Finance Minister, Zdravko Maric, told Parliament on Wednesday that the total cost of combating the Covid pandemic has so far exceeded 40 billion kuna (€5.3 billion) in government funding.

The brunt of the costs funded by the government were spent on various subsidies to save jobs in the wake of the lockdowns, but also on tax relief, said Maric presenting this year’s budget revision to MPs.

Compared to the previous plan, the latest budget revision for 2021 projects an increase in budget revenue of 3.3 billion kuna (€439m) to 153.6 billion kuna (€20.4bn), and also higher spending, by 6 billion kuna (€798m), to total 173.3 billion kuna (€23bn). The budget gap is expected at 19.7 billion kuna (€2.6bn) or 4.7 percent of GDP, while the general government debt is expected at 18.9 billion kuna (€2.5bn) or 4.5 percent of GDP.

“Maric confirmed that the revised estimates of GDP growth for this year from the initially planned 5.2 percent have almost doubled and increased to about 9 percent,” state agency Hina said.

“When observing all GDP components – with the exception of investments and private investments – we have a significant increase in all categories,” said Maric.

Average annual inflation at 2.4 pct

The projected average inflation rate for 2021 will be 2.4 percent, he said. The minister underscored that the plan is to reduce the public-debt-to-GDP ratio to 83.1 percent.

“Even though we have revised the deficit upward from 3.8 percent to 4.5 percent, this year we expect a higher-than-expected growth rate and as a result, the public-debt-to-GDP ratio will be at 83.1 percent,” he said, and added that the public debt had been falling for four years in a row before the pandemic, and during that time it had dropped “by almost 12 percentage points of GDP cumulatively,” Hina said.

(€1= 7.52 kuna)