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ZAGREB (Croatia), June 19 (SeeNews) - Croatia's fiscal deficit is expected to deepen this year, mainly due to an increase on the expenditure side, but should remain below 2% of GDP, the local unit of Raiffeisen Bank International said on Monday.
The fiscal deficit is seen to grow to 2% of GDP next year, before returning to below 2% a year later, RBA commented in a weekly report.
The public debt to GDP ration is expected to continue its annual decline to 82.6% this year, 80.6% next year and 78.8% in 2019, the lender noted.
It warned, however, that the new political environment in Croatia is one of political volatility, which raises questions of whether crucial reforms needed for sustainable growth, development and smooth business will all be implemented.
Last week, Croatia received positive news from the Council of the EU who accepted the EC recommendation to abrogate the excessive deficit procedure for the country as it has brought budget deficit to 0.8% of GDP in 2016 while the public debt fell for the first time in eight years by, 2.5 pp to 84.2% of GDP.
Croatia had been in the EDP since January 2014, when the EU Council gave it until the end of 2016 to cut the budget deficit to 2.7%.