COVID Crisis Has Cost Us €4.3Bn So Far, Says FinMin

The drop in revenues accounts for about HRK 13 billion of that amount, including measures to write off taxes and contributions, while direct expenditures and outlays due to the pandemic account for over HRK 19 billion, Marić said.

Job retention measures account for the bulk of direct expenditures, with HRK 10 billion paid to date, while about HRK 2 billion has been set aside for additional healthcare expenses. Most of the rest pertains to liquidity maintenance budgetary transfers to the Croatian Health Insurance Fund and local government, and to the Croatian Bank for Reconstruction and Development and the HAMAG agency for SMEs for their credit lines.

“We have utilized EU grants in the amount of HRK 5.9 billion, most of which from the REACT-EU package for job retention,” Marić said.

However, he added, when the total financial effect of the COVID crisis is taken into account, “it’s clear that so far the bulk of the cost has been at the expense of the state budget, i.e. borrowing. That affected the public debt-to-GDP ratio, which reached 89.1% at the end of 2020.”

Tax revenues and contributions are coming into the state budget as expected, he said. “Such trends give us a certain optimism that the whole economy is continually adapting to the new situation and that the planned economic recovery, and thereby the consolidation of public finance, will not be significantly undermined.”

Still, the continuation of the COVID crisis additionally accentuates uncertainty, notably regarding budget expenditures, Marić said, adding that he was primarily referring to ensuring additional funds for job retention and for the problems in healthcare.

He said it was also necessary to find the money for a 4% base pay rise for public sector workers and that he hoped budget beneficiaries would cut costs sufficiently to that end.

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