compared to 2019 that is HRK 13.7 billion or 9.8% more.

Maric said that the majority of that increase in expenditure was related to health and jobkeeping measures and other challenges as a consequence of the earthquakes that hit northern and central Croatia in March and December 2020.

The consequences of the COVID-19 pandemic interrupted positive economic trends that were recorded over the preceding five years and the economy experienced an 8% downturn. The decrease in exports of goods and services, household consumption and gross investments in fixed capital contributed to the contraction of the economy and the negative effects of the epidemic were particularly felt in the tourism sector, the report underlines.

Total gross foreign debt at the end of 2020 reached €40.6 billion, or 82.4% of GDP, the report said.