Croatian government budget to GDP ratio in 3Q 2019 increased 0.8 p.p. YoY and has amounted to 5.5% of GDP. Slovenia has achieved somewhat lower budget surplus of 1.6% of GDP that increased even higher for 1.1 p.p. YoY. As a comparison, EU government budget was in deficit of 0.7% of GDP while in Eurozone deficit stood at 0.5%.

Croatian government budget in 3Q 2019 was in surplus, amounting to 5.5% of GDP. When looking at the last six years of data, this is the highest surplus of all third quarters and is in line with seasonality of public income. Revenues tend to peak around penultimate quarter supported by record tourist season which was reflected in higher tax revenue. On the annual level we expect public budget to be roughly balanced. Announced hikes of public wages and additional costs due to Croatia presiding over EU from January to June is expected to result in small general budget deficit in this year. Public debt in third quarter increased in local currency by HRK 12.6 bn YoY due to different dynamics of debt maturity but is on an annual level on a downward trajectory. In relative terms debt to GDP stayed basically flat YoY and has amounted to 74.9% of GDP. As we expect solid development of public revenues in 4Q and positive economic development, we see the public debt in relative terms to GDP to remain firmly on a decreasing path. We see it falling further in this year below 70% of GDP.

Croatia Public Debt & Public Deficit (% GDP)

On the other hand, Slovenia has in Q3 achieved somewhat lower budget surplus of 1.6% GDP, an increase of 110 bps YoY. This trend is expected to continue and on the annual level small budget surplus is expected. Public debt has decreased by 3.3 p.p. YoY to 68.1% GDP driven by higher economic activity while nominal amount of debt has increased slightly to EUR 32.4 bn. Public debt is expected to decrease further by the end of 2020 driven by favorable economic cycle and loose monetary policy.

Slovenia Public Debt & Public Deficit (% GDP)