Finance Ministry says Cost of Combatting COVID Exceeds €5.3bn

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The majority of costs relate to job-keeping measures, directly or indirectly, then taxes, contributions, everything the state took upon itself, said Marić presenting this year’s budget revision.

The revision envisages an increase in budget revenue of HRK 3.3 billion to HRK 153.6 billion and expenditure by HRK 6 billion to HRK 173.3 billion.

The budget gap is expected to amount to HRK 19.7 billion or 4.7% of GDP while the general government debt is expected at HRK 18.9 billion or 4.5% of GDP.

Marić confirmed that the revised estimates of GDP growth for this year from the initially planned 5.2% have been increased to about 9%.

When observing all GDP components, with the exception of investments and private investments, we have a significant increase in all categories, underscored Marić and added that with regard to investments, they will be the main drivers of overall economic growth in the years that are to follow.

Average annual inflation at 2.4%

Marić presented data related to price trends and inflation. Regardless of the past few months and accelerated and visible inflation, the projected average inflation rate for this year is 2.4%, he said.

The minister underscored that the plan is to reduce the public debt to GDP ratio to 83.1%.

“Even though we have revised the deficit upward from 3.8% to 4.5%, this year we expect a greater-than-expected growth rate and as a result, the public debt to GDP ratio will be set again at 83.1%,” he told the parliament.

The minister recalled that the public debt was slashed for four years in a row by almost 12 percentage points of GDP cumulatively.

The pandemic and the 2020 devastating earthquakes to some extent have as one-off events increased the public debt to GDP ratio to 87.3% and erased the effect of four years, said Marić and underscored that “had we not done what we did in those four years, our public debt would have exceeded 100% of GDP.”

“Those 4.2 percentage points, compared to other countries have ranked us in the top 3,” boasted Marić.

That result, he added, needs to be highlighted not just in numbers but in the fact that we have done and are doing everything to improve the finances and  the growth rate and decrease in the public debt to GDP ratio indicate that the effect of COVID is a one-off event, regardless how strong it may have been, he concluded.

(€1= HRK 7.5)


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