April 26 (SeeNews) - Croatia's consolidated general government was in deficit of 12.438 billion kuna ($1.8 billion/1.6 billion euro), equivalent of 2.9% of GDP, last year, compared to a deficit of 27.710 billion kuna, or 7.3% of GDP in 2020, the country's statistical office said citing preliminary figures.
The general government budget deficit in 2021 was fuelled by a deficit of 14.967 billion kuna, or 3.5% of GDP, in the working balance of the state budget, even though it represented an improvement of 7.015 billion kuna compared to the previous year, the Croatian Bureau of Statistics said on Friday in its excessive deficit procedure report.
The deficit of the working balance was caused by taking extensive measures on the expenditure side of the state budget in order to preserve jobs at employers whose economic activity had been disrupted due to the COVID-19 pandemic as well as to finance costs of preserving the health of citizens, which also continued in 2021, the statistical office explained.
After a significant deficit in 2020 due to COVID-19 pandemic activities, 2021 was marked by increasing tax revenues, social contributions, improving the financial performance of extrabudgetary users and public companies, and received capital and current transfers, while the decline in the deficit was also affected by the reduction of certain expenditure categories, like gross fixed capital formation, interest paid and subsidies paid, according to the report.
In 2021, collected taxes on production and imports totalled 83.103 billion kuna, an increase of 17.5% compared to 2020, while the collected current taxes on income and wealth amounted to 23.315 billion kuna, 5.6% lower than in the previous year.
Net social contribution revenues in 2021 amounted to 48.868 billion kuna, 10.7% more than in 2020. Investments totalled 20.588 billion kuna in 2021, 3.5% lower than in 2020.
Payments for guarantees called, debt assumptions and capital injections totalled 591 million kuna in 2021. In 2021, interest payments amounted to 6.691 billion kuna, an annual decrease of 10.9%.
The fiscal surveillance of the European Union over the member states is based on the countries' excessive deficit procedure reports, as the Maastricht treaty defines two main criteria of the fiscal surveillance: a deficit-to-GDP ratio and a debt-to-GDP ratio must not exceed the reference values of 3% and 60%, respectively.
Meeting the Maastricht convergency criteria is among the conditions for euro adoption. Croatia, a member of the European Union since July 1, 2013, hopes to be ready to join the eurozone on January 1, 2023.
The country's consolidated debt-to-GDP ratio stood at 79.8% of GDP at the end of 2021, compared to 87.3% a year earlier.
(1 euro=7.563 Croatian kuna)